Brazil’s smart grid deployment gets a push

The US Trade and Development Agency (USTDA) has awarded a $605,000 grant to support large-scale smart grid deployment in Brazil.

The award to the Brazilian Association of Electricity Distributors (Abradee) is intended to provide technical assistance to analyse regulatory scenarios to support and enable further smart grid deployments in Brazil.

Specifically, the focus will be on two main topics, viz public policies and economic regulation models that could further facilitate investments and encourage the modernisation of the electricity distribution networks across Brazil.

With the results that emerge, Abradee, together with Brazil’s electricity regulatory agency Aneel, the telecommunications regulatory agency Anatel and the national electricity system operator ONS intend to seek public policies that can lead to a full deployment of smart grids in the country.

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“USTDA’s grant will provide Brazilian electricity distributors an opportunity to collaborate with US industry and observe how the United States has developed smart grids and regulatory best practices,” commented Abradee President, Marcos Madureira.

“This will allow us to anticipate potential challenges and identify solutions that will work for Brazil.”

The project RFP document states that industry observers indicate two barriers to smart grid adoption within the current regulatory framework in Brazil. These are uncertainty about smart grid asset recognition and valuation and that assets are recognised and remunerated not on the date they enter into service, but rather on the effective date of the next tariff rebasing. Moreover, the assets are recognized at their net, depreciated level at the beginning of the rebasing period, not their original acquisition value.

Alternatives to these have been explored but without the availability of the incentives that have supported developments in other countries, Abradee wishes to explore the potential for public policies as a driver.

To date the two main motivations for smart grid development in Brazil have been combatting energy losses and improving the quality of supply, the RFP notes. Where these motivations are strongest, it is possible to identify a positive economic return for the projects. However, in most areas of Brazilian concessions, such projects have an unfavourable cost/benefit ratio

The USTDA has invited proposals from interested US firms, with a submission deadline of November 26. Once underway, the project is expected to take about six months to complete.

Abradee members represent 41 private and public electric distribution companies in Brazil, operating in all regions of the country, and serving 99.8% of Brazilian consumers.