Last October, Echelon announced an
important milestone in China. Our smart meter power line communications
(PLC) and Control Operating System (COS) technology received approval from the
China State Grid, allowing us to enter the Chinese market with our technology
through our joint venture, Echelon-Holley. This is a significant
accomplishment, as the State Grid controls roughly 90% of the 300 million
meters in China.
Already, our joint venture has begun to win pilot projects in
China. Holley
Metering Limited, a leading smart
meter provider in China, will use the Echelon meter modules in a 30,000 smart
meter pilot deployment in Inner Mongolia, and later for a pilot in Fuping
county, located in the Shanxi province.
A recent article in
the South China Morning Post
summarized the high points of Echelon’s penetration of the highly competitive
advanced electricity meter market in mainland China.
China is a priority target for Echelon because
high electricity theft levels and widespread shortages of electricity mean that
smart grid technology is seen to have very high value. Our two pilot projects will
allow the Echelon Holley joint venture to demonstrate the particular value of
our technology, which can drive much broader revenue for us in coming years.
Inner Mongolia alone is expected to add 10 million new smart meters over the
next five years, while Shanxi province is also targeting 10 million new smart
meters over the next three years.
Echelon’s approach to the market in China is
significant because it builds on a local partnership (with Holley Metering).
Establishing similar partnership relationships, tailored to the cultural and
business environment of individual regions, could represent a model for
smart-grid success globally.
More generally, due to fundamental challenges on the grid brought
about by economic growth, the China market is significant. GTM
Research reports that China plans to invest
close to US$250 billion into its grid over the next five years. The South China Morning Post article cites
market research from IMS Research stating that at the end of 2011, “just under
10 per cent of the world’s roughly 1.43 billion installed power meters were
‘smart,’ or communicating ones. This is forecast to double to 35 per cent by
the end of 2016.”
It’s clear that China will need great smart grid technologies,
which Echelon provides via our multi-application COS platform model. Our platform and our partner approach will also
work well in other emerging markets in Asia and South America.
We believe that our recent milestones in China represent the tip
of the iceberg for Echelon, and we’re optimistic about our prospects in this
large, attractive, yet challenging market.
Recommended Links:
Echelon
press release announcing China’s Holley Metering order
Article
on Echelon in China in South China Morning Post
GTM
Research: The Smart Grid in China, 2012-2016
Echelon
and Holley Metering announce joint venture for China
Learn
more about Holley Metering Limited