Hitachi Energy's Growth: Paving the Way for a More Sustainable Energy Sector

After my initial engagement with Hitachi Energy, it’s no surprise that I am encountering the same megatrends I've been focused on intensely over the past five years. These megatrends, by their very nature, underscore the enduring and increasing importance of the challenges associated with the energy transition.

We live in a world where electricity demand is set to increase dramatically. Electricity will be the backbone of the entire energy system, and for a successful clean energy transition, it is absolutely essential that most countries reduce CO2 emissions as quickly as possible. According to the International Energy Agency, global electricity demand in 2023 was around 27,500 TWh. It is anticipated to reach between 31,000 and 36,000 TWh by 2030, and increase by 89% to 158% by 2050, reaching between 52,000 and 71,000 TWh, depending on the energy transition scenario.

The share of electricity in global final energy consumption, which reached 20% in 2023, must near 30% by 2030 if we are to meet our climate targets. This significant increase is unsurprising, given the rapid electrification of the transportation, industrial, and building sectors, as well as the rising consumption in data centers driven by new industries like artificial intelligence (AI). Data centers’ consumption is expected to double by 2026, reaching 1,000 TWh worldwide, roughly equivalent to Japan's electricity consumption.

Increasing the supply of electricity while decarbonizing the energy sector is a dual objective that entails enormous complexity and must be addressed from multiple angles. The two focus areas I find most crucial and urgent are efficiency improvements and renewable energy expansion.

Efficiency across the entire value chain must improve, from production to distribution and consumption of electricity. We need to achieve more with less, reducing losses. On this front, the introduction of digital technology, AI, and Machine Learning, are imperative building blocks, which explains Hitachi Energy's focus on digitalization and services, also part of Hitachi Energy’s 2030 strategic growth plan.

A sharp increase in renewable energy sources (RES) is essential to meet our climate targets. Europe has set a target to triple its current renewable capacity by 2030. However, the inherent volatility of renewables clashes with the limitations of current power grids, leading to curtailment that hampers faster RES expansion. Studies show that in Europe, over 30 TWh of renewable electricity was curtailed in 2023, costing consumers close to 9 billion euros to compensate RES producers for the power they were not allowed to generate. It is imperative to modernise and enhance power grids to handle more power. Considering the planned power grid upgrades by TSOs across Europe, we expect a capacity increase of 720 GW by 2030 and 1,304 GW by 2040, representing a total investment of over 1.5 trillion euros.

But growing Hitachi Energy’s business sustainably is not merely a business objective; it is also a contribution our company makes to society. Only through growth can we contribute to decarbonizing our world. What a great purpose, which is also underpinned by Hitachi purpose for the energy sector - Advancing a sustainable energy future for all.

Hitachi Energy has everything it takes to help our customers and society achieve these challenging objectives. Together, we will ensure sustainable growth for our company and the wider energy sector. Thank you to all Hitachi Energy employees for your engagement and aspirational attitude.