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The Power Business Unit provides systems for such tasks as power generation, direct-current power transmission, and energy management to companies engaged in power generation, transmission, and other operations in the energy value chain. In response to expanding demand for renewable energy, we have created a structure over the past few years to offer comprehensive services for wind power generating systems, ranging from design, production, and sales to maintenance. This has enabled us to claim the top share of the wind turbine market in Japan. While our business unit has long been engaged in providing stable supplies of energy to contribute to the sustainable development of society, I feel that the business environment in which we operate is now undergoing a major transformation due to climate change and the growing demand for energy in emerging economies. At the same time, I also feel that these changes represent major business opportunities. Our foresight in developing renewable-energy technologies is beginning to show results as the world makes a faster-than-anticipated transition to a low-carbon society.
I believe there are three major challenges to overcome in making a full-scale transition to renewable sources. The first is lowering costs. At present, reinforcing transmission systems to accommodate new energy sources invariably leads to higher electricity bills, which consumers must ultimately bear. The second is enhancing power adjustment mechanisms to ensure a stable supply even with weather-reliant sources like solar and wind. This will require improvements in technologies for storage batteries and pumped-storage hydroelectricity. And the third is strengthening the power grid. Countries in Europe are already interconnected by a grid that operates at a synchronized frequency, enabling the trans-border trading of electricity. While the grid in Japan is quite strong at the local level, there is less flexibility regarding power interchange among regional power companies compared to the European power grid. I believe that this is an issue that must be resolved before we see an explosive expansion of renewable sources. Working closely with the Social Infrastructure Systems Business Unit, we will be focusing on offering solutions for the enhanced power grid stabilization systems.
We are also aware of the risks that renewable energy can pose to the natural environment, such as when installing on- or offshore wind turbines. Our business unit thus cooperates with power producers to mitigate our potential environmental impact both during environmental assessment and installation. By applying the technologies and knowhow developed through the construction and maintenance of power plants and by working with IT-related business units to advance the digitization of power systems using Hitachi's IoT platform, Lumada, we will actively offer highly reliable and high-added-value solutions to our customers. There is a limit, though, to what we can offer through monozukuri (manufacturing). More than “good products,” customers are looking for “good value,” and this requires close collaboration with many different partners. Lumada, we believe, is a very efficient tool in advancing such partnerships. We are also offering distributed-power-source solutions in accordance with the available resources in each locality, as well as the approaches to their effective connections to the grid. In 2017, for example, we began helping build a Compact Energy Network of locally produced, locally consumed power in the city of Hioki, Kagoshima Prefecture, centered on photovoltaic power generation.
There are things, however, that Hitachi cannot do alone. In the electric power business, we need to work with the national and local governments along with electric power companies to formulate a grand design. In 2016, for instance, we launched the “Hitachi The University of Tokyo Laboratory” as part of an effort to create a “Super Smart Society” (Society 5.0) that the Japanese government and industry are advancing. Looking ahead to 2050, Hitachi is working with the university to identify technology- and policy-related issues in creating energy systems of the future and to discuss optimum responses. We organized a forum at the University of Tokyo in April 2018 with the participation of government, academic, and business representatives, where we announced a range of recommendations on such issues as the coexistence of core energy systems and the local community, creation of wide-area grid simulators, and medium- to long-term scenario analysis. We hope to continue debating these ideas in similarly open forums and to contribute to the drafting of a grand design through collaboration with government and academia.
Inasmuch as our business unit is involved in expanding the use of renewable energy and enabling a stable supply of power from such sources, we are most committed to achieving Goals 7 and 13. We believe that our products and services are uniquely positioned among Hitachi's many operations to make a substantial contribution to the achievement of the SDGs. We also expect to contribute extensively to building the new energy systems that will support Society 5.0. Those products and services include renewable energy solutions and power grid solutions. We are strengthening our partnerships with national and local governments, electric power companies, and universities to contribute to the achievement of Goal 17 as well.
I intend to adopt key performance indicators (KPIs) in our business plan so that our unit's employees will work toward the achievement of the SDGs with a sense of responsibility. Quantifying our initiatives through KPIs will be an admittedly daunting task, but it will be an effective way of demonstrating how much Hitachi is contributing to the achievement of energy-related SDGs.