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Dialogue with the Chief Lumada Business Officer

Following COP26, Hitachi becomes an impactful presence in the international community 
Paving the Way to a New Era by Optimizing Energy Value Chains

Nikkei Business Online Edition: December 2021 Special Feature

Following COP26, Hitachi becomes an impactful presence in the international community

Hitachi, Ltd. (hereinafter Hitachi) has provided systems that support social infrastructure in various fields, one of which is the important field of energy. The energy field is closely tied to international measures against global warming and is fast approaching a drastic transformation. However, the road to a decarbonized society has many obstacles. There is a need for more and more technological innovations and unprecedented approaches. In the midst of all this is Lumada: a promising solution for accelerating digital innovation. Takehiko Seiji (CIO and CLBO of the Energy Business Unit) and Yoshimitsu Kaji (a recent addition to Hitachi) sat down at Hitachi Origin Park to discuss initiatives in the energy field and the impact of Lumada. A corporate museum that opened on November 5, 2021, Hitachi Origin Park introduces Hitachi’s corporate mission and founding principles, which have been passed down through generations, as well as actual cases where Hitachi worked with people from all over the world to resolve social issues.

A strategy that encompasses entire value chains, from power generation and transmission to consumption

Hitachi, Ltd. Service & Platform business unit Lumada Innovation Hub Senior Principal Co., Ltd. Cinnamon Chairman of the Board and chief sustainable Depopento officer Yoshimitsu Kaji

Hitachi, Ltd. Service & Platform business unit Lumada Innovation Hub Senior Principal Co., Ltd. Cinnamon Chairman of the Board and chief sustainable Depopento officer Yoshimitsu Kaji

―In this day and age, environmental problems have become a global issue. Can you talk about some of the challenges related to the use of energy?

Seiji: The 26th UN Climate Change Conference of the Parties (COP26), which was held in November 2021, established the spread of clean energy—particularly, renewable energy—as an urgent task for achieving a decarbonized society. At that conference, Hitachi became the first Japanese company to be named a principal partner. Since then, we have been working to reduce the environmental impact of all Hitachi Group companies, with the goal of achieving carbon-neutral business sites (including both factories and offices) by 2030.

Takehiko Seiji, CIO and Energy business unit, Hitachi, Ltd. Energy Management Div.

Takehiko Seiji, CIO and Energy business unit, Hitachi, Ltd. Energy Management Div.

Regarding energy, when we think about the links that make up a value chain—namely, the energy suppliers that generate and transmit power and the energy consumers—there are challenges involved at each step. With respect to supply, there is pressure to increase renewable energy, but the generation of solar and wind power depends on the weather. Thus, the stabilization of power generation is something that must be addressed. There is also a need for stable and efficient power transmission. However, Japan faces an additional challenge, because eastern Japan uses 50-Hz networks while western Japan uses 60-Hz networks. As for the challenges related to demand, energy management can be an effective way to improve efficiency.

In response to each of these challenges, we at Hitachi hope to use Lumada and data to control energy supply, making it more stable and efficient.

Kaji: Hitachi is in a rather unique position, being involved in all steps of the energy value chain from power generation and transmission to consumption. And because of that, Lumada really shines as a common platform. It’s a strategy that only Hitachi can implement.

Seiji: Right. Hitachi has both products and IT that we can deftly combine and use. And we have been restructuring our businesses to further increase our value. For example, in the field of energy, Hitachi acquired ABB’s power grid business in July 2020. This business then became Hitachi Energy in October 2021. When we combine Lumada with ABB’s power distribution technology and the IT that controls it, we can provide services of even greater value. While bringing the expertise of one of the world’s leading power grid businesses into Japan, we at the same time hope to share Japan’s products and services with the rest of the world. Through this integration, we can change how people think, which is also quite meaningful. Having conducted business on a global scale until now, ABB’s businesses have long been standardized and can be deployed efficiently. In contrast, Hitachi’s businesses have, for a long time, focused on carrying out each customer’s individual requests. As a result, we are not as good at standardizing and there’s a lot we can learn.

Figure: Conceptual overview of an energy system
Figure: Conceptual overview of an energy system
Digital technologies manage stable energy systems to achieve decarbonization,
hydrogen fuel distribution, and entire supply chains that run on clean energy.

―Can you give us a conceptual overview of Hitachi’s energy businesses?

Seiji: Generally speaking, there are three such businesses: The first is Hitachi Energy’s power grid business, which I just mentioned. The second is our nuclear energy business, and the third is the domestic energy business. With regard to the last of these, we are focusing on renewable energy and have actually installed 835 wind turbines*, the most turbines installed by any group in Japan.

Total installed by Hitachi, Ltd., and Hitachi Power Solutions as of the end of March 2021

Kaji: Even looking at companies around the world, it’s pretty rare to find a company that has both nuclear energy and renewable energy technologies, right?

Seiji: Yes, I’d say it’s pretty hard to find another company like Hitachi.

Kaji: And this matches a policy put forth by the Japanese government to increase renewable energy while also stabilizing and optimizing nuclear energy to handle the baseload.

Seiji: Exactly. It’s important to find the right combination of different types of energy. The more renewable energy you use, the less reliable the supply becomes, so adjustments need to be made. The development of Lumada has made it possible to make these adjustments with greater precision. Plus, in the past, the number of power plants was limited, but with the increase in renewable energy, we can now find power generation sites all over the place. However, as the number of such sites increases, at some point, it will no longer be possible for people to keep track of them all. That’s why visualization through digital technologies will be necessary.

In the future, we will be able to make predictions. For example, if we know that it will be cloudy across a wide area, we can start up some power plants that were previously stopped. In such situations, it would be ideal to use power plants closest to the target region, but we also have to factor in various things like output capacity and power lines. With AI, we will be able to find the best method, accounting for all of those factors.

Kaji: As power generation sites become more spread out, how can we control them?

Seiji: Control will be consolidated to a degree and handled remotely. As such, it is likely that, in the future, control operations will also move to the cloud. But ultimately, we are performing operations on actual things, so the edge devices that actually operate those things will have to remain. Going forward, it will be more and more important for companies to provide evidence of their use of green energy. And speaking of the traceability of electric power, data will also be important here.

The spirit of Lumada: Questioning assumptions and increasing dialogue

―Can you tell us about some actual solutions or cases?

Seiji: Right now, we’re focusing our efforts on improving operational efficiency. For example, in the case of wind turbines, we need to perform maintenance when needed and to improve their performance. To that end, we employ remote monitoring to ascertain the condition of each turbine, but we’re now considering the use of Asset Performance Management (APM), which would create even more value. We will first examine APM with respect to wind turbines and then, in the future, apply it to various other equipment and facilities.

Speaking of APM, we’ve started providing it as an easy-to-introduce, cloud-based service called Lumada APM. We also provide Lumada EAM (Enterprise Asset Management) for operating and managing assets.

By providing these as Lumada solutions, we can link them with existing services and apply AI to various types of data. As a result, analyses that were previously difficult—such as the analysis of weather data combined with data on renewable energy—will become easy. If things go well, we might even discover new insight.

As for power transmission, we are currently working on vegetation management mainly in the US. When trees come into contact with power lines, it can cause the lines to short circuit, which in turn can even lead to forest fires. To prevent such accidents, we can analyze satellite images and then formulate forest management plans. The use of data makes efficient vegetation and forest management possible.

Another one of our strengths is in HVDC (high-voltage direct current) systems, which can transmit power efficiently even over long distances. We currently hold the record for having installed the most HVDC systems in the world, at 109 systems*. In Japan, renewable energy is often generated far from the macroconsumers of electric power and thus power must be sent over long distances. With offshore wind power generation, power is collected from each area and then sent ashore, a process for which HVDC is also effective. Similarly, HVDC is also useful when it comes to power interchange. To transmit power between regions using 50-Hz networks and regions using 60-Hz networks, you must first convert alternating currents into direct currents. As such, we can expect to use HVDC for many purposes.

Energy and Facility Management as a Service (EFaaS) manages and operates both the generation and the consumption of power across an entire area. In addition to energy conservation, it also facilitates the efficient use of energy within a microgrid. At Hitachi, we’re trying to connect and manage factories across the Hitachi region of Ibaraki Prefecture. We will share the experience and knowledge we gain through this effort, with our customers.

Total for Hitachi, Ltd., and Hitachi Energy as of the end of March 2021

Kaji: Based on what you just shared, I sense immense potential in what Lumada can contribute to the field of energy. At the same time, I think there is a need for each organization to change its own culture. Albert Einstein once said that problems cannot be solved by using the same kind of thinking that was used when those problems were created. To bring about new perspectives, it is important for people from diverse backgrounds, including customers, to communicate with each other while questioning their assumptions. Lumada exists for that purpose, and the Lumada Innovation Hub serves as a place for dialogue.

Seiji: Actually, having people like Mr. Kaji join Hitachi is really stimulating. Hitachi employees work hard but tend to keep to themselves. We need more stimulation and interaction with the outside world.

Kaji: I also think we need a broader interpretation of Hitachi’s corporate mission, which is to contribute to society through the development of superior, original technology and products. In the past, simply having superior technology was enough to put us ahead of the competition. Now, however, even if we possess key technology, it is crucial that we link that technology to the outside world at large, as in the case of Lumada.

Seiji: Hitachi has businesses in many fields. If we can manage those well and apply more and more solutions from one field to another, it will be even better. I think, as a platform, Lumada can contribute to realizing that vision.

Kaji: Recently, conglomerate discount (which refers to the drop in stock market value when many businesses come together) has become a global problem, leading big companies to divest, one after another. In contrast, Hitachi is taking on an ambitious and experimental challenge, expanding into different fields while maintaining its overall strength. This strategy matches the new concept of stakeholder capitalism. You could say that we’ve come full circle, as one of the few giant conglomerates that has survived. And developing the Lumada platform is also rather unique from a global standpoint. In a way, I think Hitachi’s existence will become an important litmus test for the rest of the world.

Seiji: After shifting our focus to social infrastructure, we have been consolidating our businesses. However, social infrastructure encompasses various things. Recently, Hitachi announced that it would be concentrating its efforts in three areas: the environment, resilience, and safety and security. In line with that policy, how do we connect and assemble different types of social infrastructure? We will look for that answer.

Aiming to overcome difficult challenges by coming up with new combinations

―Mr. Seiji and Mr. Kaji, can you tell us about your future endeavors?

Seiji: I want to help achieve both a stable energy supply and a decarbonized society. These are difficult challenges, but they need to be addressed when we think about the global environment.

Also, hydrogen fuel is emerging as a new type of energy and the use of renewable energy in generating hydrogen fuel will one day become mainstream. I hope to optimize value chains that include these elements, from the creation of green infrastructure to power distribution and consumption. Looking even further down the road, I want to be able to aptly manage both electric power and hydrogen power and to create an energy platform.

Kaji: If possible, I’d like to create opportunities where people who wouldn’t normally cross paths can gather. In particular, GlobalLogic, which we acquired this year, is known for its speed and its design thinking. I have great hopes for the new possibilities we can achieve by combining our strengths with theirs.

Related Links

What is Hitachi Origin Park?

Hitachi Origin Park

This dialogue took place at Hitachi Origin Park, a corporate museum that opened on November 5, 2021.

Including the Odaira Memorial Museum, the Sogyo Goya, the Omika Club, and the Omika Golf Club, Hitachi Origin Park serves as the setting for new dialogue with the local community and with business partners from around the world.

This article is a repost of content from the Nikkei Business Online Edition: Special Feature.
Measures to prevent the spread of COVID-19 were taken prior to the interview and filming.
The affiliations and positions of persons in this article are current as of the date of the interview.
Company names, product names, etc., appearing in this article are the trademarks or registered trademarks of their respective companies.