Dive Brief:

• Hitachi Ltd. on July 1 announced the launch of Hitachi ABB Power Grids, a joint venture with ABB Ltd. that will lead to ABB's complete divestiture of its power grids business within three years.
• The new entity plans to use Hitachi's artificial intelligence (AI) and machine learning (ML) capabilities to leverage data from ABB's grid operations, company spokesperson Kurt Steinert told Utility Dive in an email. The company also plans to expand operations to Japan, focus on intelligent grids, and explore opportunities in emerging areas such as mobility, smart cities, energy storage, and data centers.
• The power grid unit will become a wholly-owned subsidiary of Hitachi after 2023. ABB plans to use the proceeds from the Hitachi transaction for a stock buyback.

• Dive Insight:

Hitachi ABB Power Grids intends to couple data from ABB's operation with the AI capabilities of Hitachi's Lumada platform, according to Steinert.

"Operational technology systems from ABB control and protect 30% of the networks globally and software from ABB is used daily to manage over one million power assets globally," he said.

"What does this look like in practice? Imagine receiving information from Hitachi ABB Power Grids that a certain type of transformer should not be loaded beyond a certain limit based on aging information and statistics about failures detected by Lumada AI algorithms that continuously analyze data from several thousands of similar assets," he told Utility Dive.

Hitachi ABB Power Grids' Digital Enterprise prognostics, running in the cloud, can provide information about the likelihood of transformer failure, he said.

"Machine learning-based weather and load forecasting will feed a digital model that calculates the load flow in a certain part of the network, and coupled with the maximum calculated loading of the transformer, and advise the operator that there is a high risk of failure and he should re-route the energy or even trigger the Hitachi PowerGrid Network Manager to calculate automatically and propose the best option for transferring energy over different routes," Steinert said.

The company occupies a leading position in the traditional power grids market, according to Steinert.

"Our customers benefit from our extensive global footprint and scale, where we have the largest installed base and can deliver a very local service, underpinned by a global network," he said

The launch completes an agreement between Hitachi and ABB signed Dec. 17, 2018.

Hitachi acquired an 80.1% stake for approximately $6.85 billion, according to company statements. The Japanese conglomerate will acquire the remaining 19.9% stake of Hitachi ABB Power Grids, making it a wholly-owned subsidiary after 2023.

Hitachi ABB Power Grids Ltd. has around 36,000 employees across more than 90 countries, including over 2,000 in research and development, primarily in software development, according to a company statement. The company's main office is in Zurich, Switzerland.

ABB plans to use the net cash proceeds from the transaction for a share buyback program, according to an ABB company statement.