Landis+GYR On Acquisition Warpath In Smart Meter Race
BMI View : The announcement by Landis+Gyr to double its revenue through an ambitious acquisition plan highlights the strong growth prospects for the global smart meter and smart grid sectors. The majority of developed countries have already introduced some form of smart meter rollout programmes, with the EU alone poised to install some 200mn meters by 2020.
On May 27, Switzerland-based Landis+Gyr announced its intention to more than double its revenue to USD4bn by 2020 through a series of takeovers. The company is the largest maker of power meters for utilities, and is looking to acquire companies specialising in power metering and networks as it seeks to benefit from a global investment drive in smart meters. Landis+Gyr recorded revenues of USD1.5bn in 2013, and was acquired by Japan's Toshiba in 2011 for USD2.3bn (1.5 times of sales).
The announcement by Landis+Gyr highlights the strong growth prospects for the smart meter and grid sectors. Technological advances have greatly increased the functionalities of electricity meters, and smart meters offer a number of key advantages over conventional electromechanical meters. For consumers, smart meters are able to provide real-time consumption data and in some cases, electricity prices, which allow consumers to moderate and plan their consumption patterns. Meanwhile, smart meters help to reduce the operational costs for utilities as they eliminate the need for costly meter reading visits. These features are extremely valuable, and the majority of developed countries have already introduced some form of smart meter roll-out programmes. Some of the more noteworthy programmes include:
Europe: A European Union (EU) directive introduced in 2009 requires 80% of households to have smart meters installed by 2020, representing around 200mn smart meters (see 'Smart Meter Global Update', July 23 2012). We estimate that only 50mn smart meters were installed across the region at the end of 2013, meaning that there is significant room for growth. Key markets will be the UK (50mn smart meters to be installed between 2015 and 2020) and France (35mn meters to be installed between 2016 and 2020). In fact, the French government has already opened a tender for the first 3mn smart meters, and several suppliers, including Landis+Gyr, Itron and Britain's Iskraemeco are in the running.
Japan: The Japanese government has called for a full smart meter roll-out to be completed in the early 2020s. The country's 10 regional electricity utilities are proposing to complete the rollout by the end of FY2024/25 (April-March), and have said that the number of smart meters for households and small-scale companies nationwide is expected to reach a total of about 80mn ( see 'Acceleration Of Smart Meters Rollout A Plus For Most', March 19 2014).
US: The US currently does not have a target for smart meter installations at a federal level, but programmes have been initiated in at least 11 states across the country. The country had around 43mn smart meters installed at end-2012, representing a penetration rate of 24%. This is expected to increase as President Obama is an advocate of energy efficiency and grid modernisation, having introduced the USD3.4bn Smart Grid Investment Grant and a USD2bn initiative to improve energy efficiency in federal buildings.
China: China is potentially the single largest market in the world for smart meters, with the government targeting to install 300mn smart meters by end-2015. While the market is relatively inaccessible to foreign companies, a number of international service providers such as US-based Echelon have made inroads into the sector via joint ventures ( see 'Echelon-Holley JV Signals Consolidation Of Resources And Fiercer Competition', April 11 2012).