Fermi Energia, a privately held company formed to develop a small modular reactor (SMR) in Estonia, announced that it has selected GE Hitachi Nuclear Energy’s (GEH’s) BWRX-300 design for deployment.

Kalev Kallemets, CEO of Fermi Energia, said in September last year that the company’s nuclear technology selection process had begun in 2019, with a mapping of a large list of companies from around the world that were all offering new advanced nuclear technologies. Decision-makers whittled that list down to the “more successful” designs. From the successful ones, in turn, leaders chose the three they felt were most suitable for Estonian conditions and its electricity system. The company had sent tenders to GEH, NuScale, and Rolls-Royce on Sept. 15, with bids requested by December, including comprehensive technical documentation needed to estimate the construction cost. On Feb. 8, the group announced GEH had been selected as its top choice (Figure 1).

“There are dozens of new small modular reactors in development around the world—each of them is somehow different. Some developers are experimenting with more exotic technologies that will take a long time to reach market maturity, while others use tried and tested, functional and safe solutions. Estonia cannot be too bold an experimenter with its first nuclear power plant. It also sets a number of practical criteria for the choice of technology, which after thorough consideration fell to GE Hitachi,” explained Marti Jeltsov, Chief Technology Officer of Fermi Energia.

The BWRX-300 is the 10th evolution of GE’s boiling water reactor (BWR) design. The company says the BWRX-300 “represents the simplest, yet most innovative BWR design since GE began developing nuclear reactors in 1955.”

“The BWRX-300 is in principle a boiling water reactor, which is used and well known by many European countries, including Finland and Sweden. However, the specific reactor model is much smaller than the ones used in the nuclear plants of our northern neighbors, which allows greater safety, lower cost, and shorter build time. At the same time, it is possible to rely on the experience of neighbors and offer the consumer clean electricity at an affordable and stable price,” said Kallemets.

“We are honored that our small modular reactor technology has been selected by Fermi Energia to help Estonia fulfill its energy security and climate goals,” said Jay Wileman, president and CEO of GEH. “This technology selection further validates the BWRX-300 as the leading SMR solution. By leveraging a unique combination of existing fuel, plant simplifications, proven components, and a design based on an already licensed reactor, the BWRX-300 offers cost-competitive, zero-carbon-emission generation in a meaningful timeframe.”

The technology selection by Fermi Energia is the latest win for GEH’s BWRX-300. In January, GEH, Ontario Power Generation (OPG), SNC-Lavalin, and Aecon announced the signing of a contract for the deployment of a BWRX-300 SMR at OPG’s Darlington New Nuclear Project site. In August 2022, the Tennessee Valley Authority (TVA) began planning and preliminary licensing for potential deployment of a BWRX-300 at its Clinch River Site near Oak Ridge, Tennessee. And, in June last year, SaskPower announced that it had selected the BWRX-300 for potential deployment in Saskatchewan in the mid-2030s.

Meanwhile, ORLEN Synthos Green Energy (OSGE) and its partners started the pre-licensing process in Poland by submitting an application for assessment of the BWRX-300 to the country’s National Atomic Energy Agency. OSGE plans to deploy a fleet of BWRX-300s with the potential for deployment of the first of those units by the end of this decade. GEH has also begun the design certification process for the BWRX-300 in the UK. The company said it has memoranda of understanding or other agreements in place with companies in Canada, Czech Republic, Poland, UK, U.S., and Sweden, among others, to support the global deployment of BWRX-300 technology.

However, there are still several hurdles to overcome in Estonia before construction begins. In order to build a nuclear power plant in Estonia, the Riigikogu—the unicameral parliament of Estonia—must consider the need and authorize nuclear energy in the country. Also, the initiation of a special national plan to find a suitable location for the plant, as well as the development of nuclear energy legislation are required.

Fermi Energia feels there is good support for nuclear power among citizens of Estonia. The company commissioned public opinion surveys in January, which were conducted by Kantar Emor and Norstat—two independent companies that collect data and do business consulting, analysis, and research in Estonia. Kantar Emor’s study was the eighth completed since 2019. Norstat, however, went for the first time to interview the residents of Viru-Nigula and Lüganus parishes. This was significant because these are potential siting locations for the nuclear power plant.

Kantar Emor reported that 61% of people it polled were in favor (34%) or somewhat in favor (27%) of “considering the use of a new generation small nuclear power plant to ensure Estonia’s electricity supply security.” It said 17% were against (7%) or somewhat against (10%), and 23% did not have a clear position on this issue. “The share of opponents of considering a nuclear plant is in a continuing downward trend,” Fermi Energia said.

Norstat’s survey in Viru-Nigula municipality in Lääne-Virumaa and Lüganus municipality in Ida-Virumaa was conducted door-to-door. It revealed that 50% of the residents of these municipalities were in favor or somewhat in favor of building a new generation small nuclear power plant in their home municipality, and 32% were against or somewhat against the prospect. Notably, the support percentages in each category were quite similar for both municipalities.

“We have analyzed all the work ahead and consider it realistic to produce reliable, clean, and affordable nuclear energy in Estonia by Christmas 2031, which should also be in the interest of society and the country’s climate goals. Understandably, this goal requires a serious effort from both the state and Fermi Energia,” said Kallemets.

—Aaron Larson is POWER’s executive editor (@AaronL_Power, @POWERmagazine).

Published on the Value Lab 9/2/23

Hitachi (OTCPK:HTHIY) is one of Japan's more well known conglomerates. While their household-name status should normally mean less of a value edge, due to the confluence of factors, mainly the chip ban and the reopening of China, some of their higher margin segments could see positive increments. On top of that, they have some nice secular tech-based growth drivers in their larger segments. Overall, their low multiple combined with a good probability of sustained growth, despite forecasts expecting declines, makes capital appreciation here quite likely in our view. A clear buy.

Q3 Results

To begin, we have compiled the granular segment EBITA to get a view of how exposed Hitachi results' are to their different segments, whose profiles are very different in terms of end markets and positioning into 2023.

For those that think more linearly and less graphically, here's the original table.

Measurement & Analysis (12%)

This segment is the highest margin of all of Hitachi's businesses, and they produce valuable, high ticket technology like electron microscopes and metrology equipment essential for semiconductor production. The growth in fabs and foundries have been good for this business so far in 2022. In the latest quarter, revenue growth showed acceleration at 31%, with EBITA growing by more than 50% thanks to operating leverage. The average Hitachi margin is lower than 10%, so the 15% margin in this segment contributes substantially to positive mix effects.

Semiconductor manufacturing may slow down in most western markets since we are seeing a semiconductor glut, but there are strategic tailwinds that may keep demand going, especially for Hitachi. The chip ban is likely to get China investing more heavily in their own fabs, and Hitachi's proximity and exposure to Chinese markets could be downside protection to this segment. Moreover, clinical and chemical markets should be quite stable.

However, for now, orders are down in this segment, and the shrinking backlog is the reason why the markets are forecasting about a 10% decline in earnings in 2023.

However, strategic considerations could limit declines in the order rate and backlog, and would not yet be visible in the results.

Building Systems (11%)

This includes HVAC and elevators. Exposure to China is important here too. This is one of the higher margin Hitachi segments, and part of the demand here has been dormant due to a locked down China. A recovery there should be positive for this segment, whose maintenance and razor and blades economics will contribute positively to Hitachi's cash generation profile.

Sustained growth on maintenance but also new installations from a recovering Chinese real estate market - note that only partial recovery in Chinese markets would be needed to keep this engine going - should see a positive contribution from this segment into the next year as well. As it stands, growth in the Q3 at 11% in revenues showed some more acceleration, where it had been lower at a 9-month trailing 9% growth so far this year. A general acceleration in results in the recent quarter is appreciated, despite FX pressures with an appreciating Yen and depreciating FX in foreign markets beginning to materialise over the last couple of months. Underlying demand must be improving - indeed, orders are up 9% in the last quarter showing recovering demand.

IT Services (11%)

These are higher margin businesses as well at 11.3%, focused on digital transformation services but also general IT management for financial companies in the ASEAN markets and for the public sector.

The main growth driver and the majority of the IT business right now is this business called Lumada, which contributes results in several segments. They provide security and cloud services and apps to help companies manage and consolidate data from IoT. Exposure to financials, the public sector, and industry is driving growth here.

The growth of Lumada is pretty phenomenal, and is still mainly focused on Japan, which has a long way to go in terms of digitalisation, as it a notoriously analogue country (you need to carry around a personal stamp for admin). Lumada was organically launched in 2016 so it's good to see its progression and we expect continued growth into 2023 without much problem especially as digital systems and services orders are accelerating in the Q3 to 22%.

Hitachi Energy (11%)

This is quite a straightforward segment, as it is an engineering and products business that provides products and services to the electric grids of countries. This is an important infrastructure, especially in the context of electrification, and provides a secular market. This is another segment where revenue growth is accelerating in Q3 at 39% compared to 28% YTD. We can expect further growth into 2023, unfortunately it is one of the lower margin segments.

Services & Platforms (9%)

This business also includes some revenues from Lumada, in particular digital engineering which is growing at 28% within the Lumada line. But there's also GlobalLogic which is another quite recent acquisition that adds to these digital engineering capabilities. This is a lower margin segment at 8.2%, closer to the company average, but it is growing nicely at 24% YTD. The tech angle here provides some secular growth tailwinds, and things like omnichannel and general retail and logistic digitalisation support this business.

Hitachi Construction Machinery (7%)

This segment has been hit pretty hard this year. YTD revenues are down 34% and EBITA has halved. With orders recovering generally in the building systems segment, we expect the possibility of a recovery of some of these losses into the coming year. Margins are reasonable at 9%, so a recovery here will go a decent way.

Hitachi Metals (7%)

This is a more vulnerable segment. 23% growth was achieved thanks to pricing initiatives, but this could reverse as customers require deflation since the underlying commodities are deflating too. This segment produces metal materials used in various industrial parts. Its margin is lower than the company average at 5%, which means markups are already low. They are unlikely to go lower on a percentage basis, but revenues and EBITA should fall into the next year, thankfully not going the longest way.

Bottom Line

Metals and Machinery will balance out, then everything else should grow and it balances out declines that one could expect in measurement and analysis, assuming strategic considerations don't mitigate declines. For the declines in measurement, there are about four other segments of equal import producing similar growth than the order declines currently seen in measurement. Overall declines seem rather unlikely considering the rate of growth in the tech segment especially, despite universal reporting on slowing sales cycles for tech offerings - Lumada is exploding.

The company trades at around a 10x PE multiple. That's too low considering EPS growth is entirely possible, even assuming the worst in their jewel measurement segment. With reopening in China already producing order growth for some of the better Hitachi segments like building systems, Hitachi looks primed to show sustained growth from its cheap, industrial profile. Longer term, investors can be happy with their high-tech exposures in semiconductor metrology and clinical and chemical analysis. Semiconductor is very cyclical, and it will come back in a couple of years at most, if not sooner depending on how China responds to the chip ban.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

Hitachi India, part of the Japanese conglomerate Hitachi, aims to work towards contributing USD 20 billion in the overall consolidated global revenue for the parent company by 2030 with a 'higher double-digit profit', said Managing Director Bharat Kaushal. By 2030, Hitachi India aims to occupy an ''influential position'' across rail, energy, and digital, automotive businesses of the group, he said.

''Some of the horizontal enablers that support integrating technologies using digital as the catalyst including Artificial Intelligence (AI), hydrogen, and energy storage, will become an important growth driver. We aim to have a higher double-digit profit to the overall Hitachi's consolidated revenues,'' Kaushal told PTI.

India is increasingly emerging as a base to do business outside India, especially in capital goods, where the government has launched a lot of incentives for technology transfer, and funding it, allowing to keep the IPR and these are very significant steps.

When asked about Hitachi India's revenue, Kaushal said: ''We expect to contribute to Hitachi's economy by USD 20 billion''. The idea is that India will work towards contributing the above amount to the overall global revenue for Hitachi, he added. ''Hitachi's innovative and globally acclaimed technology has been fuelling the transformation of India. Hitachi's new Mid-term Management Plan 2024 aims to support people's quality of life with data and technology that fosters a sustainable society,'' he said.

Hitachi has been playing a significant role in accelerating India's journey towards achieving a carbon-neutral environment. ''Growing globally by digital, green, and innovation, Hitachi India will continue creating milestones across the globe. Hitachi operates in the infra, manufacturing and IT sectors among others. In 2012, India was converted into a region. Hitachi has five regions outside Japan, of which two are large emerging countries of India and China, and the rest are the US, Europe and Asia.

The other regions of Hitachi are presently bigger than India but Kaushal expects it to scale up. ''Increasingly, the focus on India's importance in Hitachi is gathering momentum very significantly,'' he said adding, ''it is coinciding with Japan and India trying to make more winners out of their economic engagement story.'' The India solutions are not just about scale but also about affordability. The company is expanding its canvas of business proficiencies in the country.

''Investments and acquisitions are ongoing progressive business plans for Hitachi to strengthen further its position in the ecosystem of Social Innovation Business,'' he said adding: ''Our core areas as part of our forward-looking Mid-Term Management Plan 2024 will have a direct correlation to the future investments we carry out focusing on offering solutions including Green Technology, Digital Technology and Innovation.'' Though Hitachi did not share the exact investment made in India, Kaushal said it has witnessed a ''phenomenal growth progression'' in the last couple of years.

''This is primarily due to the significant investments we have made at the global level that includes – the acquisition of the power grids business of ABB (Now Hitachi Energy), GlobalLogic, Hitachi Astemo etc. the investment within Hitachi is a globally driven process and we as Regional Headquarter become an integral part of this heightened ecosystem,'' he said.

For FY21, Hitachi India's consolidated financial revenue was around Rs 17,204 crore (around 274 billion yen).

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

TOKYO — Japanese carmaker Nissan Motor Co Ltd and a Hitachi Ltd subsidiary said on Friday they plan to roll out a system to keep elevators running during blackouts by drawing power from the batteries of electric vehicles.

Few cars today are capable of bi-directional charging, where vehicles can become a power source for homes, or feed energy back into the grid, though carmakers such as Ford Motor Co and Renault SA are among those jumping on the bandwagon.

In what appears to be an early attempt in earthquake-prone Japan to make wider use of EV batteries, Nissan and Hitachi Building Systems Co Ltd are focused on keeping elevators running when the power supply is disrupted.

During a pilot project unveiled on Friday, the firms said they had kept an elevator with capacity for nine people running at slow speed for 10 hours by drawing power from the battery of a Sakura, a fully electric micro "kei" car made by Nissan.

The V2X system uses the CHAdeMO charging standard supported by Nissan, an Hitachi Building Systems executive said.

That allows it to also draw power from larger Nissan EVs, such as the Ariya and Leaf models.

Tatsunori Takahashi, a director in the domestic business management division of Hitachi Building Systems, said he hopes the firm will start providing the system to apartment buildings from the financial year starting in April.

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