Hitachi Energy CEO Warns Power Equipment Demand Outpaces Supply
POWER & RENEWABLE ENERGY

Hitachi Energy CEO Warns Power Equipment Demand Outpaces Supply

Hitachi Energy is struggling to keep pace with rising demand for electricity infrastructure, as artificial intelligence, electric vehicles and data centres increase pressure on power equipment suppliers. Global CEO Andreas Schierenbeck said the industry needs better visibility into future orders and closer customer partnerships to expand manufacturing capacity more quickly.

The company is investing more than $9 bn globally to increase production, while expanding existing sites and building new facilities. However, manufacturing plants can take around three to four years to establish, creating a significant gap between rising demand and available supply.

Data centres can be built in about two years, while grid expansion plans can span 10 to 15 years and individual projects can take five to six years to complete. These differing timelines limit manufacturers’ ability to respond rapidly when electricity demand increases, according to Schierenbeck.

He said the industry’s traditional transactional model needs to shift towards long-term planning, framework agreements and advance capacity reservations. Greater certainty about future orders would give manufacturers stronger business cases for committing hundreds of millions of dollars to new factories and would help reassure shareholders about the required investment.

Specialised machinery shortages, including equipment used to manufacture transformers, are also limiting production. Geopolitical disruptions and supply chain problems may raise costs, while stronger demand visibility and political support could help manufacturers accelerate investment. Schierenbeck said data centres that previously required 20 to 40 MW may now need two, four or even 5 GW. US data centre electricity demand could reach 80 to 100 GW, equivalent to the output of 80 to 100 power plants. AI could double data centre energy consumption in the US and potentially worldwide, while industrial electrification and electric vehicles will add to the need for expanded grids.

Hitachi Energy is struggling to keep pace with rising demand for electricity infrastructure, as artificial intelligence, electric vehicles and data centres increase pressure on power equipment suppliers. Global CEO Andreas Schierenbeck said the industry needs better visibility into future orders and closer customer partnerships to expand manufacturing capacity more quickly. The company is investing more than $9 bn globally to increase production, while expanding existing sites and building new facilities. However, manufacturing plants can take around three to four years to establish, creating a significant gap between rising demand and available supply. Data centres can be built in about two years, while grid expansion plans can span 10 to 15 years and individual projects can take five to six years to complete. These differing timelines limit manufacturers’ ability to respond rapidly when electricity demand increases, according to Schierenbeck. He said the industry’s traditional transactional model needs to shift towards long-term planning, framework agreements and advance capacity reservations. Greater certainty about future orders would give manufacturers stronger business cases for committing hundreds of millions of dollars to new factories and would help reassure shareholders about the required investment. Specialised machinery shortages, including equipment used to manufacture transformers, are also limiting production. Geopolitical disruptions and supply chain problems may raise costs, while stronger demand visibility and political support could help manufacturers accelerate investment. Schierenbeck said data centres that previously required 20 to 40 MW may now need two, four or even 5 GW. US data centre electricity demand could reach 80 to 100 GW, equivalent to the output of 80 to 100 power plants. AI could double data centre energy consumption in the US and potentially worldwide, while industrial electrification and electric vehicles will add to the need for expanded grids.

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