Gov't mandates driving smart grid deployments

WASHINGTON – With government mandates driving smart grid deployment, China and other emerging markets are generating greater demand for components like smart meters.

European states like Italy have led the way for early deployment of key technologies like smart meters. But the economic slowdown in Europe and the U.S. has slowed demand in the west. That means key suppliers are turning are increasingly turning to emerging markets, especially China, to take up the slack.

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Smart grid suppliers like power line communications specialist Echelon Corp. (San Jose, Calif.) are especially targeting the Chinese market given Beijing’s mandate to connect 300 million homes to the smart grid by 2015.  The company announced on Oct. 8 that is has received two smart meter orders for pilot projects in Inner Mongolia and China’s Shanxi province. Both regions plan to deploy up to 10 million smart meters over the next five years, the company said.

Echelon CEO Ron Sege said government mandates in China and other emerging markets like Brazil have made up for the recent “lull” in smart grid demand in the U.S. and Europe. Smart grid rollouts in these news markets “have to happen in the next number of years,” Sege said.

Echelon’s China deals initially include delivery of 30,000 smart meter components. Echelon’s power line communications technology and related equipment recently received Chinese smart grid approval through its China joint venture, Zhejiang Echelon Holley Technology Co. Ltd. Sege said he expects the approval to lead to bigger deployments in China when the pilot project is completed in January 2013.

The Echelon Holley joint venture has also sold communications modules incorporating Echelon’s technology in 11,000 smart meters deployed in five other Chinese provinces. The deals are part of the company’s strategy of laying the groundwork in emerging markets for selling more of what Echelon calls “edge-of-the-grid solutions,” Sege said.

Once smart meter technology is integrated into China’s electrical grid, Sege said market drivers there and in other emerging regions include managing power demand, the integration of renewable energy sources into the grid and accommodating greater numbers of electric vehicles on the gird, an application that can consume as much electricity as 20 households.

Echelon also has teamed with Duke Energy in the U.S. on smart grid pilot projects, including the installation of 700,000 smart meters in Ohio. Still, he said the lack of any U.S. government mandates means U.S. utilities mostly “cobble together enough [grid] smarts to get by.”

Along with some smaller projects in Europe involving applications like controlling street lights, he added that Echelon is looking at opportunities in markets like Brazil, which has mandated smart grid modernization by 2020.

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