Brazil wants to deploy about 65 million smart meters by decade’s end, making it one of the biggest emerging smart grid markets on the horizon behind China and India. One of the biggest reasons Brazilian utilities want smart meters is to prevent energy fraud and theft, or “non-technical losses,” which can add up to a quarter to a third of total delivered power for some beleaguered utilities.

But what’s the use of putting up expensive smart meters to prevent energy theft if thieves can still break into them? We’ve seen at least one example of high-tech, inside-job energy theft using smart meters in Puerto Rico, and experts warn that smart meters everywhere are exposed to new forms of digital tampering, even if they don’t let you crack the case and spin back the dials.

German smart meter maker Elster has come up with a solution that’s just earned it an expanded rollout in Rio de Janeiro: put the meters in a pole-top strongbox -- and lock the door. Light S.A., Brazil’s second-largest utility, announced this week that it would deploy 80,000 of Elster’s locked-up meters, building on a 20,000-meter pilot that’s been going on for about two years.

Elster’s “Garnet” solution features up to 12 meters inside one box, with connect/disconnect, relay and radio frequency mesh communications built inside each, according to Geraldo Guimaraes, Elster’s Latin American vice president of integrated solutions. That box is then locked and placed on the power pole, exposed to medium-voltage grid, and reads individual household power from that end of the line, rather than at the house level, he said.

“It’s a very Brazilian solution,” Guimaraes said -- but it’s not limited to Brazil. Elster has about 1 million meters deployed using this solution, along with a hardened individual meter it calls “Dracon,” in Peru and Colombia as well, he said. That would put Elster in the running for top market share of Latin America’s still-tiny smart meter market.

It’s an important new source of growth for the long-time metering company. Elster has deployed about 200 million meters over the last decade. But it hasn’t captured as much of the first wave of smart meter deployments in North America and Europe as have competitors like Itron, Landis+Gyr and Sensus. Last week, Elster reported first-quarter 2012 earnings fell to $9.3 million, a 63-percent decline from the same quarter last year, based mostly on declines in its gas metering business, which makes up most of its revenue and earnings.

It’s also an interesting illustration of how the smart grid industry will be asked to adapt to new environments, particularly high-theft areas. In the case of Elster’s lockbox, the idea actually came from the utilities, Guimaraes said. Putting a smart meter behind a metal door prevents the most obvious ways of tampering with it directly, which can range from inside-job digital alteration of the pricing or power reads to smashing it with a crowbar.

And while utility office employees could still hack the system, presumably, field workers, like those who participated in the Puerto Rico scheme, couldn't. It obviously costs a bit more, but with the elimination of all but the most complex forms of fraud, it’s still more cost-effective than putting meters on houses the old-fashioned way, Guimaraes said. In fact, beyond government mandates, it provides about the only cost-effective business case for deploying smart meters in Brazil, he added. The country's abundant hydropower gives it insulation from the peak-power problems faced in the United States, and home energy efficiency concerns aren't nearly as high as they are in Europe or Japan.

Elster isn’t the only one to develop the concept, he added. Landis+Gyr built similar lockbox-style meter arrays to test with Light S.A., but those will be replaced by Elster’s in the new rollout, Guimaraes said.

The problem with L+Gs approach, he explained, was that it used meter modules, instead of meters themselves, inside the box. After awhile, those exposed, locked-up circuit boards started to show accuracy problems related to humidity and heat, he said. Elster’s decision to keep the meter case and offer protection from the elements seems to have avoided these challenges, which come with Brazil’s hot and wet territory.

Landis+Gyr is one of Elster’s chief competitors in Brazil, with the other being Brazil’s ELO Systemas Electronicos, which has licensed Echelon’s technology for its smart meter deployment. Itron, General Electric, Trilliant and Silver Spring Networks are also targeting Brazil and other Latin American countries.

Beyond adapting their approaches to prioritize energy theft prevention and durability in deployments like these, the big meter makers will also have to make their meters as cheaply as possible. China wants smart meters to come in at less than $50 apiece, compared to $150 and up for typical North American deployments, or $100-plus per smart meter in Europe.

In the case of protected markets like China and Brazil, they’ll also have to build them inside the country, and partner with lots of domestic partners to do so. It adds up to a complex new set of market conditions, but the size of the markets to come seem to make it worthwhile. Stay tuned for more developments on the Brazilian front, and across the developing world writ large.

Tags: cisco, demand response, elster, energy efficiency, energy theft, ge, general electric, itron, security, sensus, silver spring networks, smart grid, smart meter, trilliant, utilities