MOSCOW (Reuters) - U.S. energy-saving group Echelon (ELON.O) expects to double sales of its smart meters in Russia in 2013 as it seeks to offset stagnant Western markets by responding to a growing Russian political will to cut energy waste.
Russia wants to reduce energy intensity - a measure of usage - by 40 percent by 2020 to modernize Soviet-era companies which Prime Minister Dmitry Medvedev has said were only 5-10 percent as energy efficient as foreign rivals in some cases.
Echelon - which operates in Russia in partnership with local firm EnergoAuditControl (EAC) - said it should sell 200,000 meters in Russia next year, up from 100,000 in 2012, as other businesses follow state-owned Russian Railways in using the devices to measure their electricity use more accurately.
“With Russian Railways using the meters ... and seeing that they work, other people are going to start to take notice,” Echelon senior vice president for operations, Russell Harris, told Reuters.
The company was increasingly targeting emerging markets such as Russia after seeing opportunities dry up in the struggling economies of the United States and Europe, he said.
“Due to the economic situation in the EU, there are many fewer tenders being released now (than in) 2008-10 ... Given the continuing recession in many areas of the U.S., regulatory agencies have been reluctant to approve new projects,” he said.
“To find growth, we need to turn to markets that have opportunities and compelling business cases to deploy our systems. Markets such as the BRICS countries,” he said, in a reference to the acronym for Brazil, Russia, India, China and South Africa.
Russian Railways has installed Echelon’s smart meters in power stations across its sprawling network, helping it measure how much electricity it is using and detect and counter power surges.
Echelon’s Russian growth forecasts are partly a consequence of the government target to reduce energy intensity.
After Russian Railways, Echelon’s other major Russian customer is electricity grid MRSK MRKH.MM, also controlled by the state, Harris said.
A World Bank report said Russia wastes as much energy in a year as France consumes, a situation exacerbated by the common practice of opening windows in winter to cool overheated homes.
Echelon’s growth plan echoes advances by cleaning group Ecolab (ECL.N), which grew its Russian business to $130 million from $30 million on the back of last year’s acquisition of water treatment group Nalco.
Nalco has a joint venture with oil major Lukoil (LKOH.MM) to provide energy chemicals in Siberia.
Harris said echelon’s expansion in Russia could be greater were it not for high import duties for its smart meters, which are manufactured in China.
“We want to lift trade barriers such as import duties, which for advanced meters are 40 percent ... quite onerous,” he said, adding he had held talks with Jabil Circuit (JBL.N) - a U.S. electronics manufacturer with operations in Tver, north of Moscow - about manufacturing locally.
Russia’s scheduled entry to the World Trade Organisation later this year was expected to boost trade with international peers, although Harris said the effect will “take some time” to kick in. “The pipeline of opportunity is now,” he said.
Editing by Megan Davies and Dan Lalor