Echelon Corp. (NSDQ: ELON) has gotten its foot in the door to expand its smart meter business with utility Duke Energy, with a $15.8 million order for Echelon’s smart meters and supporting services.

But that initial order for about 120,000 smart meters could expand to $150 million, Echelon said Monday, if Duke continues to use its smart meters across the states where it’s planning to deploy about 1.5 million of them over the coming years.

Duke has received regulator approval to deploy more than 700,000 smart meters in Ohio over the next five years, and is seeking approval from Indiana state regulators to deploy 800,000 smart meters there as well.

Whether or not Echelon will supply those contracts remains to be seen. The agreement announced Monday, beyond the initial $15.8 million, is a “framework agreement” that sets pricing, availability, and delivery conditions, but does not guarantee that Duke will choose Echelon for those expanded deployments.

Echelon has counted the Charlotte, N.C.-based utility as its only North American customer so far for its expanding Networked Energy Services business. About 60,000 of Echelon's smart meters have been deployed by Duke in Cincinnati.

Europe has been the primary market for Echelon’s smart meters that communicate over power lines to concentrators, which then use IP-based communications networks to get information back to utilities.

The company’s technology underlies the 30-million home smart meter deployment by Italian utility Enel, and millions more of its meters are being deployed throughout Europe (see Echelon Beefs Up LonWorks).

But power line communications remains a relatively rare form of communications for smart meter deployments in North America, which have tended to rely on utility-owned wireless networks so far (see RF Mesh, ZigBee Top North American Utilities’ Smart Meter Wish Lists).

Echelon has made some moves to expand the types of communications its smart meters can use. In April, it inked a deal with T-Mobile USA to install the carrier’s radios in its smart meters — a move that matches those being made by AT&T and smart meter networking provider SmartSynch, as well as other smart meter makers seeking a public cellular option for communications (see Echelon, T-Mobile Team on Smart Meter Contracts).

Echelon is also hoping that its other primary line of business — its LonWorks technology for building automation, or controlling building air conditioning, heating, lighting and other energy-using devices — could see growth in connection with expanding smart meter services.

The idea would be that smart meters could serve to connect LonWorks-based systems to utilities that want to power down those systems to save energy during peak demand times.

David Mohler, Duke's chief technology officer, has said that the existing base of commercial buildings with LonWorks-based building automation systems could make it a natural technology to integrate with smart grid communications and control systems.

But then, Duke is also the first North American utility to partner with Cisco Systems in the networking giant’s broad-based smart grid plans, which significantly include a major push into building automation integration (see Duke Energy Enlists Cisco in Smart Grid Efforts and Cisco Rolls Out Building Automation ‘Mediator’).

Duke has also applied for $200 million in Department of Energy smart grid stimulus grants, which it said could help it install them about two years faster than otherwise planned (see Smart Grid Stimulus Applications at $2.85B and Counting).

Image of Echelon's Networked Energy Services (NES) smart electricity meter via Echelon.

Interact with smart grid industry visionaries from North American utilities, innovative hardware and software vendors and leading industry consortiums at The Networked Grid on November 4 in San Francisco.