Social Innovation, Smart Tech More Than Just BuzzwordsBy Cas Biekmann | Wed, 05/19/2021 - 15:01
Q: What was the strategy behind last year’s joint venture between Hitachi and ABB’s Power Grid division and what does it mean for the Mexican market?
A: The JV was a deeply strategic decision for both parties. ABB had finally made the difficult decision to exit the power business and was looking for a partner with the right synergies to strengthen the business and take the operation to the next level. Hitachi now owns an 80.1 percent stake in Hitachi ABB Power Grids. ABB already had a successful partnership with Hitachi in Japan for some of the power business and it was clear that there was an opportunity to build further on this. With the new company, we are expanding Hitachi’s global energy solutions business by combining it with ABB’s world-class power grid technology. Given our combined technological prowess, we hope that the energy utility, smart city, industrial and IT sectors will benefit from this new entity.
As to the Mexican market, both companies have been present here for decades. If anything, the JV has strengthened the opportunity we see in the country. We have an experienced team here that does not only cater to the local customer base, but also meets wider regional demand. Key resources for R&D and engineering regarding grid automation and integration, that provide support not only to our customers in Mexico but also North and South America, as well as a strong business development and sales organization. The JV will also be effective in meeting Mexico’s growing need for e-mobility and smart technology.
Q: Analysts often point to the aging national grid as a stumbling block in Mexico’s clean energy transition. How can the company add value in this area?
A: This represents a huge opportunity. I am a firm believer in the energy industry’s ability to bring prosperity to a country and Mexico is no exception. From my perspective, for Mexico to take advantage of its position in the world, a robust, resilient, efficient and sustainable power grid is necessary. Even though hydropower has become a focal point recently, photovoltaic solar and wind will be major components in the country’s new energy matrix. For this to be a success, good planning is a must. This is where we come in, providing advisory services related to making hydropower more efficient and how to combine and integrate all of the country’s other assets to get the most out of them. If a competitive grid to make the country itself competitive is wanted, the company can help with advice and the integration of such technologies into the grid. Data will play a huge role; everyone has been talking about the buzzword “smart” in recent years, but what do we actually do with this data? Understanding how we turn this into actual insights and use this toward innovation is what we are looking to do in Mexico.
Regarding technology, both new solutions, integration into the existing grid and parallel support are among the possibilities we can provide. An appropriate national strategy followed by an integrated resource planning stage are crucial in this regard. Some assets will likely be replaced with newer technology, but we help our customers to make well-informed decisions based on the strategy they follow. Execution is equally crucial because the right engineering and engineering resources ensure the process goes smoothly.
Q: What energy storage efforts have you noted in the Mexican market and where have you identified untapped opportunity?
A: In line with the government’s plans in the energy sector, hydroelectric dams offer a great option for energy storage. In talking about the growing trend of battery storage, however, we see it as a new tool for the industry. The more it is used, the better we understand it and can apply it to other situations. Increased renewable integration and dynamic demand can create instability, but storage can help remedy this. While this is a challenge, it also offers an opportunity in regard to energy efficiency. Hitachi ABB Power Grids has data-focused forecasting technology and can help operators manage the grid efficiently.
In my experience, the consumer is fully on board with clean energy, but not if it is at a high cost or results in reduced service and blackouts. Avoiding these pitfalls are essential to our planning stage. The company uses storage to improve the quality of service.
Q: How is the company preparing to help support Mexican customers in meeting the stringent requirements of the grid code?
A: Implementing new trends or technologies simply takes time. A clear example is Renewable energy was a promising prospect for years but actual projects did not materialize for years, it took a long time but now it is a reality. The grid code came out years ago, but the market still needs to understand it. This is where we come into play, working with our partners and the grid owner, CFE, to ensure people see the benefits of technology that ensures compliance with the code.
From our perspective, there is a natural period in which energy users need to adjust and make modifications. I think that the time is coming for this to happen because it is already occurring in the usually faster-moving C&I sector. We also see traction in the utility-scale segment for renewable energy players. CFE plays a major role in this as well, when it comes to ancillary services and how this boosts growth for the grid through technology use. This is where the company is active, supporting the grid owner, private power producers and even large industrials.
Q: What sets apart Hitachi ABB Power Grids’ approach to R&D?
A: Innovation has always been and will always be a strong pillar for the company, only more enhanced by the JV. We continue to invest heavily in R&D. Hitachi brings the concept of “Social Innovation” to the table as well, which will take our innovation to a different level. Hitachi ABB Power Grids believes that true Social Innovation cannot be done alone. Companies need to partner up and co-create. That is what we are doing. For example, we signed a landmark agreement with General Electric recently in which the two companies will combine forces through a non-exclusive, cross-licensing agreement to further develop a new gas-insulation technology as an alternative to SF6. The alternative solution has a significantly reduced impact on the environment compared to SF6. Our approach to R&D is rooted in how to advance society in general and that is a key differentiator.
Q: What are the company’s near-term goals in the Mexican market?
A: The Mexican market continues to evolve. We hope to soon enter into a new normality, past the pandemic. The market itself is in transition. We are well established, especially regarding our transmission and distribution products, including digital substations and transformers for various segments. We continue to introduce new technology into the market, making it smarter and more efficient and digital-ready. The goal for us now is to get the market to enter the digital technology arena. We have been talking smart and digital for a long time because it helps customers get the most out of investments and assets. Now is the time to help transform the industry by translating data into action for the energy sector. We are well-established in traditional business, so we want to grow further in digital-powered solutions. We continue to evolve in order to remain the company of choice for our clients.
Hitachi ABB Power Grids was created in 2020 after Hitachi purchased ABB’s Power Grid division. The company is a worldwide leader in the area of power grid transmission and distribution.