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Hitachi Energy rides HVDC boom

12 November 2024

The GCC region’s strong drive to decarbonise electricity generation, distribution and consumption has led to an increased demand for renewable energy and electric mobility, which in turn require strong, secure and reliable grids.

“The key issue [among stakeholders] is how to stabilise the grid and maintain its resilience to ensure safety and security of supply,” Bruno Melles, global managing director for the Transformers Business Unit at Zurich-headquartered Hitachi Energy, tells MEED.

Options to address this issue include offshore and onshore interconnections, particularly through high-voltage direct current (HVDC) networks, as well as the deployment of battery energy storage systems.

HVDCs are broadly considered more environment-friendly compared to their alternating current predecessors by allowing electricity transmission over long distances with minimal losses.

Several HVDC networks are under construction across the GCC states. The region’s first subsea power transmission network in Abu Dhabi replaces existing offshore gas turbine generators catering to Adnoc’s offshore operations with more sustainable power sources available in Abu Dhabi’s onshore power network.

The Saudi-Egypt interconnection is also underway. Once completed, it will enable the daily exchange of up to 3,000MW of electricity, opening up potential energy trade between the GCC and other countries in the Gulf, Africa and Europe.

Saudi Arabia also recently awarded a $5.3bn contract to interconnect its western, central and southern regions through an on-land HVDC network.

In addition, in May this year, Hitachi Energy signed agreements with Enowa, the utility arm of Saudi gigaproject developer Neom, to supply three HVDC transmission systems with a total capacity to transmit up to 9,000MW of electricity.

Discussions are under way for more of these types of projects, notes Melles, who says these projects reflect the need to integrate and secure the grid, particularly as more countries consider cross-border links and connecting their existing grids to remote renewable energy plants.

As interconnection investments grow, the need for digitalisation will also grow as utilities and transmission system operators seek more precise ways to manage their electrical loads and avoid waste.

Large users

The presence of industries with high power demands such as refining has been a distinguishing feature of most GCC states' power systems.

Most recently, the drive to deploy AI-based applications has spurred a boom in data centre construction particularly in the UAE and Saudi Arabia.

“We’re seeing plans to build data centres with load capacities of up to 1,000MW,” explains Melles, who points out that these facilities are fast becoming a major power utilisation point similar to other large industries.

The International Energy Agency estimates that data centres represent roughly 2% of global power consumption in 2022 and this is expected to more than double to 5% to 6%,  according to various projections.

An increase in the large power user base, even as electrification increases, reinforces the need for more resilient grids that can deal with varying loads and distances and energy sources, according to Melles.

Meeting demand

Globally, transmission and distribution infrastructure buildout is expected to catch up with prolific investments to expand generation capacity as power and decarbonisation demands increase.

Across the GCC, an estimated 49,000MW of conventional and renewable energy power generation plants are under construction as of October this year. The project pipeline remains robust, with key jurisdictions such as Saudi Arabia and Abu Dhabi aiming for renewable sources to meet up to 50% of their electricity demand by the end of the decade.

The GCC region’s power transmission and distribution sector is also set to experience its best year in terms of the value of awarded contracts. 

According to data from regional projects-tracking service MEED Projects, the total value of awarded contracts for substations, control centres, overhead lines and cables across the six GCC states reached an estimated $13.8bn between January and September 2024.

This figure already exceeds by 81% the total value of contracts awarded in the preceding full year.

To meet demand, Hitachi Energy, which supplies solutions ranging from large transformers, communication networks, cooling systems and cybersecurity to cable accessories, recently launched a $1.5bn programme to boost its transformer production capacity between 2024 and 2027.

“We need to scale up capacity and availability, and we are committing with our parts suppliers… to be able to supply [transformers] to the industry,” explains Melles.

Hitachi Energy is also, more crucially, investing in human resources as it expands its production capacity and presence globally. "We are investing in people across all skill levels in our company not just in our factories… because we believe resource constraints will be more serious than steel or copper constraints."  

The executive notes that in addition to driving power demand, AI is a key development that suppliers like Hitachi Energy are following closely due to its potential to transform industries over time.

Current AI applications enable predictive maintenance and reliability, where they can analyse data from sensors and maintenance records to predict when equipment may fail.

The next stage, which Melles expects will cause widespread disruption, is when AI is applied to industrial process and engineering optimisation, which experts say may lead to increased efficiency, reduced resources and improved product quality, among others.

“AI offers a great opportunity if used properly,” the executive concludes.

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Jennifer Aguinaldo

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