Smart grid expenditures in South America will cumulatively reach $49.8 billion by 2023, according to a new study released today by the Washington, D.C. research firm Northeast Group, LLC. This spending will be allocated across the four segments of advanced metering infrastructure — distribution automation, wide area measurement, home energy management and information technology.

The bulk of the planned spending will be allocated to distribution automation ($23.2 billion), followed closely by smart metering ($19 billion for deployment of 80.7 million meters).

Upgrading the legacy grid is a critical need in this region, which has abundant renewable resources—particularly, hydropower—but does not have the capacity to meet rising demand.  Strengthening and updating the electric transmission and distribution infrastructure also will help to reinforce security, which has become a critical problem. South America has a distribution loss rate of 15.5 percent —the highest in the world— due to pervasive electricity theft at customer endpoints and system-wide power outages.

"South America stands to achieve some of the largest benefits from smart grid infrastructure among all emerging markets," according to Ben Gardner, president of Northeast Group. "When we released our first South America study two years ago, there was a lot of potential, but limited activity. Since then, several countries have drafted smart grid roadmaps, launched numerous pilot projects and vendor activity has accelerated across the region."   

Gardner identifies Brazil as the leader. Indeed, Brazil has implemented pilot projects dating back to the middle of the past decade—comprising over 1 million deployed smart meters and a number of smart city initiatives. What’s more, Brazil’s government has set clear regulations for smart meter deployments and created incentives for residents to install small-scale solar photovoltaic systems and install smart meters.

But Brazil is not alone. Other countries also have made large strides—including:

• Ecuador, which is aiming for full smart meter deployment by 2017;
• Colombia and Peru, which are finalizing advanced metering infrastructure (AMI) roadmaps;  and
• Chile, which is developing smart city pilots.

Established smart grid vendors are positioning themselves for this huge potential market and new players are entering the sector, such as telecom operators eager to expand their machine-to-machine (M2M) market offerings.

Northeast Group's “South America Smart Grid: Market Forecast (2013-2023), Volume II” report comprises forecasts for Brazil, Chile, Colombia, Argentina, Ecuador, Peru, Paraguay, Uruguay, Venezuela and Bolivia. Northeast’s research is focused on the smart grid opportunity in emerging market countries.