Power Systems Company
Business Strategy

June 9, 2010

Koji Tanaka
Vice President and Executive Officer
President & CEO,Power Systems Company
Hitachi, Ltd.

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

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

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

IGCC

Preventive maintenance,
nuclear fuel cycle, etc.

<Major equipment of nuclear power plants>
Reactor pressure
vessel

<Major equipment ofcoal-fired thermal power plants>

Main Control Room Panel

24%

Steam turbines andgenerators

FY2009consolidated
57% revenues¥882.1 billion

19%

Boilers and AQCS

Reactor equipment

Gas turbines

Hydroelectric power
Wind power
Solar power
generation systems generation systems generation systems

Proton beam
therapy system

Power transmission and distribution systems,
drive systems, smart grids, PET services, etc.

Other Businesses
IGCC：Integrated Gasification Combined Cycle
AQCS：Air Quality Control System

ABWR：Advanced Boiling Water Reactor
ESBWR：Economic and Simplified Boiling Water Reactor

PET：Positron Emission Tomography© Hitachi, Ltd. 2010. All rights reserved.

2

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

2-1. Worldwide Trends toward a Low-Carbon Society
Increasing role of power sector to reduce CO2 emissions
Accelerate realization of a low-carbon society (nuclear power, CCS andrenewable energy are projected to increase)

Global CO2 Emissions
(Gt)

40.0

Breakdown of reduction

40.2 Gt emissions
in 2030

Power generation
related sector
6.6 Gt（-48%）

38.0
36.0
34.0
32.0
30.0

28.8 Gt

Other
7.2 Gt（-52%）

28.0
2007

26.4 Gt
2010

2015

2020

Source: World Energy Outlook 2009

2025

2030
CCS：Carbon Dioxide Capture and Storage
Gt：Gigaton© Hitachi, Ltd. 2010. All rights reserved.

4

2-2. Japanese Market Trends
Power Plant Investment (10 Utilities)(Tr yen)

Nuclear power■ Continuous construction plans,
mainly of BWR, as core power source

2.1 2.4 2.4

2 1.5

Power
capacity1

Distribution,
etc.

0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
Plan

Plan

Source: Management plan presentation materials of utility companies

Power Capacity Development Plans
No. ofPlantsPlanned (MW)No. ofPlantsNuclear

2,760

216,55012

BWR*(2,760)(2)(11,890)(9)

Thermal

9130

23

14,210

44

60

7

40

13

11,95032

30,80069

Renewable energy,
etc.

Total

■ Demand for Highly efficient new plants■ Increasing efficiency of existing plants

Renewable energy, etc.

Capital expenditure of around ¥2.4 trillion

Under
Construction(MW)

Thermal power

Plans and construction are proceeding steadily
Source: Agency for Natural Resources and Energy, Summary of Electricity
Supply Plan, FY2010■ Accelerate testing andcommercialization of mega-solar
systems, and smart grids

Government institution initiatives
Industrial Structure Vision 2010,
Basic Energy Plan
■Public-private partnership approach forinfrastructure projects in emerging
nations(Nuclear, “clean coal” thermal power, etc.)■Promoting construction of
next-generation energy systems(Smart grids, etc.)＊BWR: Boiling Water Reactor© Hitachi, Ltd. 2010. All rights reserved.

5

Trends
2-3. Global
Emerging Markets Expansion and Combating Climate Change
World Electricity Generation by Type30
20

(Tr kWh)184%
Renewable energy

134%

Natural gas
Oil

100%

10
0

Coal
Nuclear

2005

2015

World electricity generation is
expected to grow by 1.8 times(from 2005 to 2030)
Coal-fired generation is to continue
to play a significant role in power
sectorNuclear power plants introduction plan

2030

Source: Prepared from International Energy Outlook 2009

Facility Demand by Region(GW/Year)
200

193GW/year
Asia

144GW/year
100

Emerging
markets

Others(Middle East,
Africa, etc.)
Europe and U.S.

0

1999-2006
Actual2007-2020
Forecast

Source: Prepared by Hitachi from various statistical data,
including World Energy Outlook 2008

Capacity demand in emerging markets
to grow by 1.6 times (Asia, etc.)
Accelerate realization of a low-carbon
society■Increased expectations on “clean coal”
technologies■Nuclear power use■ Increase in renewable energy use(Wind solar)

Strengthening and expanding powertransmission network(Large capacity, stabilization,high quality)© Hitachi, Ltd. 2010. All rights reserved.

6

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

3-1. Focus on Growth Regions and Fields
Expand revenues focusing on
emerging markets (Asia, etc.)
Revenue target¥1.2 trillion

Revenues(Billion yen)

1,000

Focusing on growth fields with highcontribution to the environment

ThermalClean coal
Higher efficiency

882.1
Overseas

NuclearIncreased output andcapacity factor

Japan

Renewableenergy0Overseasrevenue ratio(%)

Grid stabilization

FY2009FY201540%50%■ Higher efficiency(A-USC, IGCC development)■ CCS■ Low NOx combustion,
advanced AQCS

■ Higher output, larger capacity■ Advanced maintenancetechnologies■ Accelerate development of
next-generation reactors■ Wind, solar, adjustable-speed
pumped storage hydro-power system■ Grid stabilization technologies,
storage batteries■ Fusion of power systems and ICT*2009 Minister of Environment Award

A-USC：Advanced Ultra Super Critical IGCC：Integrated Gasification Combined Cycle AQCS：Air Quality Control System
CCS: Carbon Dioxide Capture and Storage© Hitachi, Ltd. 2010. All rights reserved.

8

3-2. Promoting Globalization (1)Global Deployment of Power Systems Company
Expand global business operations centeredon three core regional bases－

250－ Collaborate with China’s National Development
and Reform Commission

HEU

35%
26%

Promoting localization and partnering
Cooperate to realize low-carbon society

Hitachi Power Europe GmbH

40%

500

CAGR: 25% (2006-2009)

EuropeOverseas revenue ratio (%)
Overseas revenues (Billion yen)

0 2005

2006

2007

2008

2009

Asia

Americas

Power Systems Company
Babcock-Hitachi K.K.

Hitachi Power Systems America, Ltd.

Hitachi-GE Nuclear Energy, Ltd.

HAL

Japan AE Power Systems Corporation

HCH

Core Group companies
Sales
Service
Manufacturing andengineering

HAS
HAUL

GE-Hitachi Nuclear Energy LLC[Group total: 45 companies (23 companies (Japan), 22 companies (Overseas)]
HEU：Hitachi Europe Ltd.
HAL：Hitachi America, Ltd.
HCH：Hitachi (China) Ltd.
HAUL：Hitachi Australia Pty Ltd.
CAGR: Compound Average Growth Rate

HAS：Hitachi Asia Ltd.

© Hitachi, Ltd. 2010. All rights reserved.

9

3-3. Promoting Globalization (2)Global No.1 sharein DeNOxcatalyst (24%)

Hitachi Products Around the World

Global No.1 sharein boilers(20%)*1
EuropeChina
North America
Japan

75GW

26GW

Middle East
India

Asia

100GW

20GW
2GW 21GW
AfricaNo.1 Japan sharein ABWR (67%)*2

18GW

Cumulative global
unit orders
for gas turbines
575 units

Central andSouth America
17GW

31GW
Australia
Ｈ－２５/８０

7GW
Expanding salesof ABWR/ESBWR

Hydro

Thermal: Delivered Capacity (GW) *3

NuclearCoal-fired thermal
power plants*1 05-09: Excluding China and India*2 Including plants under construction. Reactors and turbines counted as 0.5 of a plant each
*3 Size of pie chart shows capacity image© Hitachi, Ltd. 2010. All rights reserved.

10

3-4. Strengthen Business CompetitivenessProduction and Procurement
Global production optimization■Share production among subsidiaries, utilize partners

Strengthen procurement ability throughcooperation among subsidiaries■Worldwide lowest cost procurement,
manage exchange rate fluctuations

Promote cost reductions (Standardization, joint VEC)

Project Management
Bolster overseas project
management capabilities■Strengthen overseas project management(HR and organizational structure)■ Expand local partners■ Rigorous risk management(Utilize experience in EPC worldwide)

Strengthen MONOZUKURI (Manufacturing
capabilities) and HR development

Services

R&D

Promote globalization of services

Strengthen global R&D Network■ Expand and enhance local service bases■ Establish cooperative structure between
three core regional bases (Japan, Europe andU.S. ) and universities in the regions

Nuclear power advanced
maintenance (Cooperate with GE)
Strengthen gas turbine service
business■ Increase output of high-temperaturecomponents (Nearly double present capacity)

Propose and participate in national
projects to promote development of
future technologies
Hitachi’s corporate R&D focus on
Social Innovation Business

VEC: Value Engineering for Customers Integrated activities designed to improve products and services in line with customers’ expectations.
EPC: Engineering, Procurement, Construction© Hitachi, Ltd. 2010. All rights reserved.

113-5. Fusion of Power Systems and ICT
Total proposals for creating highly eco-friendly new social infrastructure
Electricity consumption

Electricity storage

Electricity transmission

Power system infrastructure

ITPower generation

Conventional large-scale power sources
Power systems andenergy technologies
Power facilities
Power protection and control system
Various engineering technologies(Power Systems Company)

Distributed power sources

Renewable energy
ICT

Fusion融合

Information systems technology
Communications network
construction technologies(Information &Telecommunication Systems
Company)

Information & Control Systems Company
Provide new solutions through “fusion”
Provide integrated solutions from electricity generation and transmission/
distribution to energy use
Established Smart City Business Management Division in April 2010
for creating solutions© Hitachi, Ltd. 2010. All rights reserved.

12Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

4-1. Basic Policy

Revenues

eco-friendly coal-fired
FY2015: ¥650.0 billion ■ Expand
thermal power business

FY2009: ¥500.0 billion■ Expand Hitachi-developed
gas turbine business

Strengthen highly efficient coal-fired thermal power business■ Step up global development■ Expand EPC businessAccelerate development of “clean coal” technology■ Develop A-USC, IGCC technology■ Field test carbon capture technology
Expand medium-capacity gas turbine business■ Accelerate business development centeredon Hitachi-developed gas turbine
EPC: Engineering, Procurement, Construction A-USC: Advanced Ultra Super Critical
IGCC: Integrated Gasification Combined Cycle© Hitachi, Ltd. 2010. All rights reserved.

14

Highly Efficient Coal-fired Thermal Power Business
4-2. Strengthen(Step Up Global Development)
Global business development based on the three core regional bases
Hitachi Power Europe GmgH (HPE)

Hitachi, Ltd.

Dalian Hitachi Machinery& Equipment Co., Ltd.

Donges Steel Tec GmbH
Meeraner Dampfkesselbau GmbH

Hitachi Power Systems
America, Ltd.

Babcock-Hitachi K.K.

Babcock-Hitachi
Dongfang Boiler Co., Ltd.

Hitachi CanadianIndustries Ltd.
Mechanical Dynamics & Analysis, Ltd.

Babcock-Hitachi (Philippines) Inc.
Hitachi Industrial Machinery Philippines Corp.

Revenues
Hitachi Power Africa Pty. Ltd.

Clyde Babcock-Hitachi (Australia) Pty. Ltd.

Japan, Asia, etc.

Americas

Europe & Africa
HPE Group
Over 40%

HPE Group
Over 40%<HPE Group History>
2003
2005
2007
2008

Established Babcock-Hitachi EuropeGmbH(now Hitachi Power Europe GmbH)
Established Hitachi Power
Africa Pty. Ltd.
Acquired Meeraner
Dampfkesselbau GmbH
Acquired Donges Steel Tec GmbHCore Group companies

Manufacturing andengineeringsubsidiaries
Service subsidiaries¥500.0billion¥650.0billion

FY2009FY2015© Hitachi, Ltd. 2010. All rights reserved.

15

Highly Efficient Coal-fired Thermal Power Business
4-3. Strengthen(Expand EPC Business[1])Expand business by drawing on Hitachi’s superior technologies and EPC capabilities
Steam turbines and power generators (TG)

Boilers (B)■ Highly efficient and reliable■ Highly efficient combustion: Low Nox/CO2
emissions, high economical efficiency■ Compatible with various coal types :Global No.1 Share
Applicable low grade coal

Achieved world’s highest level efficiency with the new No.
2 unit of Isogo Thermal Power Plant for Electric Power
Development Co., Ltd. (Commercial Operation since July2009)
<Steam condition: 25MPa 600℃/620℃>

OthersI
H

FY2005-2009
115,710MW

Hitachi
20%Company

G

A
F

Turbines and generators

E

Low-pressure turbines

D

C

B

Source: McCoy Reports 2009
(Excludes China and India)

AQCS■ Integrated system (DeNOx reactor, precipitator,
desulfurizer )■ High-performance DeNOx catalyst: In-housedevelopment and production system Global No.1 Share
DeNOx Catalyst share Hitachi
Others24%
Share of 2009 orders
D
CompanyC

DeNOx system
DeNOx Catalyst
AQCS：Air Quality Control System

A
B
Source: Hitachi estimate© Hitachi, Ltd. 2010. All rights reserved.

16

Highly Efficient Coal-fired Thermal Power Business
4-4. Strengthen(Expand EPC Business[2])Recent Construction Achievements and Progress (Major Plants)
Europe, South Africa

Asia★◎ Walsum-10 (Under construction) BTG◎ Electrabel-1,2 (Under construction) BTG

Americas
Keephills-3(Under construction) BTG
Duke Energy(Under construction) B◎YongHung-3,4(Operation in 2008)★◎Walter Scott, Jr-4
(Operation in 2007)
BTG◎ Boxberg-1◎ BoA II-1,2◎Electric Power Development Co., Ltd.
(Under construction) B (Under construction) B/New No.2 unit, Isogo Thermal Power Plant(Operation in 2009) TG

Elm Road-1,2(Under construction) BTG

Kusile-1~6
Medupi-1~6(Under construction) B (Under construction) B

Ultra Super Critical (USC) Construction Track Record(Incl. Under Construction)■Japan: 8, Overseas: 23 (Total: 31 Units)
B: Boiler TG: Steam turbines and generators ★：EPC project ◎：USC project

Expand business centeredon the HPE Group

USC: Ultra Super Critical (Steam temperature at least 593℃, steam pressure at least 24.1MPa)© Hitachi, Ltd. 2010. All rights reserved.

17

Development of Clean Coal Technologies
4-5. Accelerate(Develop A-USC/ IGCC Technology)

Accelerate development of A-USC, IGCC and CCS technologies
A-USC

IGCC + CCS
Technology development in EAGLE project (Since 2002)

Power generation
efficiency LHV (%)

700℃ A-USC development target : more than 50%

50~2006: Confirmed plant performance in approx. 6,000 hours oftest operations~2009: CCS test (World’s first with coal gas for power generation)

Cutting-edge commercial equipment(Steam temperature 600℃/620℃)

40(Current average world wide: about 35%)

30

1960

1980

2000

Item

TargetResultCO2 capture
ratio
CO2 purity

90%

>90%

99%

>99%

2020

Europe (Hitachi Power Europe participation)~2013 : Develop materials, testwith commercial equipment

Japan (Hitachi, Ltd,
Babcock-Hitachi participation)

Late 2010s:
Apply to commercial
equipment

2008～ : Develop materials
and core technologies by
national projects

EAGLE pilot plant

CCS equipment

Osaki CoolGen Project (NEDO Feasibility Study: 2010 to 2011)■Operator: Osaki CoolGen Corporation■Details: Scale-up testing of oxygen-blown IGCC and CCS
separation and capture technologies
Gasifier
Gas refinery

Alloy for turbine rotor

500MW-class boiler schematic

Site

EAGLE: Coal Energy Application for Gas, Liquid and Electricity(Multi-purpose coal gasification technology development project run by NEDO and Electric Power Development Co., Ltd.)NEDO: New Energy and Industrial Technology Development Organization

Combined
cycle

1,100t/day
Wet chemical
absorption type
170MW

© Hitachi, Ltd. 2010. All rights reserved.

18

Development of Clean Coal Technologies
4-6. Accelerate(Carbon Capture Technology[1])CCS commercialization through cooperation among three core regional bases→ Revenue target of ¥100.0 billion/year from 2020
2005

2010

Pilot test
Chemical absorption

2015

Demonstration test

2020

2025

Commercialization■ U.S./Wolverine Power
SupplyCooperative, Inc.
- Contract for basic design of carbon capture
equipment (2009 to 2010)■ Canada/Saskatchewan
Power Corporation
Pilot test
(To 1995)
Joint research by
power companies

Pilot test
(From 2010)
Germany,
Netherlands, etc.

・Comprehensive collaborative agreement
on low-carbon energy technologies(2010 to 2012)
・150MW-class CCS demonstration project
Steam turbine and generator order(2010)

Conceptual Design of CO2
Scrubbing (1,000MW class)

Oxy-combustion
4MW-th burner
combustion test
(From 2008)
Babcock-Hitachi
Kure ResearchLaboratory
System evaluation
test (From 2009)
Babcock-Hitachi
Akitsu ResearchLaboratory

CCS：Carbon Dioxide Capture and Storage■ Finland/Fortum Corporation
Oxy-combustion joint research(2008 to 2010)■ Germany/Vattenfall AB
Oxy-combustion burner test
(2009 to 2010)
Conceptual Design of
Oxy-combustion (500MW class)© Hitachi, Ltd. 2010. All rights reserved.

19

Development of Clean Coal Technologies
4-7. Accelerate(Carbon Capture Technology[2])Hitachi-Saskatchewan Province (Canada)“May 2010—Joint Declaration for Collaboration on Energy and Environmental Technology Development”

Areas of Collaboration■ CCS technology■ AQCS■ Boilers, Steam Turbines, Generators■ Renewable Energy Technologies■ Smart Grid Technologies
Saskatchewan
province

Hitachi-SaskPower (Saskatchewan Power Corporation)“February 2010—Comprehensive Collaborative Agreement on Low-Carbon Energy Technologies”■ Participate in CCS demonstration project(Carbon capture technology for coal-fired
thermal power plants)
AQCS: Air Quality Control System© Hitachi, Ltd. 2010. All rights reserved.

20

4-8. Expand the Medium-Capacity Gas Turbine Business
Expand business of Hitachi-developed equipment
H-25

H-80 (Newly developed 80MW class GT)■ Top-class performance in heavy-duty gas turbines■World’s largest capacity as■ Highly reliable and compatible with various types of fuels
a two-axle heavy-duty type gas turbine■ Target order: At least 20 units/year
H-25 specifications
Output31,000kW (Natural gas)34.8％（LHV）

Efficiency

Europe/Russia

14

30,000kW(Heavy fuel oil A)
33.6％（LHV）

East Asia/Southeast Asia

37
9Africa38

H-25 order track record: 136 units

HITACHI17%

7
South Asia

West Asia/Middle East

Other
9%

B 26%

LHV：Lower Heating Value■ Replaced gas turbines of Unit 1 at Shin-Oita thermal
power plant*1 at Kyushu Electric Power Co., Inc.
with H-80 (Operation in January 2010)
115MW

24

Central and South America

Increasing production
capacity

89,000kW(Natural gas)
Efficiency 38％（LHV）
Output*1:Plant output

North America

7

H-80 specifications

Company A
48%

Market Share (20-40MW-class GT)[McCoy Reports 2009: Heavy-duty type]

Plant efficiency
Before GT
replacement

47.7％(LHV)

After GTreplacement

51.4％（LHV）
Explore replacement demand for highly efficient
combined-cycle gas turbines in Japan© Hitachi, Ltd. 2010. All rights reserved.

21

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

5-1. Basic Policy
FY2020: ¥380.0 billion ■ Implement ABWR projects in Japan
Revenues
FY2009: ¥210.0 billion■ Strengthen global businessdevelopment

Deploy new nuclear power plants in the global market
Maintain No.1 share of ABWR plants in Japan
Accelerate global deployment under “One Team” framework with GE

Provide one stop service through the total nuclear fuel cycle
Hitachi expand nuclear fuel cycle business together with GE

Develop nuclear technologies and increase production capacity
Promote development of ABWRs (Increase output),
ESBWRs and next-generation BWRs
Develop advanced maintenance technologies andincrease facility capacity (Production and development)
ABWR: Advanced Boiling Water Reactor
ESBWR: Economic and Simplified Boiling Water Reactor© Hitachi, Ltd. 2010. All rights reserved.

23

5-2. Maintain No.1 share of ABWR plants in Japan
No.1 share of new plant construction in Japan

(MWe)
8,000

1990

ABWR market share 67%*1
Participate in construction of
all ABWR plants[In operation/underconstruction]
Power generation
capacity (Cumulative)

2000■ Module Works construction■ Applied large-block modular construction
and used composite modules■ Use of RFIDs■ Expanded scope of application (Approx. 180
modules)Ohma*1

Stable progress of construction

ShimaneUnit No.3
3,000

0

1995

Shika Unit No.2
Hamaoka Unit No.5*1
Kashiwazaki Kariwa Unit No.7*1
Kashiwazaki Kariwa Unit No.6*1
2010
2000
2005

Nuclear power
plant constructionplans*2

Module Works■Large-sized Modular
construction■Parallel construction

Hitachi's share
(67%)

5,000

Application of advanced construction technology

2015(Year)

PWRs 3

BWRs 9(Future construction plans)*1 Reactor island and turbine island counted as 0.5 of a plant each
*2 Source: Agency for Natural Resources and Energy, Ministry of Economy,
Trade and Industry, Summary of Electricity Supply Plan, FY2009

Shimane Nuclear Power
Station Unit No.3 (underconstruction)
The Chugoku ElectricPower Co., Inc.
■ Completion ofenergization■ Started pre-operational
test
Ohma Nuclear Power
StationElectric Power
Development Co., Ltd.
■ Construction fully inprogress© Hitachi, Ltd. 2010. All rights reserved.

24

5-3. Global Business Deployment Under “One Team” Framework
Joint Sales Office (JSO)

Explore global markets
Promote order intake
activities(Turbines, Generators, etc.)

Order intake withalliance of Hitachi-GE(JSO)

Strengthen sales activities and project
promotion functions●●

Hitachi-GE Nuclear Energy, Ltd.
■●

Equipment supply

Target order intakeof plant(Countries
New construction
developing own
market size
nuclear reactors:(To 2030)
China, Russia
Approx. 150 plants
and South Korea)(Japan, U.S.,
Europe, India,
Southeast Asia,
etc.)

●
●

HPSA
■
■

GE-Hitachi Nuclear Energy LLC● JSO: Joint Sales Office(GE-Hitachi Nuclear Energy International LLC)

Public-private partnership approach to win orders■ Cooperate with new company International
Nuclear Development Co., Ltd. (Tentative name)Strengthen product competitivenessTarget OrderAt least 38 new plants by 2030
(Target market share of 1/3)

■ Strengthen ABWR competitivenessAccelerate development (Increase output, etc.)■ Develop ESBWR engineering
Win customers by obtaining U.S. design
certification© Hitachi, Ltd. 2010. All rights reserved.

25

5-4. Provide one stop service through the total nuclear fuel cycle
Develop with Hitachi-GE Alliance and Partners
Cooperate with GNF, GLE and Cameco Corp.
Enter interim storage market (facilities and casks)
Develop reprocessing technologies
GLE is conducting tests toward commercialization of
the world’s first laser enrichment system
Conversion

Uranium raw
materials

Enrichment

Cameco Corp.

GLE

Secureuraniumraw materials

Consistently
supply uranium fuel

Fuel
fabrication

Cameco Corp.’s share of uranium mining: 15% (2008 result)
Source: World Nuclear Association website
GLE: GE-Hitachi Global Laser Enrichment
GNF: Global Nuclear Fuel
FLUOREX: Fluoride volatility and solvent extraction

GNF

Nuclear power
generation

Hitachi/GE

Interim storage

Reprocessing

Hitachi: Entire plants■ Facility

integration
Construction■
Cask
Maintenancemanufacturing■ Participate inreprocessing for
Rokkasho facilities■ Promotedevelopmentof FLUOREX
method© Hitachi, Ltd. 2010. All rights reserved.

26

5-5. Continuous Development of Nuclear PowerContinue development of nuclear power to respond market needs

Output(MW)
2,000

Strengthen ABWR product competitivenessGlobal-standard ABWR

Nextgeneration
BWR

ESBWR

■Apply for renewal of U.S. design certification(November)■Develop “global-standard ABWR”
Increase output (1,500MW class)
Dramatically shorten construction period

ABWR

Promote ESBWR engineering

BWR-5

1,000

ABWR
-900

BWR-4
Applicablesite
candidates
increase

BWR-3

ABWR
-600
Small
reactors

BWR-2
1960

1970

■Scheduled to obtain U.S. design certification(Sept. 2011)
Earliest among nuclear reactors
under application

Develop next-generation reactors
1980

1990

Dome
withstanding
aircraft crash
SC structure
containment
vessel
SC：Steel Plate Reinforced Concrete

2000

2010

2020

2030
DecadeNext-generation BWR■ Seismic isolation building■ Optimal mix of passive
and active safety systems■Next-generation BWRs (1,800MW class)Develop as national project■Develop series of ABWRs(ABWR-600, ABWR-900)■Develop small reactors
Small BWRs (300MW class)
Small, fast reactors(Na cooling system, 300MW class)© Hitachi, Ltd. 2010. All rights reserved.

27

5-6. Develop Advanced Technologies and Increase Capacity
Develop advanced maintenance technologies
Improve capacity factor and shorten periodical inspection time
■ Develop online maintenance technologies (Increase maintenance efficiency)■ Develop more sophisticated inspection technologies (Prevent problems)

Fusion of electric energy technologies and ICT■ RFID application technologies: Improve construction andmaintenance efficiency
Develop (world-first) cable fitted with RFID*1■ Condition monitoring (Integrate experience andknowledge as well as communications and other IT)

IC chip(0.4mm x 0.4mm)

Tag antenna

54mm*1 Jointly developed with Hitachi Cable

Reinforce systematic manufacturing and development capabilities
Expanded design wing (2006), extended production building(2006, 2008)
Introduced large turn-mill machine (2006)
Hitachi Utility Steam Test Leading facility (2009)
Seismic behavior of FMCRD testing facility (2009)[ Planned ]Strengthen machine processing facilities,
Additional extension of production building
FMCRD: Fine Motion Control Rod Drive

Seismic behavior of FMCRD testing facility (2009)© Hitachi, Ltd. 2010. All rights reserved.

28

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

6-1. Renewable Energy Business Basic Policy
FY2015: ¥200.0 billion
Revenues
FY2009: ¥60.0 billion■ Promote as a systems integrator■ Expand business throughestablishment of Smart City Business
Management Division

Strengthen business base as a systems integrator
Increase in orders of 2MW-class downwind turbines
Order intake of Japan’s largest 13MW mega solar plant forelectric providers
Strengthen smart grids; fusion between technologies anddeployment for smart city market
Differentiate through systems proposal capabilities based on advanced technologies
Control technologies of output fluctuation due to natural energy(Control systems, storage batteries, etc.)
Highly efficient, high-performance PCS (Power conditioners)
Micro grid technologies control → Apply to smart grids© Hitachi, Ltd. 2010. All rights reserved.

30

6-2. Business Promotion (Wind Power)
Increase in orders of 2MW-class downwind type wind turbines
Efficiently utilizes wind blowing upwards along land formWind
directionWind
directionWind
direction

1st commercial unit
(Completed Feb. 2008)

Downwind

UpwindWind Power Ibaraki Ltd.
(Operation in 2010)

Proven mitigation technology for output fluctuation due to wind power with storage batteries
Mitigate wind power output fluctuations by charging anddischarging storage batteriesWind turbines
Smoothed output

Output fluctuation

Charging anddischarging control
according to fluctuation
Converter

Grids

Transformer
Storage batteries

Stable electricity

Stable interconnection with grids using storage batteries

Storage battery room

Storagebatteries

Kuroshio Wind Power Ltd.
(Operation in 2010)© Hitachi, Ltd. 2010. All rights reserved.

31

6-3. Business Promotion (Mega-Solar Systems)
Build grid-friendly systems as a systems integrator
Lump sum order intake of Japan’s largest mega-solar systems
for electric providers

PCS with harmonic
suppression function

440kW
Suppresses “harmonic noise”
emitted in PCS and maintains
high-quality power
Relative Harmonic Content (%)

13MW-class Mega-Solar System for TEPCO,
Ohgishima (Feb. 2011): New control

5: Conventional

4

Limit Value

3
2
1
0

3

5

11
9
7
Harmonic Order

13© Hitachi, Ltd. 2010. All rights reserved.

32

2009 Minister ofEnvironmentAward

Promotion
6-4. Business(Adjustable-Speed Pumped Hydro)

Contribute to stable interconnection between main power grids and renewables

Adjustable speed pumpedhydro■ Rapid adjustability of frequency■ Reduction of power loss during water
pumping operation
Improvement of frequency adjustment
Pump turbine

Generator motor

Comparison of frequency adjustability

Frequency (Hz)

60.1

KEPCO
Okawachi (400MW)

Adjustable speed

Delivery record in Japan

0.14Hz60.0

Conventional

0.17Hz
59.9

0

2

4
Time (Mins.)

6

8

Customer

UnitsYear ofoperation

The Kansai Electric Power Co., Inc.
Okouchi power station

2

93,95

Kyushu Electric Power Co., Inc.
Omarugawa Power Station

2

07,10

The Kansai Electric Power Co., Inc.
Okutataragi power station*

2

13,14

*Conversion of existing pumped hydro© Hitachi, Ltd. 2010. All rights reserved.

33

6-5. Business Promotion (Smart Grid)
Contribute to optimization of energy infrastructures
based on the fusion of power and information technologies

Realization of low-carbon society
based on fusion of power andinformation technologies■Best mix of large scale power
generations and renewable energy.
■Stabilization and optimal design ofpower grids(Power stabilization equipment,
adjustable speed pumped hydro,
secondary battery)■Development of advanced
stabilization technologies

Accumulation of technologies andstandardization throughdemonstration projects
Japan Wind Development Co., Ltd.(Rokkasho),
NEDO (New Mexico state) etc.

Best mix for lowcarbon society

Nextgeneration
次世代電力網の最終形
smart grid

Mega solar
Wind power

Stabilizationof power
grids

Secondarybattery

Smart grid,
Supply and demand
optimization

Residential PV
Nuclear/thermal/hydro powers

CEMS
Interconnected
electric vehicle
Electric vehicle BEMS/HEMS

Present

CEMS: Community Energy Management System BEMS: Building and Energy Management System HEMS: Home Energy Management System© Hitachi, Ltd. 2010. All rights reserved.

34

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

7-1. Business Performance Trends
50%
Revenues(Billion yen)

47%
45%

1,200.0

1,200
Overseas revenue ratio

40%

1,000
882.1
800

Operatingincomeratio (%)
8

880.0

900.0
6
6.0%

32%
5.0%

600

4

566.7
3.3%

400

2

2.5%
200

0

Loss
FY20060
FY2009FY2010 est.

FY2012 target

FY2015 target

Thermal power business revenues

Nuclear power business revenues

Other business revenues

Operating income ratio© Hitachi, Ltd. 2010. All rights reserved.

36

7-2. Results and Outlook
FY2008 to FY2010 Results and Forecasts
FY2008FY2009(Actual) (Billion yen)

(Actual) (Billion yen)

Revenues

862.3

882.1

102%

880.0

100%

Operatingincome

3.4

22.0

633%

29.0

131%

YoY

FY2010(Forecast) (Billion yen)

YoY

Maintain at existing level despite recent market slowdown
Revenues

Strong thermal power revenues in Europe and South Africa
Strong nuclear power revenues fromdomestic new plant construction and preventive maintenanceOperatingincomeHigher earnings due to improved profitability in overseas businesses© Hitachi, Ltd. 2010. All rights reserved.

37

Power Systems Company
Business Strategy

Contents
1. Business Overview
2. Market Environment
3. Business Policy and Strategy
4. Thermal Power Business
5. Nuclear Power Business
6. Renewable Energy Business
7. Business Performance Trends
8. Conclusion

8. Conclusion
Leading company in creating global society’s future with cutting-edge energy technologies

Contribute to creation of
low-carbon society
FY2015 targets
Revenues: ¥1.2 trillion
Overseas revenue ratio: 50%
Operating income ratio: 6%

Promoteglobalization

Improve
profitability© Hitachi, Ltd. 2010. All rights reserved.

39

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
materially from 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 investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;- exchange rate fluctuations for the yen and 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 in Japan, 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 Components & Devices and the Digital Media &Consumer Products segments;- uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and cost-effective basis and to achieve market acceptance for such 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 and synthetic resins;- 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;- 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 and other cost reduction
measures;- general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orIndirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;- uncertainty as to the success 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 in Japan by earthquakes 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 and that of its customers;- uncertainty as to the accuracy of key assumptions Hitachi uses to valuate 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 Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in othermaterials published by Hitachi.

© Hitachi, Ltd. 2010. All rights reserved.

40