Slide 1: Power Systems Business Presentation
Power Systems Business Presentation June 18, 2009 Koji Tanaka Vice President and Executive Officer President & Chief Executive Officer, Power Systems Group Hitachi, Ltd. 1 1 Copyright © 2009, Hitachi, Ltd., All rights reserved.
Slide 2: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion 2 2 Copyright © 2009, Hitachi, Ltd., All rights reserved.
Slide 3: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion 3 3 Copyright © 2009, Hitachi, Ltd., All rights reserved.
Slide 4: Worldwide Trends for Reducing CO2
1-1 Worldwide Trends for Reducing CO2 ■ Increasing expectations for power generation to play a central role in decreasing global warming. ■ Heightened investment in infrastructure for creating a low-carbon society. Country/Region Government (Bn t) Global ＣＯ２ Emissions Policy Trends 70 Baseline scena
Slide 5: Domestic Market Trends
1-2 Domestic Market Trends ■Power Plant Investment (Tr yen) 2.5 158% 160% Nuclear 146% 2 124% ・Ongoing construction, mainly of 100% 102% 1.5 BWR, as core power source 1 0.5 Thermal 0 FY 2005 2006 2007 2008 2009 2010 ・Highly efficient new plants *FY08 estimated actual, FY09 and FY10 planned ・Increasi
Slide 6: Overseas Market Trends
1-3 Overseas Market Trends ■Electricity Generating Increasing electricity demand over Capacity by Type medium and long terms (1.8 times) 1.8 times by 2030 （Compared to 2005） 184% Ongoing construction of coal-fired 6.7 thermal power plants ((Tr kWh)) 134% 3.8 Renewable 100% 4.9 Increasing demand for
Slide 7: Power System Demand by Region
1-4 Power System Demand by Region ■ Power System demand is increasing globally. Eastern Europe, Russia, CIS Europe 3→14 North America 22→30 GW/Year GW/Year 40→35 A i and Asia dOOceania i GW/Year Middle East, Africa 15→19 57→83 South America GW/Y GW/Year GW/Year 7→12 GW/Year Left of arrow：’99 to ’06
Slide 8: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewal Energy Business ６．Conclusion 8 8 Copyright © 2009, Hitachi, Ltd., All rights reserved.
Slide 9: Key Policies
2-1 Key Policies Assisting creating highly reliable, highly efficient social infrastructure as a core for the Social Innovation Business. Contribute to the Creation of a Low-Carbon Society Promote development of innovative energy technologies P Promote t renewable bl energy businesses b i Promote Gl
Slide 10: Contributing to a Low-Carbon Society (CO2 Reduction Targets)
Contributing to the Creation of a Low-Carbon Society 2-2 (CO2 Reduction Targets) C t ib t tto Hit Contribute Hitachi hi G Group’s ’ Environmental E i t l Vi Vision: i ■ Achieve 70% reduction of CO2 in power systems business Transportation/consumer 10% Hitachi Group Environmental Vision 2025 Reduce 1
Slide 11: Product and Technology Development
Contributing to the Creation of a Low-Carbon Society 2-3 (Product and Technology Development) Products and Technologies Environmental Initiatives Nuclear power 【Nuclear Power Plants】 plant Higher output, larger capacity Nuclear power use Longer life with advanced maintenance technologies Faster deve
Slide 12: Promoting Globalization
2-4 Promoting Globalization Sharp growth in overseas revenues through globalization. Grow overseas revenues approx. 2.6 times (FY2006⇒FY2011) ( ) (Bn yen) 1,000 1,000 845.7 865.8 260% 500.0 566.7 185% 210% Overseas 100% Japan 0 FY2006 FY2008 FY2009 (Target) FY2011 (Target)) 2004 and prior 2005 2006
Slide 13: Promoting Globalization (Main Group Companies)
2-5 Promoting Globalization (Main Group Companies) Continuingg to localize operations p around the world centered on core Groupp companies p [Group Total: 17 companies (Japan), 23 companies (Overseas) Europe Asia Americas Hitachi Power Europe Hitachi, Ltd. Hitachi Power Systems y America,, Ltd. Babc
Slide 14: Increasing Profitability
2-6 Increasing Profitability Strengthen Project management Improve project management capabilities ■ Increase project management, engineering tools, and number of project managers Pre-order review and risk-prevention initiatives Strengthen reviews through establishment of “Supervisory Office for Ove
Slide 15: Power Systems Group Targets
2-7 Power Systems Group Targets FY２０１１ Targets Revenue: 1 trillion yen Operating margin: ５％ １,０００ Operating p g (Bn yen) ８６５.８ Operating Income margin Income margin １，０００ ８４５.７ Restore ５％ Profitability ３％ ２０ ８００ ５６６ ７ ５６６.７ Hydroelectric Systems, ２４ ２１ and Power & Industrial Operating ２０ ６００ Systems
Slide 16: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion Copyright © 2009, Hitachi, Ltd., All rights reserved. 16 16
Slide 17: Nuclear Basic Policy
3-1 Basic Policy Revenue R FY15： FY15：300 bn b yen ・Steadily construct ABWRs in Japan FY08:200 bn yen ・Develop business overseas St dil promote Steadily t business b i in i Japan J Continue participating in construction of ABWR plants in Japan Promote continuous maintenance business using advanced t
Slide 18: Promoting Business in Japan
3-2 Promoting Business in Japan Nuclear Power Plant Construction Plans in Japan Predominantly ABWR plants Steady progress with plans and construction 4 PWRs 11 ABWRs Nuclear Power Plant Construction Plans * Shimane Nuclear Power Station Unit No. 3 (under construction) The Chugoku Electric Power Co.,
Slide 19: Promoting Business in Japan (ABWR Construction)
3-3 Promoting Business in Japan (ABWR Construction) Leading Player in ABWR Plant Construction in Japan No. 1 market share in ABWRs（67%*） Participating in construction of all ABWR plants Start of TEPCO/Kashiwazaki Kariwa Unit No.6 Operations First ABWRs 1996 TEPCO/Kashiwazaki Kariwa Unit No. 7 1997 C
Slide 20: Strengthening Overseas Business
3-4 Strengthening Overseas Business W ld id N Worldwide Nuclear l R Renaissance i Ensure stable energy supply Increasing overseas demand for nuclear power plants Global warming prevention 72 GW by 2020 (Equivalent to 72 plants) 124 （ E ' 104 Expected Increa Nuclear Power Generation Volume Increase 7
Slide 21: Strategic Alliance With GE
3-5 Strengthening Overseas Business (Strategic Alliance With GE) Alliance Goals Obtaining License (License and certification) Optimal combination Provide state-of-the-art BWR Marketing Production system (Products and plants to the global market construction technologies) Optimal Framework GEH ：Licen
Slide 22: Expanding Sales of ABWRs ①
3-6 Strengthening Overseas Business (Expanding Sales of ABWRs ①) Th Latest The L Proven P Nuclear N l Power P Plants Pl One of the world’s largest generation capacities (1,350 MW) Proven operating results in Japan g certification alreadyy obtained (GHE) U.S. design ( ) Uses modular technique, latest
Slide 23: Expanding Sales of ABWRs ②
3-7 Strengthening Overseas Business (Expanding Sales of ABWRs ②） T Target t New N Markets M k t andd Countries C t i Adopting Ad ti Nuclear N l Power P India：Alliance with engineering g g and construction major j (GEH) ( ) China：Highlight ABWRs merits for energy diversification Southeast Asia, etc.：
Slide 24: Development of Advanced Technologies
3-8 Development of Advanced Technologies Hitachi’s Hit hi’ advanced d d ttechnologies h l i ffor iincreasing i reliability li bilit and competitiveness Key equipment supplied Advanced from within Group construction technologies Increased reliability Greater competitiveness Advanced maintenance Stron
Slide 25: Key Equipment Design and Manufacturing
Development of Advanced Technologies 3-9 (Key Equipment Design and Manufacturing) Equipment Design and Manufacturing Information and Control Systems Div. Supply key equipment from Hitachi Group Continuous supply of reactor equipment Babcock-Hitachi K.K. Central Operation and Control Board Reactor pr
Slide 26: Construction Technologies
Development of Advanced Technologies 3-10 (Construction Technologies) I Increasing i Sophistication S hi i i and d Efficiency Effi i featuring f i the h Latest L Technologies T h l i Automated and high-quality construction Modular construction management using RFID Upper Dr Drywell ell Generator Sta
Slide 27: Advanced Maintenance Technologies
Development of Advanced Technologies 3-11 (Advanced Maintenance Technologies) Development of Advanced Maintenance Technologies Technology synergies with GEH ・Noble Metal Chemical Advanced Maintenance Market Addition (NMCA) Extend life life：Life Life 40 years ⇒ 60 years ・Stress improvement (ReNew) In
Slide 28: Stronger Manufacturing Capabilities
Development of Advanced Technologies 3-12 (Stronger Manufacturing Capabilities) S t Systematic ti St Strengthening th i off Manufacturing M f t i Capabilities C biliti Expanded design wing (2006), extended reactor building production (2006, 2008) Introduced large turn turn-mill mill machine (2006) H
Slide 29: Development of Future Reactors
Development of Advanced Technologies 3-13 (Development of Future Reactors) A l Accelerate Development D l U Using i Core C Technologies T h l i Reactor Type Recirculation Safety FY (Output) Method System '80 80 '90 90 '00 00 '10 10 '20 20 '30 30 '40 40 Development Construction Active Forced （1,350 M
Slide 30: Hitachi's Next-Generation BWRs
Development of Advanced Technologies 3-14 (Hitachi’s Next-Generation BWRs) Promote development as national project Standardize specifications for basic performance and common requests from all countries, aiming to develop global-standard reactors Meet replacement demand in Japan from 2030 Separation
Slide 31: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion Copyright © 2009, Hitachi, Ltd., All rights reserved. 31 31
Slide 32: Thermal Power Basic Policy
4-1 Basic Policy FY11 FY11： ：600 bn b yen Revenue R ・Strengthen competitiveness of core coal-fired thermal power plants ・Expand products with No. 1 market shares and growing products ・Decrease ＣＯ２ emissions and atmospheric pollutants FY08 FY08： ：450 bn yen Strengthen coal-fired power plant business
Slide 33: Market Trends
4-2 Market Trends Coal：Abundant reserves, little geographical dependence core power source for the world Natural gas：Relatively few ＣＯ２ emissions major power source after coal Global Generating Capacity Proven Resource Reserves Gl b l Electricity Global El t i it G Generating ti Capacity C it 133 ye
Slide 34: Strengthening Coal-Fired Thermal Power Plant Business
4-3 Strengthening Coal-Fired Thermal Power Plant Business (Maximize Global Performance) Hitachi Power Europe GmbH Hitachi Power Systems America [HPE](Established Apr. 2006) Hitachi, Ltd. (Hitachi Works) [HPSA] (Established Feb. 2005) Hitachi Power Africa Mechanical Dynamics & Analysis Ltd. [HPA] (Es
Slide 35: Strengthen BTG Integration Capabilities ①
Strengthening Coal-Fired Thermal Power Plant Business 4-4 (Strengthen BTG Integration Capabilities ①) Boiler Market Share (5 MW and Above)：2004 to 2008 Orders Global G oba Boiler Bo e Share S ae Share S a e in Region eg o Market Hitachi share No. 1 share Share: ３５％ Others Hitachi Europe （Rank：１st） 2
Slide 36: No. 1 Global Share in DeNOx
Strengthening Coal-Fired Thermal Power Plant Business 4-5 (Strengthen BTG Integration Capabilities ②) No. 1 Global Share in DeNOx for Denitrification ■Help prevent atmospheric pollution globally ・Decomposition of NOx →Prevent acid rain, photochemical smog catalyst production facility ■First Commerci
Slide 37: Strengthen BTG Integration Capabilities ③
Strengthening Coal-Fired Thermal Power Plant Business 4-6 (Strengthen BTG Integration Capabilities ③) No. 1 share in boilers and AQCS Able to supply “BTG + AQCS” by Hitachi based on top-share products Optimize Boilers, AQCS, Steam Turbines and Generators ・High-performance catalysts ・Highly efficient
Slide 38: Manage Projects Rigorously and Cut Costs
Strengthening Coal-Fired Thermal Power Plant Business 4-7 (Manage Projects Rigorously and Cut Costs) Rigorous Project Management Strengthen control of operation, profit/loss, risk management Increase and improve project management tools Increase and improve high-speed, high-accuracy engineering tool
Slide 39: Expanding the Medium-Capacity Gas Turbine Business
4-8 Expanding the Medium-Capacity Gas Turbine Business A l Accelerate B Business i D Development l C Centeredd on Own O Highly Hi hl Effi Efficient i E Equipment i ■H-25 Series ■80 MW ・Orders （Cumulative127 units） ・Up-scaled p model of H-25 series turbine Japan ・Greater efficiency as Units Overseas
Slide 40: Accelerating Development of Environmental Technologies
4-9 Accelerating Development of Environmental Technologies Atmospheric Pollutants Emission-Reduction Technology Development CO2 NOｘ SOｘ PM 2000 2005 2010 2015 2020 More efficient power generation Highly efficient steam turbines (Increased efficiency and reliability) ○ 700℃-class (46%)A-USC 750℃-clas
Slide 41: Increasing Generation Efficiency ①
Accelerating Development of Environmental Technologies 4-10 (Increasing Generation Efficiency ①) R i St Raise Steam T Temperature t and dPPressure tto IIncrease Effi Efficiency i ５0 Reduce CO2 emissions with USC USC construction track Geneeration efficieency Sub-critical: - 7％ approx. approx recordd
Slide 42: Increasing Generation Efficiency ②
Accelerating Development of Environmental Technologies 4-11 (Increasing Generation Efficiency ②) High-efficiency Steam Turbines High-performance nozzle blade Optimized degree of reaction （Reduced loss through 3D rendering） （Increase efficiency by optimizing output in stages） Extended length of last-
Slide 43: Increasing Generation Efficiency ③
Accelerating Development of Environmental Technologies 4-12 (Increasing Generation Efficiency ③) 700℃-class A-USC Power Generation Integrated Coal Gasification Combined Cycle (IGCC) Increased steam temperature and Conversion of coal into fuel gas Reheater tube pressure Header Higher efficiency by ga
Slide 44: Flue Gas Cleaning and Carbon Capture
Accelerating Development of Environmental Technologies 4-13 (Flue Gas Cleaning and Carbon Capture) Flue Gas Cleaning CO2 Capture ・Developed low-ＮＯｘ combustion technology (New-type burners/new multi-stage air-injection method verified at ・Joint development and field testing with European and existing
Slide 45: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion Copyright © 2009, Hitachi, Ltd., All rights reserved. 45 45
Slide 46: Renewable Energy Basic Policy
5-1 Basic Policy FY15 FY15： ：200 bn b yen Revenue R ・Provide solutions to support the uptake of renewable energy ・Renewable Energy & Smart Grid Division to lead cross-organizational efforts FY08： FY08： 25 bn yen Expand sales of wind power systems Expand downwind turbine sales Promote solar power sys
Slide 47: Initiatives to Promote Renewable Energy
5-2 Initiatives to Promote Renewable Energy ■ Promote initiatives across the Hitachi Group Wind power, solar power and other ■ Strengthen collaboration in power systems and ICT fields renewable energies will contribute to the creation of a low low-carbon carbon society, but… ■ Such power output is s
Slide 48: Key Equipment and Systems
Initiatives to Promote Renewable Energy 5-3 (Key Equipment and Systems) ■ Power Grid Systems Telecommunications networks/monitoring and ■ Solar Power control systems/SVC/storage batteries ■ Wind Power Telecommunications Network Voltage Solar Wind and current power power SVC Load Load SVC Solar power
Slide 49: Expanding Sales of Wind Power Generation Systems
5-4 Expanding Sales of Wind Power Generation Systems ■W ld Largest ■World’s L t Downwind D i dTTurbines bi (O (Output t t 2MW) Provide system with Fuji Heavy Industries Ltd. ■ Increase output on mountains, mountains hillsides and other areas where wind blows upward using downwind turbines ■ Designed
Slide 50: Promoting Solar Power Generation Systems
5-5 Promoting Solar Power Generation Systems ■ Use Accumulated Control Technologies to Harmonize With Power Grids S Smoothth Solar power Prevent lower power quality generation connection due to output fluctuations depends on with power weather grid g Power Conditioners Solar Power Power Grid AC DC G
Slide 51: Development of Storage Battery Systems
5-6 Development of Storage Battery Systems ■ Focus on the battery business with efforts spearheaded by Battery Systems Division ■ Promote development to advance Social Innovation Business S i l IInnovation Social ti B Business i ●Lead storage batteries for Wind power wind and solar power generation
Slide 52: Development of Smart Grid-related Systems
5-7 Promoting Development of Smart Grid-related Systems ■ D l andd Provide Develop P id Products/Solutions P d /S l i in i 5 Fields Fi ld Grid control EMS Distributed power Higher DMS administrative source harmonization efficiency Facility & Customer investment services optimization SVC Maintenance
Slide 53: Contents
Power Systems Business Presentation June 18, 2009 Contents １．Market Trends ２．Management Policy ３ Nuclear Power Business ３．Nuclear ４．Thermal Power Business ５．Renewable Energy Business ６．Conclusion Copyright © 2009, Hitachi, Ltd., All rights reserved. 53 53
Slide 54: Conclusion
6．Conclusion Contribute to Creation of a Low- Low-Carbon Society FY2011 Targets Revenue: 1 trillion yen Operating margin: 5% Promote Globalization Increase Profitabilityy Copyright © 2009, Hitachi, Ltd., All rights reserved. 54 54
Slide 55: Cautionary Statement
Cautionary Statement Certain statements found in this document may constitute "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. Such "forward-looking forward looking statements statements" reflect management management's s current views with respec
Slide 56: Copyright © 2009, Hitachi, Ltd., All rights reserved. 56
Copyright © 2009, Hitachi, Ltd., All rights reserved. 56 56