Toshiba's Swiss purchase (electricity metering company)

Toshiba's Swiss purchase is a 'smart' play

2011/05/21

Toshiba Corp.'s acquisition of the world's leading electricity metering company signals an aggressive push by the technology giant into the fast-growing "smart-grid" market.

The company announced on May 19 that it would buy all shares in Landis+Gyr AG for $2.3 billion (about 186.3 billion yen).

Toshiba expects the move to give it a commanding position in "smart-grid" technology by combining its own strength in manufacturing power generation equipment with Landis+Gyr's muscle in cutting-edge electricity metering.

"Smart-grid" electricity distribution allows electric utilities to vary the amount of power they transmit to particular areas according to actual demand.

While conventional grids distribute given amounts of electricity in a way that is not responsive to fluctuations in demand, "smart-grid" infrastructure changes the power distributed based on close monitoring of the actual power usage by factories and households.

Landis+Gyr, which was founded in Switzerland in 1896, has 5,000 employees and operates in more than 30 countries, including Europe and North America.

It is the leader in the global market for electricity meters, with more than 10 percent of the sector, but its strength in smart meters is likely what attracted Toshiba. It controls nearly 30 percent of the global smart meter market, more than any competitor.

Smart meters are advanced meters that record and communicate electricity consumption data in real time and in much greater detail than conventional meters. They are a vital building block in smart-grid systems.

Landis+Gyr's sales for the year ending December 2010 stood at 124 billion yen, but Toshiba plans to call on the public-private fund Innovation Network Corp. of Japan and information technology companies overseas to invest in the Swiss company to help expand its smart-grid services. It expects to boost sales in ecological community-related infrastructure projects from about 300 billion yen to 700 billion yen in fiscal 2015.

Household smart meters offer the ability to monitor the amounts of electricity used by individual refrigerators, TVs and other electric appliances and immediately transmit that information to power companies, either wirelessly or via cables.

But installing intelligent metering in individual offices and homes offers many other potential benefits. The technology could be used to inform utilities of the amounts of electricity generated by solar panels in households, allowing companies to buy surplus energy and distribute it quickly to areas that need it. The meters could also be used to redirect unneeded power in households to recharging electric vehicles.

Smart grids could facilitate more decentralized power networks, allowing utilities to move away from a current model that relies heavily on large power stations pumping out electricity to regional networks. A smart grid could make much greater use of dispersed solar and wind power generation.

In addition, when electricity supplies are tight, such as in Japan's Kanto and Tohoku regions following the March 11 earthquake, smart meters might allow power companies to avert blackouts by instructing particular households to save energy when necessary.

The proliferation of smart-grid systems is expected to spur the development of not only smart meters and transmission equipment but also rechargeable batteries and communication lines.

Japanese companies, which had found themselves playing catch-up behind rivals in the United States and Europe, are stepping up their investment in the sector with backing from the industry ministry. Hitachi Ltd. announced on May 17 that it will participate in a project in Hawaii to develop a network for recharging electric vehicles. Mitsubishi Electric Corp. is experimenting with transmission systems in Hyogo Prefecture.

(This article was written by Shu Nomura and Satoshi Daiguji.)