TECHNOLOGY DEVELOPMENTThe Tokyo Gas Group has always maintained a focus on technical development, and the Company
has developed its operations while repeatedly taking on the challenge of new technologies. As westrive to respond rapidly and accurately to changes in the operating environment, we are working
to develop technologies that will open up new energy frontiers.
Strategic Direction of Technology Development
In technology development, we focus on three areas: (1) the creation of heart-reverberating concepts and the development of products that give concrete form to the value created by those concepts, (2) the development of innovative environmental technologies that will contribute to the realization of a low-carbon society, and (3) technologies
that support the operational platforms for stable administration of gas operations and for realization of higher-level
usage and cost reductions. In the fiscal year ended March 31, 2011, the Company allocated about ¥9.9 billion to technology development.

The Technology Development Strategy of Tokyo Gas

Creation of Heart-Reverberating Concepts
and Development of Appealing Products

Development of Innovative
Environmental Technologies

Residential Sector

Innovative Energy-saving Technologies for Advanced Use of City Gas• Development oftechnologies related tounderstanding customers• Development of lifestylevalue-added products• Effectiveness andefficiency verification• Quality-oriented
commercialization• Development of “ENE-FARM”(polymer electrolyte fuel cell)• Development of SOFC (solid oxide fuel cell)+do GRILLER for enjoying cooking

Commercial and others, Industrial Sectors• Customer support technologies that contribute toretention of existing customers and development oftechnologies that increase
the safety of gas systems• Development of technologies that utilize solar heatand biomass.

Solar Heat Panels• Production
Long-term facility
maintenance,increased qualityof terminal operations, etc.

• Pipelines
Maintenance ofsecurity levels
and optimizationof security investment

Renewable Energy Technologies, Low-Carbon Technologies• Technologies for systems
combining solar heat/solar
batteries with gas systems• Technologies to make fulluse of biomass• CO2 separation, collection,transport, and processing
technologies• Technologies for the highly efficient production anduse of hydrogen• Technologies related to“Smart Energy Network”
composed of distributed
power sources“SOLAMO” Gas hot
water system that alsouses solar heat. Installedon the railing of a multipledwelling unit.

Hydrogen Station• Meters
Development ofservices using
ultrasonic meters,etc.

TOKYO GAS ANNUAL REPORT 2011

Technologies Supporting Our Operational Platforms

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Major Outputs and Initiatives in Recent Years

EnvironmentalTechnologies• Started general sales in May 2009 of residential polymer electrolyte fuel cell (PEFC) (sales name:“ENE-FARM”), and in April 2011, released a new model with improved generation efficiency.
Moving ahead with development to further improve the product, targeting its use in multiple dwelling units.
• Development and demonstration testing of solid oxide fuel cell (SOFC) technologies.
• Ongoing demonstration testing of CO 2 separation and collection during the production of hydrogen.
• Started sales in February 2010 of the “SOLAMO” gas hot water system that also uses solar heat and is installedon the railings of multiple dwelling units, and in July 2011, released a model for detached housing remodelling.

Platform
Technologies• Ongoing deepening, succession, and utilization of infrastructure construction technologies, maintenancemanagement technologies, combustion engineering-related technologies, and gas quality management
technologies, etc.

TECHNOLOGY DEVELOPMENT

In-depth ReportCreating Tomorrow’s Low-carbon Society
Tokyo Gas advocates the use of “smart energy networks” for achieving a next-generation lowcarbon society. A smart energy network combines large-scale electricity and gas networks withdispersed energy supply sources, such as gas cogeneration systems and renewable energy
sources. Optimal network control using information and communications technology realizes
stable energy supply while reducing energy consumption and CO2 emissions.

Gas Cogeneration Systems Support Future Urban Planning

Kazuhisa Okamoto, GroupManager of the Solution
Technology Department,
who is working to create asmart energy network

In a smart energy network, the installation of local gas cogeneration systems andother dispersed energy systems reduces energy consumption and CO2 emissions through optimized area-wide control of generated heat and electricity. In
addition, independently operated gas cogeneration systems, a dispersed powersource, continue to supply electricity to essential loads within the network in theevent of a power outage. This highly reliable electricity supply system promotes
safe urban planning, achieved by establishing disaster prevention bases at hospitals, schools, and other central locations. In the future, information andcommunications technology will be used to control the output of gas cogeneration systems and electricity demand within an energy network in coordination
with large-scale centralized power sources, such as thermal power plants. By
taking on part of the function of adjusting system-based power generation, thestabilization of this main power source will help facilitate the introduction of large
volumes of unstable renewable energy sources, such as solar and wind power.
Tokyo Gas began the demonstration of a gas cogeneration project at its Senju
site in fiscal 2010 and at a multiple dwelling unit in Yokohama in fiscal 2011.

In a smart energy network, the key to optimizing the efficient use of energy
lies in the precise measurement of the amount of energy created and consumed, and the supply of that information via a communications network.
Tokyo Gas is working jointly with two other gas companies, as well as otherpartner manufacturers, on the development of a next-generation smart metersystem. The proliferation of smart meter systems will reduce CO2 emissions
in the residential and commercial and others sectors. Furthermore, the digitization of energy-related data has the potential for creating new shared value
through the establishment of new businesses. Our efforts targeting future
utilization of such systems extend beyond the development of next-generation ultrasonic gas meters, and next-generation metering systems with highspeed communications and advanced functions. Tokyo Gas is collaboratingwith other subsidiaries and affiliates to promote the development andassessment of an optimal communications infrastructure. We are also working to establish common specifications and acquire an international standard
for a wireless system, which is the top candidate.

Hajime Furusawa, GroupManager of the ProductDevelopment Department,
who is currently developing anext-generation smart meterTOKYO GAS ANNUAL REPORT 2011

Smart Meter Systems Create New Shared Value

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