The Hitachi Group’s Growth Strategy

Story of Value Creation in the Energy Sector
The world’s energy demand continues to expand against a backdrop of population growth and economic development, as well
as social innovation such as the recent expansion in the scale of data centers and the spread of electric vehicles. On the other
hand, serious power shortages in developing countries remain a problem and one billion or more people are forced to live without
electricity. Furthermore, movements to reduce CO2 emissions and decarbonize are picking up speed throughout the world in themidst of response to global climate change. Hitachi will respond to these issues with energy solutions that leverage the strengths of“OT × IT × Products” in business fields such as renewable energy and power grids.

Results and Targets
Revenues (¥ billion)/
Overseas revenue ratio (%)

Principal Products and Services
Adjusted operating income (¥ billion)/
Adjusted operating income ratio (%)

More than
1,700
1,700.011%

456.6

More than
1,520

304.2
171.6

More than 180

FY2018 (Results)

FY2021 (Target)

FY2018 Revenues

More than10%80%¥456.6billion*1Energy BU

More than
170.0
7.9％

Nuclear
Energy BU

62%Power grid (14%)

38%

Substation, breakers, transformer

Nuclear power plant (ABWR)
Remotely operated vehicle*2

35.9Services (24%)

Fuel transport and storage

Control system maintenanceservices

casks

FY2018 (Results)

EBIT (¥ billion)/EBIT ratio (%)

ROIC

FY2021 (Target)

Renewable Energy Solutions (16%)
Mega solar*3

More than
170.0

Others (8%)

7.5%
5.8%

More than
10％
FY2018 (Results)(254.8)(55.8%)FY2018 (Results)

FY2021 (Target)

FY2021 (Target)

Energy BU
Nuclear Energy BU*1 Includes the control systems business, which is posted in IT Sector*2 Developed as operations of International Research Institute for Nuclear Decommissioning. This development
was conducted using business expense subsidies provided by the Agency for Natural Resources and Energy
in connection with decommissioning efforts and water pollution countermeasures.
*3 FY2018 figures except one-time expenses.

Vision and Targets under the 2021 Mid-term Management PlanProviding energy solutions that contribute to a stable energy
supply and efficient facility management
The energy business forms the core of the Social Innovation Businessand contributes to the achievement of the SDGs. In the Energy Sector,
we will provide energy solutions that make use of the strengths of “OT× IT × Products,” such as nuclear power generation systems,
renewable power generation systems, power grid systems forreceiving and transforming, transmitting and distributing electricity,

The Chugoku Electric Power Company, Inc.’s Shimane Nuclear Power Station
Unit 3, under construction

predictive diagnostics for equipment and remote monitoring services.
Providing these solutions will enable us to contribute to a stable energy
supply for customers, efficient facility management and the cutting of
CO2 emissions, as we work toward a low carbon or decarbonizedsociety.

Ultra-high voltage gas insulated switchgear (UHV GIS)

56

Hitachi Integrated Report 2019

Growth Strategies under the 2021 Mid-term Management Plan

In the renewable energy business, Hitachi will strengthen its

Previously, in the Energy Sector, we have been converting ourcombining its services and Enercon’s wind turbines to develop windbusiness portfolio in response to changes in the market environment

power solution business, which will stabilize operation and reducesurrounding energy while promoting the launch of high-value-added

maintenance costs.

partnership with Germany-based wind turbine manufacturer Enercon,

service businesses and the enhancement of the solution business. In
the future, the power transmission and distribution market is expected

Power grid businessto expand significantly both in Japan and globally against a backdrop

In the power grid business, we will promote the expansion ofof the spread of renewable energy and the expansion of distributed

businesses in industrial fields, including the expanding data centers

power supply. In response to these projections, we plan to acquireand electrification of factories and the provision of solutions related to

ABB’s power grid business during the first half of 2020. Digitalelectric vehicles. In the HVDC (High Voltage Direct Current)

technology is indispensable for the achievement of advanced energy

transmission business, we will conduct active development related tomanagement, and power grids are an area in which Hitachi can fully

the offshore wind power market and interregional and international

utilize its digital technology. Hitachi’s energy business had been

DC power transmission. In addition, we will work on the development

primarily concentrated in Japan. However, we will accelerate global

and deployment of new solutions that fuse DC transmission andbusiness expansion by utilizing the expertise and resources of thedigital technologies.

power grid business of ABB which has the largest share of the global
power grid market. At the same time, we will also focus on
strengthening and expanding our solution and service businesses

Further Demonstration of Our Competitive
Advantageusing Lumada. In addition, Hitachi will continue to engage in initiatives

Taking advantage of its “OT × IT × Products” strengths, Hitachi will

aimed at providing a stable energy source through its nuclear energy

provide solutions, including power generation and power gridbusiness while using its advanced technological capabilities andsystems, to all customers involved in energy production, distribution

abundant knowledge to contribute to the decommissioning of theand consumption. Furthermore, following the acquisition of ABB’s

Fukushima Daiichi Nuclear Power Plant. Furthermore, we will use thesepower grid business, which has the largest share in the global

same attributes to promote construction that is compliant with newmarket, we will accelerate new innovation by combining its products

regulatory standards and aims to support the early resumption ofand software with Lumada.

operations at domestic nuclear power plants.

Enhancement and Expansion of the Solution andService Businesses Using Lumada

Collaborative Creation of Value within the Energy Sector

In the energy solution business, we received orders for a management

Promotion of open innovation

platform for high-temperature parts for gas turbines used in privatelyHitachi is promoting industry-academia collaboration in pursuit of new

owned industrial power generation equipment in 2019. This platform

value creation in the Energy Sector. Targeting the realization of Society

uses Lumada to improve the efficiency of inspection and maintenance5.0, we are working to create a new vision and produce newwork while raising the maintenance capabilities of operators. Following

innovation at the "Hitachi the University of Tokyo Laboratory", which wethe acquisition of ABB’s power grid business, we will aim to develop

established with the University of Tokyo in 2015. In the Energy Sector,

solutions on a global scale by utilizing its customer base, engineering,

we are building a platform with the goal of simulating long-term energy

technologies and systems.

supply and demand. These simulations will allow different renewableenergy implementation methods to be evaluated and verified, enabling

Service businessauthorities to determine which method is most effective in terms of

In 2017, we concluded contracts in the service business withachieving the goals of the Paris Agreement.

customers. Through these agreements, we will provide solutions thatHitachi will contribute to social, environmental and economic values bycombine power generation systems with integrated energy andexpanding its provision of energy solutions that utilize Lumada,equipment management services to provide total solutions for energy

including grid and renewable energy solutions, energy management

conservation issues. Moving forward, we will combine Lumada withsolutions and energy conservation and decarbonization solutions.

our on-site capabilities and digital technologies to develop a variety ofFurthermore, we will aim to contribute to the management of 25% ofservice solutions that improve the efficiency of inspection planning

the world’s substations and the supply of stable energy to about 1.8

upgrade and accelerate maintenance and provide predictive

billion people.

diagnostics aimed at preventing failure, as well as remote monitoring.

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