North America’s journey to a more sustainable energy future

High voltage takes center stage in this season of Hitachi Energy's Power Pulse podcast. We promise to bring you great content from the brightest minds in the business. We'll discuss challenges, opportunities, and all the hot topics any high voltage enthusiast or anyone interested in sustainability, for that matter, is sure to enjoy. In this episode, we're putting the spotlight on North America, a powerhouse region in the global energy transition.

The region's energy landscape is making significant contributions in the decarbonization journey. Here are just a couple of literal power moves happening in the region. In the US, there are massive wind farms in Texas, growing solar power generation in California, and states like New York are taking a huge leap in offshore wind farm developments. While up north, Canada is making its mark with hydroelectric projects while growing wind and solar capacity to meet ambitious climate goals.

To guide us through all of this, I am joined by Stefano Cervidi, Market Manager for High Voltage at Hitachi Energy. He will walk us through the innovations, challenges and opportunities that are defining the North American landscape. Sit back, relax and listen to this insightful episode. Hi, Stefano. Welcome to the Power Pulse podcast. How are you? Good. Thank you very much, Bárbara. Thank you for having me here. Thanks for coming in.

So we always start each podcast episode by asking our guests to tell us a little bit about themselves. I know that you've had quite a varied career, and you've lived in quite a few interesting places. Yeah, I mean, when I was in the university, I had one year Erasmus exchange in Spain. Then as soon as I finished my master's degree, I went to London actually. London? Well, yeah. Whereabouts were you? It was six months and it was an eastern part of London, Walthamstow E17. E17.

I think there was also a boy band called this, right? There was, yeah. Everyone knows E17. Everyone, our generation at least. Yeah. And then I moved to France, to Paris, to start working there. And then I got hired by ABB and here I am. Okay. Yeah. Yeah. Also, the past few years, I traveled really all around the world for both pleasure and work. And when I was in Italy with a ABB and now, Hitachi Energy, I used to travel quite often to South America, staying there several weeks.

And on one of these trips, I actually met my wife. Oh, lovely. Yeah. Yeah. It's a nice story. Well, thank you for sharing. So, you are now responsible for the North American market. You're based in Raleigh at the moment in the US, right? So to start us off, could you paint a picture for our listeners as to what the North American market is doing in terms of energy? Sure. Sure. I mean, in North America, especially in the US, we are seeing a surge of energy demand.

I would say most of that is now driven by data center consumption. And the data centers is a landscape that is evolving very quickly. So what I mean is if we take a regular data center, let's call it regular, we are considering around 100 to 200MW of power that they need. And it's already a huge amount. Now with artificial intelligence with the A.I. the computational power needed is around 6 to 7 times more.

So these data centers are becoming, I would say pretty big monster in terms of power consumption between 1 and 2GW. So that is equivalent of big scale nuclear power plant that would be needed just to feed these data centers. This is the main driver that we are seeing right now. However, we also have a lot of aging grid in the US where is being currently expanded. Also because of renewable powers such as onshore wind, photovoltaic farms.

So the solar farms have changed a little bit the landscape of generation. While with conventional generation we usually have the power plant close to the load. So let's say the energy should have been transmitted relatively for not so long distance.

While usually the solar farms and the wind farm are located in remote areas where there basically there are no consumptions or no load, but they need to be transported across the country or across several states, let's say, from then there is the need for more power transmission lines. Right, so this vast power grid, what efforts are being made to make it more sustainable? Right. We are seeing in the US a huge interest in terms of decarbonization, overall.

There are at the moment certain entities, mostly state entities, not federal yet, I would say, that are taking some strong action regarding the decarbonization of the grid. And in particular, there are two bodies; one is in California, it's called the California Air Resources Board, CARB to make it simple; and the other one is the NYSDEC, that is the New York– State Department of Environmental Conservation.

Thank you very much. Thank you, Bárbara. And CARB at the moment has issued already a regulation that is phasing out the SF6 gas. And the SF6 is what we use in our circuit breaker usually, the New York regulation is more or less based on the CARB regulation, but at the moment is still a proposal, right. We are expecting to be converted into law probably this year, but at the moment it's not effective yet.

On the contrary, the CARB is already in effect since 1st January of this year, so this is already in place. There's been discussions focusing on new transmission lines at very high voltage. So up to 800 kV. Can you tell our listeners a little bit more about what's being done? Yes. So I mean compared to Europe, for example, where we have multitude of states pretty well interconnected among them.

Okay. So the overall high voltage network is relatively well meshed and well interconnected from country to country. In my case, for example, I'm in Italy and in Italy we need to import a lot of the energy, right. So we are very well interconnected with France, with Austria and so on. Right. in the case of US, the network is a little bit more working in islands. Okay. So there are several what are called TSOs or ISOs. So Transmission System Operator or Independent System Operator.

And for the two drivers that I was mentioning before: so, on the generation side more renewables to be connected into the grid; and then on the consumption side, more data centers that will need to get in this power quickly and efficiently. Many of these TSOs are starting – and one of them already approved it actually – are starting the discussion of increasing the voltage transmission level to 765 kV, so 800 kV, and this will allow to have a lot more power flowing with less losses basically.

So we have a huge amount of gigawatts flowing in. And if you keep the highest voltage level, like current, there is in 345 or 550 according to the region. In the US, this will increase a lot the short circuit capacity and even the nominal current needed. So bigger equipment and in general a higher cost of the grid. So in this case they are evaluating of course, the 800 kV and in some cases they already adopted HVDC system for example, so...

So, Stefano, the US has been at the forefront of trying out, of piloting new technology and we've experienced this as a company. Can you tell us a little bit about the world's first pilot for EconiQ, which is our SF6-free switchgear portfolio? Correct. So in the US we are very proud because we are collaborating and partner with one of our main customers that is Eversource. They’re located in New England.

And in the beginning of 2023, we handed over the first of its kind, the EconiQ Dead Tank Breaker - 420 kV, that will be used on a 345 kV network and currently has been already installed, is of course fully tested and is working absolutely properly. Eversource is considering their energy transition goals very, very highly. We know that this is first of its kind. They are, of course, trying to repeat as much as possible this project and we hope, of course, to see something more.

We are actually working with them also on new GIS also with SF6-free, but on a lower transmission level for the moment. On 500 kV voltage level, we had several references and many customer that are early adopters of this technology. And in Hitachi Energy, we are pretty confident that this technology will be expanded overall on the full portfolio. So we are very confident because it is pretty safe, reliable, scalable, and the footprint is essentially the same.

So, Stefano, you mentioned that the US specifically is looking into increasing the grid or updating it to include 800 kV to cover larger distances with less loss. And I know that in the EconiQ roadmap, there is the 800 kV circuit breaker will be released shortly. Shortly, is that fair to say? Next year ? I can't remember, I need to check, but I know it is on there. I'm sure it'll be delivered on time as usual. As usual.

So do you think the US, considering it's been a very early adopter of the other technology we've just discussed, do you think it's likely they will be the first ones to bring in– I really hope so. I'm pretty positive about it. We have already engaged since few months with our customers, especially on the 800 kV projects. And we have introduced also the EconiQ portfolio on 800 kV. It will be actually the most critical voltage network in the country.

We are pretty confident that customers looking at the previous project that we have done on 550 and 362, they will be pretty much convinced of the goodness and the robustness of the technology. So essentially, Bárbara, yes– Because it Is proven now, right? There is one in operation. It's working as it should. Correct. Then I would say the step between the 550 and the 800 is pretty short as a technological step as far as I understood.

And I really hope that the US would be once again the early adopter of this new product. And so looking ahead, what do you think the trends will be over the next ten years, let's say? It's a good question. And considering the momentum that was created by, renewable energy data centers, we don't think also that, you know, with the new administration, there would be a real stop on the energy transition eventually. We just understood that, the new administration will invest a lot in data centers.

So that means, again, that the need of power, it will increase once more. And we do know that we cannot go back only to fossil fuel. So still the renewables are an effective and even probably most cost effective solution. But they cannot be the only one. So what we have seen is there is start of the adoption of what is called small modular reactors. So it's still once again, nuclear power plants that are CO2 zero. So there is no CO2 emission.

And they are deployed in a much faster and safer way than building up a new nuclear plant. This one will be most probably over the next ten years. Also an additional, technology on the generation side besides, of course, the renewables and some of the conventional for sure. And this additional capacity created by the same, are for sure, will be supporting the AI data center implementation over the country.

you mentioned regulatory bodies such as CARB os NYSDEC, how are they influencing the SF6-free transition in real terms? Are they setting deadlines and are those going to be implemented? Yes. At the moment, the one that is already in place is the one on California. So the CARB where as 1st of January of this year. In California only? In California only. Correct. So these are state regulatory bodies. At the moment there is nothing on federal level that is disciplining the SF6 phase out.

There is obligation to report SF6 However, there is not such an advanced legislation like in California– So report but not phase it out. That is correct. So there is not such an advanced regulation, such as in California or at the moment, the proposed one in New York, that we hope to be implemented very soon, at least this year.

What we are foreseeing and, we don't have the certainty, of course, but it seems to be the trend is that there will be over the next ten years, for sure, a sort of domino effect at least on the state level. On the federal level, at the moment, we don't see any movement, but we are expecting that other states will take inspiration, let's say, from California, New York.

And the most important thing is that in our case, we are showing the market that there is valid and reliable technology to implement this transition. We mentioned earlier the California Air Resources Board and the New York State Department of Environmental Conservation are actively trying to phase out SF6 Yeah. It's not mandated yet, so at least not across the US. But companies are adopting this technology. Are they doing so because it's part of their own company’s sustainability goals?

Is it because they want to be a good corporate citizen? What do you think is making these companies invest in a better and more sustainable energy future? Regarding our customers, the majority of utilities that are serving the US customer are what is called the IOUs – Investor Owned Utilities. They cover around 72% of US customers, as the name say they are listed in the New York Stock Exchange.

Many of them, they do have very strong ESG policies that they want to implement as part of their strategy. And particularly the ‘S,’ or the sustainability part is where they are looking after for their operation. Right. And we know that SF6 circuit breaker are a huge part of their daily operation. And more than a couple of years, we are supporting them in this transition because we know it's very difficult to to switch over a new technology all of a sudden.

It is a path that we are doing together. We are demonstrating more and more that we do have in the portfolio a reliable and robust technology. We are pretty confident that over the next year, this customer will enable whatever is in their goals for sustainability through change in technology, also in their substation equipment. We are again very optimistic and positive about what is the future ahead of us. The grid is expanding rapidly. Your customers are also investing in a sustainable future.

How is Hitachi Energy responding? What are you doing as a company to make sure you can meet this demand? It's a very interesting point, Bárbara, because, what we are seeing now over the last one and a half year, a couple of years is a booming demand in general for our equipment. - so, switchgear - with EconiQ, we could cover interesting portion of it. So we were, absolutely a valid alternative. And this also increased the adoption of the the EconiQ portfolio into the US.

But in general, the demand coming from all our customers, different segments such as utilities, like we were saying before, but also what is non-utility, the data centers, for example, industries and renewables, if we want to consider them as a non-utility, was amazing. Amazing means that, our numbers more than quadrupled compared to the last couple of years.

If it's a good thing for the manufacturer, for Hitachi Energy and for the others, is less of a good thing for the customers, because there is what we could say, a supply crunch. When an equipment such as power transformers or nowadays, dead tank breaker in the US was taking few months for delivery, now we are going up to 4 years. This is something where Hitachi Energy understood and decided to invest in North America.

With the new expansion planned, we will be investing overall starting from 2021, around 100– 2020? Starting from 2021. Oh, we started. Got it. Yes. Correct. We did several improvements and now we have announced in October the biggest investment for high voltage in North America. The cumulative amount invested on our own facilities since 2021 will be around $100 million. So it is pretty impressive.

And the goal is to support our customers to meet their demand and to re-normalize a bit, the lead times. At the moment, the focus for sure is on the breakers. So our factory in Mount Pleasant, Pennsylvania.

However, we are expecting also that the rest of the high voltage equipment, so the instrument transformers, the surge arresters, the capacitor banks, the disconnectors that are usually also going into a substation, right – so whenever you need a circuit breaker, you will need one of this equipment - will also eventually be in high demand simply because, at the moment we are seeing that lead times are increasing over there as well.

And for this reason we are actually opening a new facility just dedicated– So you’re preempting the need to make sure that the long lead doesn't happen again. That's correct. So we are getting prepared. We are proactively approaching the market with further investment, further efficiency and more capacity to support the foreseen growth. We hope that this one could help us to give us a strong position in front of our customers.

They do appreciate the fact that we are doing these investments and, most importantly, they appreciate that we are, improving and increasing the amount of investment in sustainability because in the new expansion of Mount Pleasant factory, we will have a new gas management system that will allow us to increase the capacity also, for EconiQ breakers that we are building there. It will be– Great strides. Yeah. Yeah, would be a very nice experience, I would say. All right.

Thank you very much for coming in Stefano Thank you. It's been wonderful chatting with you. Thanks a lot, Barbara. Thank you very much. And that's it for today. We'll be back seen with some more great content. But before you go, remember to give us a follow so you don't miss an episode. Thanks for tuning in. See you soon. This episode was brought to you by Hitachi Energy. Created and hosted by Barbara Freitas, Daniels. Content and script writing by Cassandra Inay and Ivy Samuel.