Siemens AG (SIE) is seeking more takeovers to boost its smart-grid energy division, which uses software to help utilities react to electricity demand, as software becomes a key growth pillar at Europe’s biggest engineering company.

The Munich-based maker of power plants is also investing “heavily” in research and development for its smart grid operations, Thomas Zimmermann, the head of the Smart Grid Solutions and Services unit, said in a telephone interview.

“Digitalization is one of the major growth areas for Siemens and smart grids are a key part of that,” he said. “Margins in software businesses are higher.”

Chief Executive Officer Joe Kaeser revealed his intention in May to build Siemens around “electrification, automation and digitalization” to catch up with competitors including General Electric Co. (GE) He has promised to ensure that the company doesn’t miss out on new technologies as he tries to update its products with Web offerings and digital monitoring that can predict faults in machines and collect data.

In a company graphic showing Siemens’ operations as a chain of energy solutions from electricity generation through to application in factories, the energy management division was placed as the key link between the two.

Siemens’s smart grid unit is part of that division, and supplies software which aims to ensure energy is distributed efficiently around a power network.

There are “huge growth opportunities” in the U.S., where Siemens acquired smart metering company eMeter Corp. in 2011, Zimmermann said, adding that “Europe is picking up.”

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