Power Systems
Business Strategy
December 13, 2013

Tatsuro Ishizuka
Senior Vice President and Executive Officer
President & CEO
Power Systems Group and Power Systems Company
Hitachi, Ltd.

© Hitachi, Ltd. 2013. All rights reserved.

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

2

1-1. Business Overview
Thermal Power BusinessCoal-fired thermal power plants

Nuclear Power Business
Boiling water reactor nuclear power plants (ABWR, ESBWR)

Gas turbine

Major equipment of coal-fired
thermal power plants
Steam turbine

FY2012
Consolidated
57% revenues
904.6
billion yen

Preventive maintenance, nuclear fuel cycle, etc.

18%

14%

Transmission & Distribution Business8%

Transmission & distribution(T&D) systems

3% Renewable Energy
Wind powersystems

Power Solutions and other Businesses

BoilerRemote monitoring center

ABWR: Advanced Boiling Water Reactor

Particle beam
therapy systems

ESBWR: Economic and Simplified Boiling Water Reactor

Photovoltaic powersystems© Hitachi, Ltd. 2013. All rights reserved.

31-2. Market Trends
World Electricity Generation by Energy Source40(By energy
1.5 times source)(Tr kWh)
1.2 times

30

Base level
20
10
0

2011

Market Trends

2020

・Expansion of renewable energy,
Renewable : 2.2 times Increased demand forEnergysystems to stabilize power
Nuclear:1.6 times grid
Energy・Expansion of power
Natural Gas
transmission and distribution
Oil:1.3 times market
Coal・Many countries going ahead
with nuclear power plans(year)
2030
Source: World Energy Outlook 2013Market Trends by Region
Emerging countries (Asia, etc.)
Secure stable power supplies(demand for coal-fired
thermal and nuclear power
Systems)
Demand to strengthen
power grids

Leading countries(Europe/Americas)
Strengthening power grids
due to the increase
in renewable energy
Demand for new nuclear
power plants in Europe

Japan
Move towards separation of
power generation and power
distribution
Strengthening power grids
due to the increase inrenewable energy© Hitachi, Ltd. 2013. All rights reserved.

4

Overview of the Thermal Power Business Integration

1-3. and the Power Systems Company(1) Company Name
Mitsubishi Hitachi Power Systems, Ltd.
(2) Scope of business integration
Thermal power system businesses(gas turbines, steam turbines, boilers,
generators, etc.)

Capture Business Synergies
with Mitsubishi Hitachi Power Systems, Ltd.

Customers
Propose solution packages
that solve potential issues

AQCS (De-NOx, De-SOx, CCS, etc.)

Power Systems Company(3) Headquarters and primary bases
Headquarters (Yokohama City, Kanagawa
Prefecture)

IT integration, systems integration,
power grid interconnection,
project management

Primary bases (Hitachi, Kure, Takasago, Nagasaki,
Yokohama, etc.)(4) Others
January 1, 2014 (Tentative)
Shareholding ratio
Hitachi 35%
Mitsubishi Heavy Industries, Ltd. 65%
CCS : Carbon Dioxide Capture and Storage

Infrastructure
Systems Company

Hitachi-GE Nuclear Energy, Ltd.

Information&Telecommunication Systems
Company

Hitachi Power Solutions Co, Ltd.

Hitachi Mitsubishi
Hydro Corporation

Mitsubishi Hitachi
Power Systems, Ltd.
© Hitachi, Ltd. 2013. All rights reserved.

51-4. Global Position of the Power Systems Company
Business Portfolio Comparison
FY2012
Power
Nuclear
SolutionsPowerand Hitachi
Others 394.6

billion yen

FY2015Power
Solutionsand Others

NuclearPower

Hitachi
500.0billion yen

FY2020

Renewable
EnergyPower
Solutionsand Others
Transmission &Distribution
Hitachi Nuclear
800.0 Power

CompanyAbillion yen

Renewable
EnergyTransmission Renewable Transmission & Renewable
EnergyDistribution& Distribution Energy

Transmission &Distribution

Nuclear
Power
NuclearPower
OthersNuclearPower

CompanyF
Renewable
EnergyTransmission &Distribution

Others(motor,drive, etc)

Renewable

CompanyEnergy
ETransmission &Distribution

CompanyD
Renewable
EnergyRenewable Energy

NuclearPower

Company
C Renewable
Transmission &Distribution

Company
B

EnergyTransmission &Distribution

Hitachi’s estimates of each company’s revenues (excluding thermal powerbusiness) (size of pie chart indicates revenue size) (Base year FY2012)© Hitachi, Ltd. 2013. All rights reserved.

61-5. Strengths of the Power Systems Company
Expand business by leveraging Hitachi’s strengths■ Propose energy solutions based on facilities and equipment, plus IT integration andmanagement capabilities■ Respond to potential issues and needs of a wide range of customers by harnessing
collective strengths
Potential needs of customers (government, utilities, manufacturing industry, multi-use facilities, etc.): (energy
security, environmental issues, decentralized power sources, after-market services, initial investment)

Propose energy solutions that fuseequipment and IT
Industrial machinery (gasengines,factory automation systems)
Nuclear power, thermal power, hydroelectric,
wind power generation facilities(boilers, turbines, generators)

Financing
Control system technology(power generation,transmission and distribution)
Big Data and Cloud Technologies

Power transmission and transformation equipment(switchgear, circuit breakers, transformers,
power conditioners, batteries)

Preventive Maintenance andMaintenance Diagnosis Technologies© Hitachi, Ltd. 2013. All rights reserved.
7

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

8

2-1. FY2013 1st Half Results and Full-Year Forecasts
FY2013 1st Half Results
 Revenues: Decreased due to a decline in preventive maintenance services for nuclear
power systems, despite higher revenues from transmission & distribution systems

 Operating income: Decreased in line with lower revenues
FY2013 Full-Year Forecasts
 Revenues: Projected to decrease due to a decline in revenues from nuclear power systems,
and due to transfer of the thermal power business to the integrated company on January 1,
2014, despite higher revenues from transmission & distribution systems

 Operating income: Decreased in line with lower revenues
FY2013
1st Half

Year over yearchangeFY2013 full year

Year over yearchangeRevenues

376.3 billion yen

91％

750.0 billion yen

83％

Operatingincome(Operating
income ratio)

2.1 billion yen(1%)-5.2 billion yen

15.0 billion yen(2%)-14.9 billion yen© Hitachi, Ltd. 2013. All rights reserved.

92-2. Strengthen Business Base
Accelerate “Hitachi Smart Transformation Project”
Reduce costs by 53 billion yen through cost structure reforms (FY2011 to FY2015 total)
FY2013 1st Half cost reduction (cumulative) : approximately 35 billion yen
Production
costDirectmaterials
cost
Indirectcost

Create global manufacturing system and value chain
 Build new overseas manufacturing bases and ramp up production capacity

Expand global procurement and engineering Increase overseas procurement ratio
FY2012 11% (Excluding thermal power business)

FY2015 20%

Optimize business structure by IT and structural reforms

 Use Group shared services to improve business efficiency
 Implement business process reforms --- Execute dramatic profit andcash flow improvements ---Strengthen cash flow management
Strengthen project management and improve profitability
Bolster global supply chain management© Hitachi, Ltd. 2013. All rights reserved.

102-3. Continue Working on the“Hitachi Smart Transformation Project”

Production, procurement and engineering structural reforms
Domestic mother factory
development concept
Develop and own new products andnew technologies
Produce new and competitive
core products and systems
Manage and support overseas bases(EPC, manufacturing technologies,
information centers, etc.)
Specific examples of domestic mother factory
Build a metal cask
manufacturing system■■

Establish new
production andinspection technologies
for new products
Increase manufacturing
capacity

EPC ： Engineering, Procurement and Construction

Planned overseas manufacturing
bases
Build new overseas plants
and increase capacity[Taiwan][Indonesia]

Strengthen project management■ Develop high-speed engineering tools andstandardize local construction management
systems

Develop cutting-edge manufacturing
Technology and global expansion■ Introduce an assembly navigation system(G-KITS) at a switch and circuit breaker plantin Suzhou,China© Hitachi, Ltd. 2013. All rights reserved.

112-4. Strengthen Project Management
Develop high-speed engineering tools and standardize local construction management systems
Order
Local construction
received■Use IT tools to shorten bid preparation■Use systems to grasp details on local conditions
periods and improve precisionand carry out forestalling management

Design and engineering

Boiler – engineeringand design period
Thermal powerengineering anddesign period

Shortenedby 90%(FY2004FY2007)

Shortened by
70%(FY2007FY2009)

Estimation period for Shortened byphotovoltaic power
50%
systems(FY2012FY2013)
Turbine andgenerator drawing
creation time

Shortened by
50%(FY2012FY2013))

Hitachi Integrated Plant
Construction System (Large scale)
Nuclear power plants, etc.
Ex.) Number of equipments:
approx. 6,000
Construction period: 5 years

Hitachi Integrated Plant
Construction System(Medium scale)Particle beam therapy systems, etc.
Ex.) Number of equipments:
approx. 1,600
Construction period: 10 months

Hitachi Integrated Plant
Construction System(Small scale)
Renewable energy, etc.
Ex.) Number of equipments:
approx. 100
Construction period: 10 months

Enhance earnings by dramatically shortening the engineering period
and rigorously managing local construction© Hitachi, Ltd. 2013. All rights reserved.

122-5. Examples of Development and Global Expansionof Cutting-edge Manufacturing Technologies

Assembly navigation system (G-KITS)
・Developed by pooling the manufacturing expertise of Kokubu Engineering & Product Div.
(March 2013)
・Provide clear work instructions using 3D animation; store and share data on work logs
・Introduced at a switchgear plant in Kokubu Factory, Suzhou, China (from August 2013)
ServerAssembly worksite■Confirm
work instructions

Procedure master2D video

Tablet terminals
G-KITS

3D animation
Recorded data

Digital torque wrench
Work quality log

PC■Automated recording of work results■Warnings of insufficient torque, etc.

Global expansion of mother plant quality
G-KITS ： Global（GIS,GCB） - Kokubu（kumitate） Instruction Training System© Hitachi, Ltd. 2013. All rights reserved.

13

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

143-1. Nuclear Power Business-Basic Policy
Raise the safety of nuclear power generation as an effective source ofenergy for curbing CO2 emissions to meet continuing global demand.
Revenues

FY2012: 160 billion yen

FY2020: 360 billion yen

Japan: Promote measures to increase plant safety, andrespond to the Fukushima restoration and revitalization
Respond to new nuclear power plant regulations
Measures to enhance plant safety
Steady progress on Fukushima restoration and revitalization
Overseas: Promote and strengthen energy solutions business
Implement measures for constructing ABWRs in the UK
Promote actions to continue discussions on the Lithuania
nuclear power project
Focus on expanding sales to countries planning to construct
new nuclear power plants
Develop ABWR designs with enhanced safety, next-generation
safety technologies© Hitachi, Ltd. 2013. All rights reserved.

15

3-2. Plant Safety Enhancement Measures
Respond to New Nuclear Power Plant Regulations
Measures to preventhydrogen explosion■Blowout panel■Recombination bycatalyzer

Major accident management facility
Hydro
gen

■Emergency control room ■Power supply (generators, batteries)■Communication and monitoring control■Residence area, air conditioners

Power supply enhancement

Blowout panel■Enlarge batteries’ capacity■Decentralized power supply

I&C systems enhancement■Install water level
instrumentation in SFP

日日:日日:日日
13XX ＭＷ

C
S
T㎥

k
H
V
z

xxxxxxxx xxxxxxxx xxxxxxxxxxxxxxx
xxxxx

xxxxx

xxxxxxx

xxxxxxx

xxxxxxx

Xxx

X x x x x x x x x Xx x x x x x x x x x■Emergency response building(seismically isolated structure)■Water tightened building

Low pressure coolant
system enhancement■(Mobile) Desalination facility■(Mobile) Alternative heatexchanger

Emergency safety measure

Filtered containment
venting

RPV Depressurization
function enhancement■Venting
facility■Enlarge batteries’ capacity■Store spare nitrogen gas bottles
for operation

High pressure coolant
system enhancement
Alternative heat exchanger■High pressure coolant system (TWL pump)© Areva GmbH 2013. All rights reserved.

Propose these measures to 19 plants Hitachi constructed
TWL :Turbine Water Lubricated© Hitachi, Ltd. 2013. All rights reserved.

16

3-3. Example of Safety Enhancement Measures
For Domestic Plants

Plant Safety Enhancement Measures
Filtered containment venting (cooperation with AREVA)

Hitachi Works

Enhance performance of highpressure coolant injection system

Power supply
enhancement(cooperation with GE-Hiitachi Nuclear Energy)High pressure coolant system(TWL type pump)

Enlarged batteries capacity,
Decentralized arrangement© Areva GmbH 2013. All rights reserved.

© Hitachi, Ltd. 2013. All rights reserved.

17

Progress on the Fukushima Restoration and Revitalization
3-4. Steady(Examples of activities at the Fukushima Daiichi Nuclear Power Plant)

Examples of activities at the Fukushima Daiichi nuclear power plant
Unit 4 rubbles and spent fuels removal in the spent fuel pool

Hitachi BWR Reactor
Maintenance Technology Center

Mock up and training scene at Hitachi BWR Maintenance Technology Center

Participating National Projects

Underwater exploration robot
for the PCV torus■further strengthening contaminatedwater treatment facilities■Development technologies forremoving damaged fuels

Monitoring at Decontamination work
■Development gamma radiation distribution
measurement system© Hitachi, Ltd. 2013. All rights reserved.

18

3-5. Recent progress on major overseas projects (1)UK Nuclear Project: Horizon Nuclear Power
Status of Wylfa Newydd Project Construction of 2 ABWR units
 Hitachi, Horizon Nuclear Power and
HM Treasury signed a co-operationagreement to jointly promote the financingof the Project GDA to be completed by 2018
 Strike price for EDF has been decided
At the center: Mr. Danny Alexander, Chief
Secretary to the Treasury

Wylfa site
GDA ： Generic Design Assessment

Horizon Nuclear Power
Headquarters© Hitachi, Ltd. 2013. All rights reserved.

193-6. Recent progress on major overseas projects (2)Current status of the Visaginas project in Lithuania
Actively carried forward activities in Lithuania
 Electric power providers of Baltic states and Hitachi
have signed and submitted to the government, anagreement for jointly evaluating economic
efficiency(September, 2013)
 Parliament (Seimas) approved of holding
continuous discussions regarding the project

Kaunas University of Technology,
Human Resource Development seminar(October, 2013)

 Tokyo Tech and Hitachi provided Global Nuclear
Human Resource Development seminar(Kaunas University of Technology) (October, 2013)
 Lietuvos Energijia and Hitachi signed Memorandumof Understanding for seeking potential cooperation
to the right: Mr. Dalius Misiūnas, CEO(October, 2013)
in the field of energy technology
and Chairman of the Board of Lietuvos
Energija group

Prime ministers of Baltic states agreed on resuming the Visaginas project© Hitachi, Ltd. 2013. All rights reserved.

20

3-7. Updates on Cooperation with GE
Focusing on countries planning constructions of new nuclear power plants
SwedenUK

Finland

CanadaU.S.A.

Lithuania
■
HEU
HNP

Hitachi GE Nuclear Energy■
PolandMexicoVietnam
Saudi Arabia

India
Malaysia■: Focusing on countries planning
constructions of new nuclear
power plants■ HAL■
GE-Hitachi
Nuclear Energy

Propose ABWRs to Malaysia and othercountries
Cooperate with and strengthen support for
GE-Hitachi■ Plan construction of ESBWRs for
Dominion in the U.S.
■ Propose ABWR/ESBWR to each country■: Base

HAL ： Hitachi America Ltd.
HEU ： Hitachi Europe Ltd.
HNP ： Horizon Nuclear Power Ltd.
© Hitachi, Ltd. 2013. All rights reserved.

21

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

22

4-1. Transmission & Distribution Business - Basic Policy
Revenues

FY2012: 70 billion yen

FY2015: 110 billion yen

Develop into a core business of Power Systems Company
Expand T&D business globally based on competitive products and abundant supply experiences
Strengthen global expansion of wide-area grid stabilization systems fusing equipment and IT
Begin field testing the “CrystEna”, energy storage system

Accelerate Global Market Expansion(Trillion yen)

CAGR

Equipment

8％

20

CAGR

High-valueadded systems

6％

FY 2020
21 Trillion
Yen Switchgear
Power

21

10
15
5

6

FY2000FY200510electronics

0
FY2010

Systems, etc.Transformers

FY2015

FY2020* Hitachi estimates

Automation* Hitachi estimates

CAGR: Compound Annual Growth Rate

© Hitachi, Ltd. 2013. All rights reserved.

23

4-2. Strengthen Transmission & Distribution Business Framework
Expand competitive global solutions that fuse equipment and IT
Transmission & Distribution
Systems Division

Kokubu Engineering & Product Div.
Omika Works, Hitachi Laboratory

Integrate high value-added products and information
control technologies in Japan with competitive overseas
products
Establish and increase capacity of global manufacturing
bases
Strengthen cooperation between mother plants in Japanand global bases

Transformer factoryin Taiwan

Switchgear factoryin Indonesia■switchgear plants
China/Suzhou
China/Shangdong
U.S.A.

To start operation in January 2014

extension of production buildingin March, 2013 (Double capacity)

Establish and strengthen
Overseas manufacturing bases for competitive, highly reliable equipment
Overseas sales and engineering bases■Singapore■Indonesia (PT. Hitachi Asia Indonesia)■Kuwait office, etc.
© Hitachi, Ltd. 2013. All rights reserved.

24

4-3. Global Expansion of Wide-area Grid Stabilization Systems
Wide-area Grid Stabilization Systems
Prevent large-scale power outages through forecast andsimulation-based control
Grid stabilization with battery storage systems, etc.
System control room
Comprehensive agreement with Russia's Federal Grid Company

Comprehensive agreement with Mongolia

Comprehensive agreement signed in the electric powerindustry (April 2012)

Comprehensive agreement signed with
Mongolia Ministry of Energy (May 2013)

Remote monitoring and diagnosis of transformer substations andimprovement of safety and reliability of large power grids

Modernize and stabilize power transmission &distribution network; explore finance schemes

Comprehensive agreement signed with Russian Grids(June 2013)
Develop power transmission anddistribution network(modernization and stabilization)in the Republic of Buryatia© Hitachi, Ltd. 2013. All rights reserved.

25

4-4. Power Storage System “CrystEna”
A new initiative targeted by the Power Systems Group = One of Hitachi’s Energy Solutions

CrystEna = Crystal (crystallization of the Hitachi Group’s technologies) + Energy

Information &Telecommunication

Control System

Power Electronics

Lithium-ion Battery

Information & Telecommunication
Systems Company

Power Systems Company

Infrastructure Systems
Company

Hitachi Chemical Co., Ltd.

Procure optimal components within the Hitachi Group, and supply them as an integrated system© Hitachi, Ltd. 2013. All rights reserved.

26

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

27

5-1. Renewable Energy and Others-Basic Policy
Revenues

FY2012: 160 billion yen

FY2015: 240 billion yen

Renewable Energy BusinessContribute to realizing a low-carbon society through wind andphotovoltaic power systems
Provide integrated energy solutions spanning grid connection,
construction, maintenance, operational monitoring andfinance

Particle Beam Therapy System Business
Expand business through leading-edge technologies such as
world-leading advanced spot scanning irradiation technology*,
and outstanding operational track records in Japan and theU.S.

* Compatible with beam scanning system© Hitachi, Ltd. 2013. All rights reserved.

28

5-2. Wind Power Generation Systems
Hitachi’s initiatives and characteristics of downwind-type wind turbines
Won orders for more than 130 x 2 MW-class Hitachi downwindtype wind turbines to date2012 No. 1* share in Japan

Participated in floating offshore wind power generation demonstration and research projects carried out by
the Ministry of Economy, Trade and Industry, and the Ministry of the Environment
Development of 5 MW offshore downwind-type wind turbines (field test in 2014, commence sales in 2015)
Floating Offshore Wind Farm Demonstration
and Research Project “FUKUSHIMAFORWARD”

Characteristics of Hitachi’s downwind-type wind turbines
In floating offshore wind turbines, the rotor tilts into the wind to
capture the wind more efficiently, resulting in higher power
generation compared with upwind-type wind turbines.

Wind Project commissioned by the Ministry of
Economy, Trade and Industry
 Hitachi provided a 66KV floating offshore
substation equipments and a 2MW floating
offshore wind turbine Operation commenced on November 11,
2013

Floating Wind Turbine Demonstration andResearch Project in Goto City, Nagasaki PrefectureWind

Upwind-type

Downwind-type Enable to reduce the wind load, because rotors maintain analignment that does not bear the force of crosswinds evenduring times of high winds, reducing the wind load.

* Source: A BTM Wind Report: World Market Update 2012

 Project commissioned by the Ministry of theEnvironment
 Hitachi provided a 2 MW downwind-type windturbine.
 Operation commenced on October 28, 2013

© Hitachi, Ltd. 2013. All rights reserved.

29

5-3. Photovoltaic Power Systems
Characteristics of Photovoltaic Power Systems (Mega Solar)
Extensive track record in coordination of large-scale projects
World-class core product lineups such as power conditioners (PCS)
A solutions business providing turn-key solutions ranging from fund procurement to20 years of operation and maintenanceJapan’s largest classmega-solar systems (82 MW-class)

Propose solutions

PCS
Power Grid
Connection

Maintenance Oita Solar Power
Total area: approx. 1 km2 (the area of approx. 22 Tokyo Domes)
Panels: approx. 340,000 (approx. 500 km when laid down end to end: distance
between Tokyo and Osaka)

Storage Battery
Hitachi Chemicals

Turn-Key
Solution

Solar
Power

Finance
Hitachi Capital, Ltd., others© Hitachi, Ltd. 2013. All rights reserved.

30

5-4. Particle Beam Therapy System BusinessParticle beam therapy systems*1 around the worldand Hitachi’s track record of winning orders
All facilities
Some facilities
Mayo Clinic(Arizona)

Mayo Clinic(Minesota)

Hokkaido University
St.Jude Children
Research Hospital

Heidelberg lon Therapy Center

MD Anderson
Cancer Center
Tsukuba Unieversity
Proton Medical
Research Center

The Wakasa-bay
Energy Research Center*2
Nagoya Proton Therapy Center
National Institute ofRadiological Sciences

National Cancer Center
Hospital East

Orders received from 11 organizations around the world, centered on highprofile hospitals and research facilities in Japan and North America*1: Operations already under way or facility under construction (including systems approved for installation)*2: Concluded research radiation operation for medical purposes in November 2009

© Hitachi, Ltd. 2013. All rights reserved.

31

5-5. Initiatives in the Particle Beam Therapy System Business
Create technologies using accelerator technology andplant engineering skills amassed over many years
Cutting-edge technologies, including industry-leading spot scanning irradiation system
Expand orders received based on outstanding operational track record in Japan and the U.S.
Have treated over 7,000 patients in U.S.A. andJapan to date

Expand markets to Europe/Russia, Asia and the
Middle East
Be a key player in Japan’s drive to export medical
technologies

Delivered Japan’s first
proton beam spot
scanning irradiation
system(scheduled to begin
offering treatment in
FY2013)
Nagoya Proton Therapy Center

Signing ceremony with Russian medical and research instituteConstruction underway at 3 famous hospitals in
the U.S.

U.S. Minnesota

U.S. Tennessee

Held user meetings (Essen, Germany)

Target: over 30% market share© Hitachi, Ltd. 2013. All rights reserved.

32

5-6. Outline of Particle Beam Therapy Facility System
Composition and main facilities and equipment of Particle beam therapy facility

Approx. 70 m
Injector (Proton Linac)
Main accelerator(Proton Synchrotron)

Approx. 50 m

Fixed beamirradiation room

Inside Gantry
Irradiation room

Rotating Gantry© Hitachi, Ltd. 2013. All rights reserved.

33

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

34

6-1. Energy Solution Business
Newly establish Energy Solution Business Division
Power Systems Group
Infrastructure Systems
Group
Information &Telecommunication
Systems Group

Nuclear System Division
Hitachi-GE Nuclear Energy, Ltd.
Industrial Systems Division
Transmission & Distribution Systems Division[ 4th Division ](Energy Division)(Energy Solution Business Development Dept.)

Hitachi Works
Hitachi Power Solutions, Ltd.
( ): January 2014 onward

Vigorously promote business as the Power Systems Group’s
fourth division© Hitachi, Ltd. 2013. All rights reserved.

35

6-2. Examples of Energy Solutions Business (1)Examples of energy solutions for micro grid communities, which are facing high fuel prices

Hitachi’s Solutions

Local needs of micro grid communities Control operational costs (reduce fuel costs)
 Reduce power generation costs(power
generation facilities)
 Stabilization of power grids

 Renewable energy facilities
 Optimum system proposals (EMS, demand
coordination)
 Provide finance, leases and ESCO

Energy SolutionPowergeneration costs

Facility investment and fuel costs
Storage
Batteries

Additional System costs
Fuel costs

Wind
Power

EMS

Solar
Power

Before introduction After introduction

Finance

Expensive diesel fuelEMS: Energy Management System ESCO: Energy Service Company© Hitachi, Ltd. 2013. All rights reserved.

36

6-3. Examples of Energy Solutions Business (2)Examples of coordination among IPP and PPS operators leveraging extensive channels

Needs

Hitachi’s Solutions■Secure and coordinate transaction parties (sellers
and buyers of electricity)■Supply, maintain and operate facilities■ Finance■IPP: upgrade facilities (newly built)
Enhance availability rate, secure power
buyers, obtain financing■PPS: Secure a stable source of power

Energy Solution(Brokering the surplus power of IPP to PPS operators)

IPP

Surplus
power

HitachiPrivate Power
Generation

PPS

Facility

Finance

IPP: Independent Power Producer
PPS: Power Producer and Supplier

Stable andInexpensive
Power

Maintenance& Operation© Hitachi, Ltd. 2013. All rights reserved.

37

6-4. Service Business Basic Policy
Revenues

FY2013: 140 billion yen

FY2015: 210 billion yen

Expand conventional maintenance services business to advanced maintenance services
Examples of products eligible forconventional maintenance services■Regular-use diesel power generation
facilities (DEG)■Gas engine power generation facilities(gas engines)■Uninterruptible Power Supplies (UPS)■Wind power generation systems■Water supply and sewage plants■X-ray baggage checking equipment

Expertise inmaintenanceservices business

Service Center

36 locations

Sapporo Iwamizawa

Sales Branch, etc. 11 locations
Factory

19 locations

Kanazawa
Osaka
Fukuoka
HiroshimaTokyo

Sendai
HitachiNagoyaTakamatsu(As of October 2013)
Naha

ICT
(system integration capabilities)

Example: Hitachi Power Solutions Co, Ltd.

Achievement of advanced
maintenance services

ICT: Information and Communication Technology© Hitachi, Ltd. 2013. All rights reserved.

38

6-5. Expand Service Business
Expand preventive maintenance and advanced maintenance services
Expand preventive maintenance business further
Provide advanced maintenance service
business based on greater IT utilization
 Expand remote monitoring, Long-Term Service Agreements(LTSA) and Enterprise Asset Management (EAM) Provide integrated service solutions through to operationand maintenance

Customer Facilities

Service Business Overview
AdvancedmaintenancePrediction

Remote monitoring

Cloud-computing system
Automated
Operating data reference
diagnosis
Field engineer instructions

HiPAMPS

Remote monitoring centerIndustrial facilities(Automobiles, gas refinery,steelmaking and others)

Automated
operational datacollection• Performance change• Abnormal situation

Medicalequipment

Quick response

Securing of long delivery
time components

Plant facilities

Preventive maintenance

LTSA: Long Term Service Agreement

EAM: Enterprise Asset Management© Hitachi, Ltd. 2013. All rights reserved.

39

Contents
1. Business Overview and Market Environment
2. Business Policy and Growth Strategy
3. Nuclear Power Business4. Transmission & Distribution Business
5. Renewable Energy and Other Businesses
6. Energy Solution Services and Other Businesses
7. Conclusion© Hitachi, Ltd. 2013. All rights reserved.

40

7-1. Business Deployment of Power Systems Company
Cultivate global market in close collaboration with each company

Energy Solution

Nuclear Energy

Energy Storage

Transmission &Distribution Systems

Wind PowerEMS

Particle Beam
Therapy System, others

Solar Power

Finance

Renewable Energy

Service

Information & Telecommunication
Systems Company

Infrastrcture Systems Company

Hitachi-GE Nuclear Energy, Ltd.

Hitachi Mitsubishi Hydro
Corporation

Mitsubishi Hitachi
Power Systems, Ltd.

Hitachi Power Solutions, Ltd.
© Hitachi, Ltd. 2013. All rights reserved.

41

7-2. Orders
FY2013 forecast excludes the thermal power systems business for January-March 2014

Orders received(Billion yen)
1,000

848.3
800

691.7

685.7

650.0

600
Thermal Power Business
400
Nuclear Power Business,
T&D, Renewable Energy
and Other Businesses

200
0FY2010FY2011Main FY2012 Orders
Thermal: large projects in India, Poland,South Korea, etc.
Renewable energy: large wind power andmega solar projects

FY2012FY2013
Forecast

FY2013 Initiatives
Step up activities to win orders centered on
projects for improving the safety of existing
nuclear power plants in Japan and renewableenergy, as well as overseas thermal power and
T&D projects© Hitachi, Ltd. 2013. All rights reserved.

42

7-3. Business Performance Trends［840.0]

1,000
800

28%

832.4

813.2

［12.0]

30.0

60.0［6.1%]

50.0（450.0）［950.0]

40.0

500.0

30.0

15.0

20.0

～

3.3%

1.9%

10.0

1.9%

FY2010FY2012(5.4%)FY2011
T&D businessrevenues

Renewable energy
business and others revenues

FY2013
Forecast～(45.0)

Nuclear powerbusiness revenues

58.0［1.4%]

15.6

EBIT(Billion yen)

11.6%

750.0

400

0

（30%）
［50%]
［58.0]

904.6

600

200

～

Revenues(Billion yen)

43%

Overseas revenue ratio ［39%]
36%
34%

39%

Thermal power businessrevenuesThermal powerbusiness revenues

FY2015
TargetEBIT

0EBIT ratio*1： [ ]Figures announced on June 14, 2012 (EBIT ratio were calculated based on previous forecasts)*2：( )Figures announced on June 14, 2012 excluding the thermal power business© Hitachi, Ltd. 2013. All rights reserved.

43

7-4. Conclusion
The World Market Leader Advancing the Future Global Society with Evolutionary Energy Technologies

Accelerate promotion of global growth strategy
Capture synergies with the integrated thermal
power business

FY2015 Targets
Revenues: 500 billion yen (overseas revenue ratio: 28%)
EBIT margin: 11.6%*
Gross margin: 3 point improvement (Vs. FY2012)
SG&A expense ratio: Hold steady (Vs. FY2012)*:includes equity method earning of the joint venture in the thermal power generation system business© Hitachi, Ltd. 2013. All rights reserved.

44

Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking
statements” reflect management’s current views with respect to certain future events and financial performance and include any statement that does not directly relate to any historical or
current fact. Words such as “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar expressions which indicate future events and trends may identify“forward-looking statements.” Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materiallyfrom those projected or implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based upon current assumptions of future events which
may not prove to be accurate. Undue reliance should not be placed on “forward-looking statements,” as such statements speak only as of the date of this document.
Factors that could cause actual results to differ materially from those projected or implied in any “forward-looking statement” and from historical trends include, but are not limited to: economic conditions, including consumer spending and plant and equipment investment in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levelsof demand in the major industrial sectors Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;
 exchange rate fluctuations of the yen against other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the
U.S. dollar and the euro; uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing; uncertainty as to general market price levels for equity securities, declines in which may require Hitachi to write down equity securities that it holds;
 the potential for significant losses on Hitachi’s investments in equity method affiliates;
 increased commoditization of information technology products and digital media-related products and intensifying price competition for such products, particularly in the Digital Media &Consumer Products segment; uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technologies on a timely and cost-effective basis and to achieve market acceptance forsuch products;
 rapid technological innovation;
 the possibility of cost fluctuations during the lifetime of, or cancellation of, long-term contracts for which Hitachi uses the percentage-of-completion method to recognize revenue from sales; fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, orshortages of materials, parts and components;
 fluctuations in product demand and industry capacity; uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials or shortagesof materials, parts and components;
 uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;
 uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness;
 uncertainty as to the success of cost reduction measures;
 general socioeconomic and political conditions and the regulatory and trade environment of countries where Hitachi conducts business, particularly Japan, Asia, the United States andEurope, including, without limitation, direct or indirect restrictions by other nations on imports and differences in commercial and business customs including, without limitation, contract terms
and conditions and labor relations; uncertainty as to the succe ss of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporations in the design and development of certain key products;
 uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;
 uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may
become parties;
 the possibility of incurring expenses resulting from any defects in products or services of Hitachi;
 the possibility of disruption of Hitachi’s operations by earthquakes, tsunamis or other natural disasters;
 uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information or that of its customers;
 uncertainty as to the accuracy of key assumptions Hitachi uses to evaluate its significant employee benefit-related costs; and uncertainty as to Hitachi’s ability to attract and retain skilled personnel.
The factors listed above are not all-inclusive and are in addition to other factors contained in other materials published by Hitachi.

© Hitachi, Ltd. 2013. All rights reserved.

45