Power electronics giant Hitachi has agreed to acquire ABB’s power grids business in an $11 billion (£8.7 billion) deal. Initially, Hitachi will acquire an 80.1 per cent stake in the power grids business and expects to close the acquisition in the first half of 2020, making power grids a consolidated subsidiary.
As a result of this agreement, Hitachi will offer innovative energy solutions globally by combining ABB's grids offering including advanced digital grid solutions with Hitachi's digital technology. In addition, Hitachi aims to build an energy platform that connects various fields such as mobility, life and industry. Hitachi will expand provision of the platform to, and collaborative creation using it with ABB's broad range of customers to promote more efficient use of electricity throughout society and empower and grow the social innovation business.
"Agreement between ABB and Hitachi is a significant turning point in the global power and energy markets at a time when digital technology is fundamentally changing our society and the pattern of energy demand and supply is diversifying. Hitachi will combine ABB's strengths in the power grids business with our digital technology to build an energy platform that contributes to innovating the energy business. This creates further innovation for business fields such as life and industry and helps us address society's issues and improve quality of life," said Toshiaki Higashihara, President & CEO, Hitachi Ltd.
The power grids market is rapidly expanding, driven by increasing adoption of renewable energy, rising energy demand and supply in emerging countries, the expansion of distributed power sources such as electric vehicles and storage batteries, deregulation of the electric power sector in countries and regions, and advances in electric power system reform. The market is forecasted to reach more than $ 100 billion by 2020, at a steady annual growth rate of four per cent or above for the period from 2017 to 2020. In particular, advanced energy management systems to optimise supply of, storage and control energy using digital technologies are growing rapidly as well as innovations in grid systems for next generation transmission network, which contributes to the formation of more flexible energy infrastructure addressing promotion of renewable energy and regional characteristics.