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Echelon Corp. (ELON) Aids China's Leading Smart Meter Supplier In Winning New Customers

|Includes: Echelon Corporation (ELON)

Echelon, a global leader in energy control networking for smart grid, smart city, and smart building applications, announced today that the company had reached a significant goal in China, a key targeted growth region. Through its joint venture, Zhejiang Echelon Holley Technology Co., Ltd., Echelon was granted China State Grid approval for the use of its power line communications (PLC) technology and Control Operating System (COS) powered data concentrator module. The joint venture has also received its first order for meter modules that incorporate Echelon's PLC technology, from Holley Metering Limited, for use in a 30,000 smart meter pilot deployment in Inner Mongolia. Additionally, the company has been selected for a pilot in Fuping County, which is located in the Shanxi province.

Because China is a high-growth target for Echelon, these two projects present significant opportunity for the business. 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.

Starting three years ago, the initial Inner Mongolia project began using other PLC technologies. However, due to Echelon's reputation and renowned PLC technology, Inner Mongolia has selected Echelon for this 30,000 unit deployment now that the Echelon Holley joint venture's meter module that incorporates Echelon's PLC technology has received State Grid certification. The deployment is anticipated to be completed in January 2013; the utility already has plans to expand to a larger scale following completion.

The Fuping pilot is being managed by the local utility, part of the Shanxi provincial utility. The 1,000 meter pilot using Echelon PLC technology has delivered nearly a 100% read rate. It is expected that many more meters using the Echelon Holley joint venture communications modules will be installed over the next few months to expand this pilot. This serves as a significant opportunity for Echelon: if the Fuping pilot performs well, it could well expand to other cities or countries in the Shanxi province that are serviced by the same Shanxi utility.

In addition to its pilot projects, the Echelon Holley joint venture has also sold its communications modules (that incorporate Echelon technology) for use in 11,000 smart meters in smaller pilot projects at 10 sites in five provinces.

"Echelon's strategy of bringing our Energy Control Networking platform to China via our joint venture and local smart grid partners is starting to show results," said Ron Sege, chairman and CEO of Echelon. "This is part of our company's strategy to target growing markets and lay the groundwork for selling multi-application edge-of-the-grid solutions around the globe with great local partners such as Holley Metering."

China State Grid Corporation, a state owned enterprise and the world's largest grid operator and power distributor, has outlined and is aggressively delivering on its five year plan to upgrade China's electricity grid. State Grid promises reliability of no less than 99.9% and an on-site response time of 45 minutes to repair service in urban areas. To meet this level of reliability, China State Grid developed a rigorous set of tests that all vendors must pass in order to participate in the future State Grid project to upgrade its 120 million meter market over the next three years.

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