Hitachi grids will hit 2025 target after green revolution

The power grid business Hitachi bought is involved in projects like connecting the world’s largest offshore wind farm in the North Sea to Britain. (Shutterstock)
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Updated 26 September 2020

Hitachi grids will hit 2025 target after green revolution

  • Demand for wind and solar power growing because of pandemic, says CEO

ZURICH: The power grids business Hitachi bought from ABB for $11 billion is likely to hit the upper end of its 2025 targets despite the effects of a coronavirus downturn over the next two years, CEO Claudio Facchin has said.

Hitachi ABB Power Grids, whose products connect power stations to homes and factories, expects a recovery as countries launch stimulus packages and the electricity industry switches to greener technologies.
The company which competes with Siemens, General Electric and Hyundai, is due to give an update on its financial targets in October.
“We see the pandemic as having a temporary effect and we’re optimistic about the future,” Facchin told Reuters.
“COVID-19 has a negative impact on us in 2020 and 2021, but by 2023 and 2024 we should not see any more effect. We expect an actual positive swing when the recovery and stimulus packages kick in,” he said.
Although global electricity demand is set to fall 6 percent this year, demand for wind and solar is rising 5 percent, the International Energy Agency estimates.
“The pandemic has accelerated the conversion from fossil fuels to renewable sources of energy like wind and solar,” said Facchin, 55, who also led the business when ABB was its owner.

FASTFACT

The global power grid market is worth $100 billion.

“We are helping customers master the additional complexity of variable renewable energy sources and combining information technology and operational technology to improve efficiency.”
Projects at Zurich-based Hitachi ABB Power Grids, whose annual orders of $10 billion are equivalent to 10 percent of Hitachi’s revenue, include connecting the world’s largest offshore wind farm in the North Sea to Britain’s power grid.
In China it is delivering some of the world’s longest powerlines, including a 1,700 km link to transmit hydro-generated electricity from Sichuan province to Jiangxi province.
Facchin said he was confident the business could beat the 2 to 3 percent growth annual growth rate for the $100 billion global power grid market.
The company, which employs 36,000, will tap Hitachi’s expertise in IT and digital technology to enable predictive maintenance of power grids, for example.
It will use Hitachi’s financing arm will to help clients fund projects, and increase its service business, Facchin said.
The Italian executive was confident he could raise profitability, which investors saw as a problem when ABB owned it.
It is targeting operational EBITA margins of 8 to 12 percent, up from 6.5 percent expected in the year to March 2021.
“We are going to be at the upper end of this corridor by 2025,” Facchin said.


Fishing rights top Brexit talks agenda

Updated 27 min 29 sec ago

Fishing rights top Brexit talks agenda

  • A no-deal scenario is widely expected to cause economic chaos

LONDON: Last-ditch Brexit trade talks continued in London on Sunday with fishing rights remaining an “outstanding major bone of contention,” according to British Foreign Minister Dominic Raab.

EU chief negotiator Michel Barnier told reporters that “work continues, even on a Sunday,” as he arrived for the second day of talks.

Barnier had arrived in London on Friday following a spell in self-isolation after a member of his team contracted coronavirus and ahead of the resumption of talks with British counterpart David Frost on Saturday.

Both men warned that a deal could not be reached without major concessions from the other party.

There are only five weeks to go until the end of the current transition period, during which trade relations have remained largely unchanged.

The two key sticking points remain post-Brexit access to British fishing waters for European vessels and the EU’s demand for trade penalties if either side diverges from common standards or state aid regulations rules.

Raab told Sky’s Sophy Ridge on Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal.

“There’s a deal to be done,” he said.

“On fishing there’s a point of principle: As we leave the EU we’re going to be an independent coastal state and we’ve got to be able to control our waters,” he added.

Barnier told envoys last week that London was asking that European access to UK waters be cut by 80 percent, while the EU was willing to accept 15 to 18 percent, according to a Brussels source.

A British official called the demands “risible,” according to the domestic Press Association, adding that the “EU side knows full well that we would never accept this.”

“There seems to be a failure from the Commission to internalize the scale of change needed as we become an independent nation,” said the source.

However, Raab was cautiously optimistic over the “level playing field” issue, saying “it feels like there is progress toward greater respect” for Britain’s position.

A failure to reach an agreement would see Britain and the EU trading on World Trade Organization terms, with tariffs immediately imposed on goods traveling to and from the continent.

As it stands, Britain will leave Europe’s trade and customs area on Dec. 31, with no prospect of an extension.

A no-deal scenario is widely expected to cause economic chaos, with customs checks required at borders.

Concern is particularly acute on the border between EU member Ireland and the British province of Northern Ireland, where the sudden imposition of a hard border threatens the delicate peace secured by 1999’s Good Friday Agreement.

The talks have already dragged on much longer than expected and time is running out for ratification of any deal by the European Parliament by the end of the year.