On 5th March 2014, Cyan notified shareholders that a CyLec smart metering pilot had been deployed by its metering partner in Brazil (Nobre).
The pilot was based on the Cyan retrofit solution which is specifically designed to provide smart metering functionality to existing static electricity meters in Brazil. The retrofit module is a small, self-contained unit that connects to an installed meter via an existing communications interface on the meter. Cyan's product provides a cost effective solution to enable utilities to upgrade from ‘dumb' meters to ‘smart' using Cyan's CyLec Advanced Metering Infrastructure ("AMI") communication platform. The retrofit device deployed in the pilot supports meters with the PIMA protocol, which is a communication protocol supported by several different meter manufacturer brands operating in the Brazilian market, such as Itron, Electra, Nansen, Landis & Gyr, Elster and ELO.
The first pilot has been successful and Nobre have been able to confirm that Cyan technology can be successful in Brazil under local telecommunication law restrictions. A second pilot using the retrofit unit has been requested to demonstrate that the consumers power supply can be remotely connected and disconnected without having to send utility staff on site, in the event of non-payment and to also prevent fraud. The current cost of sending staff for manual disconnect/reconnect duties is a significant cost burden for utilities in Brazil.
Nobre has also informed Cyan that they have contracted with a Brazilian Contract Equipment Manufacturer (CEM), who will build volume orders of the new retrofit product on Nobres behalf. Nobre have reported that they expect first orders in the fourth quarter of 2014 and anticipate volume shipments in 2015. The CEM has been selected to meet this expected demand.
Based on a Brazilian utility request and market opportunity, an additional retrofit solution is also under development that will allow connection to several meters through a single radio module. Many meters in Brazil are locked inside multi-meter secure cabinets and this additional solution will establish Cyan and Nobre ahead of Brazilian competitors in terms of both cost and functionality.
A further pilot with a second Tier 1 Brazilian utility is currently planned and an update will be provided when this has been deployed by Nobre.
According to GlobalData's latest report, smart meter market revenues in Brazil will increase tenfold, from $36m in 2013 to $432m by 2020. The main market drivers for this projected growth are the need to upgrade grid reliability and power outages, and to improve the integration of renewable energy generation into the system, reducing per-capita power consumption. In addition, with power theft as high as 20% in some Brazilian regions, local authorities are currently pursuing investments in smart meters, as the technology provides a simpler way for companies to track such activity.
John Cronin, Executive Chairman, Cyan Technology commented: "Nobre are doing a great job of developing the smart metering market for Cyan in Brazil. They have made strong progress in a short period of time and are confident that they will secure orders before the end of 2014. From the information that Nobre have gathered, we understand that the retrofit solution is going to be very competitive in Brazil, where consumer smart metering deployments have not gone ahead due to the high cost and complexity of US developed smart metering solutions. We continue to support Nobre on a day to day basis and are confident that they will achieve the performance criteria related to sales in our agreement in order that their exclusivity continues."
João Nelson C de la Torre, Executive Director, Nobre, commented: "There is significant demand for cost effective smart metering solutions in Brazil. We are pleased with the results of the Cyan technology in the first pilot. With the retrofit solution, we are able to offer a different approach to other smart metering technologies available in South America and we remain confident that we can offer a compelling proposition that will allow us to be one of the largest AMI providers in Brazil."
