Echelon CEO says slow economy hindering growth

SAN FRANCISCO (Reuters) - A slow global economy is hurting Echelon Corp's growth prospects but the maker of smart meters expects activity in the energy efficiency sector to accelerate over the next six months, Chief Executive Ken Oshman said on Monday.

"Our plan is to grow like a weed," Oshman said soon after Echelon announced it had entered into a long-term agreement to supply smart meters to electric utility Duke Energy Corp. "But having said that the real world gets in our way. The economy has not helped us a bit."

Oshman said the U.S. government's stimulus package, which actually slowed decision-making in the short-term as companies filed for the grants, would help boost the sector.

Echelon's smart meters allow households to monitor electricity usage while also sending data back to power providers.

The San Jose, California-based company's deal with Duke represents a revenue opportunity of $150 million, including an initial order worth $15.8 million.

Oshman revealed that Echelon -- which saw its stock soar as much as 40 percent following the news of the deal -- lost a large contract in Eastern Europe after a utility pulled out a smart grid program because of the credit market collapse.

"We had a large utility in Eastern Europe that had awarded us partner contract and was moving ahead with the plan," Oshman said. "But in that particular country the currency collapsed and credit markets had to cancel it.

Oshman said he saw "lots of good opportunities" for the company in Europe and China, and expects to bag the contract with the Eastern European utility once the economy picks up.

"I certainly expect to," he said. "That utility certainly has not changed its ambitions or its objectives."

Oshman did not reveal the name of the power utility or the country it is based in.

Utility companies around the world are laying the groundwork to upgrade their network with smart grid technology, which measures and modifies power usage in homes and businesses, improving grid reliability.

Experts envision the smart grid as a network that will wring new efficiencies out of thousands of miles of power lines and open the door to more development of renewable electricity sources, the introduction of "smart" appliances that turn themselves on and off, and a fleet of electric cars.

Shares of Echelon were trading up 24.6 percent at $10.32 in afternoon trade on the Nasdaq.

(Reporting by Poornima Gupta; Editing Bernard Orr)