ABB and Hitachi have agreed to form a joint venture for high-voltage direct current (HVDC) system solutions in Japan. The new entity, to be based in Tokyo, will be responsible for the design, engineering, supply and after-sales services related to the DC system of HVDC projects bringing ABB's latest technologies to the Japanese market where Hitachi will be the prime contractor.
Hitachi and ABB will take equity interests of 51% and 49% respectively. This is the first step of a strategic partnership between the two companies to contribute to the evolution of Japan's power network. Hitachi and ABB will explore further strengthening of the relationship and address opportunities to widen the scope for future collaboration.
Under the terms of the agreement, Hitachi as the prime contractor will be the customer of the joint venture. Moreover, Hitachi will license the appropriate technology and equipment to the joint venture, as well as supplying contract manufacturing and human resources. ABB will license the appropriate technology and core components and relevant equipment to the joint venture and also supply human resources.
"Since the first development in the 1970s, Hitachi has participated in every HVDC project in Japan and has continued to underpin the stabilization of the electricity grid. I am confident that the establishment of a new company combining the strengths of Hitachi and ABB will provide a framework for the timely provision of the new technologies required by the Japanese HVDC market. By enhancing and expanding the HVDC business through its partnership with ABB, which has a strong performance record in the global market, Hitachi will continue to contribute to the stabilization of Japan's electric power grid." said Hiroaki Nakanishi, Chairman and CEO of Hitachi, Ltd.
HVDC is a technology used for transmitting electricity between two grid systems. The supply-side power is converted from alternating current (AC) to direct current (DC) before being transmitted, and is then converted back to AC in the receiving system for use. The system is ideal for long-distance transmission due to its ability to minimize electricity losses, and to its lower space requirements and construction costs. It is also well-suited for interconnections between two different frequencies.
The global HVDC market has seen many projects using line commutated converter technology (LCC) HVDC systems since the 1970s, while the development of voltage source converter (VSC) systems has advanced as a new technology since around 2000. In Japan, nine HVDC projects were carried out up to 2006, all of them using the LCC type. Now, with the increasing introduction of renewable energy and innovation in electric power systems, demand for VSC-HVDC systems, , which facilitate grid stabilization. The technology is ideal for long-distance underground and underwater power links and interconnections, and is increasingly being deployed across a range of applications. These include the integration of renewable energies from land-based and offshore wind farms, the mainland power supply to islands and offshore oil and gas platforms, city center in-feeds where space is a major constraint, and cross-border interconnections that often require subsea links. Its ability to comply with grid codes ensures robust network connections regardless of application.
The joint venture will combine Hitachi's sales network, project management expertise, quality assurance processes and delivery performance record with ABB's state-of-the-art HVDC technologies, and contribute to innovation in electric power systems in Japan.
It is expected to commence operations in the coming months, subject to the necessary approvals and statutory procedures. Financial terms of the agreement were not disclosed.