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By Ben Gardner

 

Emerging market countries are the next opportunity for smart grid. These countries stand to realize unique benefits and many of their regulators have already taken action. International vendors are beginning to transfer their products and know-how to these new markets beyond Western Europe, North America and East Asia. This article assesses emerging markets’ potential by looking at:

·         The benefits these countries will realize

·         The degree to which regulatory frameworks are advancing

·         A quantification of the size of the opportunity for vendors

 

Benefits are significant for emerging market countries

The three main benefits of smart grid for these countries are: theft reduction, improved reliability and the incorporation of renewable resources. Northeast Group calculates

that in some emerging market countries, the benefit of theft reduction alone can pay back the cost of AMI deployments in less than a decade. A good example of this is Brazil, where electricity theft is rampant. The problem of electricity theft is the classic “free rider” scenario: those illegally stealing electricity are unfairly subsidized by their paying neighbors. In the regions Northeast Group covers, Latin America has the highest total distribution losses (15.9%), followed by Middle East/North Africa, or MENA (11.1%), Southeast Asia (10.5%) and Central/Eastern Europe, or CEE (9.4%). These figures include both technical and non-technical losses, of which theft is a large portion. 

Emerging market countries are marked by their superior GDP growth compared with more developed countries. GDP growth drives electricity demand and is therefore dependent on reliable electric infrastructure. In many countries, power outages are a major drag on their manufacturing base and other sectors of the economy. Smart grid technologies can provide the benefit of enhanced outage detection, quicker restoration and intelligence to identify where preventative maintenance may be required. Both the frequency (SAIFI) and duration (SAIDI) indices can be improved, enabling overall economic growth.  In terms of electricity demand growth to 2020, Southeast Asia is the leading region (9.6%), followed by MENA (7.5%), Latin America (5.4%) and CEE (2.1%). 

 

Abundant renewable resources are found in many emerging market countries.  Smart grid will enable the incorporation of these intermittent renewables. This is true for larger scale renewable generation and distributed resources, or those that sit behind the meter. Demand response mechanisms, net metering, new storage technologies and other smart grid components will help unlock the potential of renewables in these countries.

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