Hitachi Energy invests $200m in Brazilian transformer operations
Hitachi Energy Guarulhos transformer factory in Brazil. Image courtesy Hitachi Energy
Swiss tech giant Hitachi Energy has announced an investment of over $200 million to enhance its operations in Brazil and ramp up global transformer manufacturing capacity.
The investment, announced during the celebration of Hitachi Energy’s 70th anniversary in the country, will include the expansion and modernisation of the Guarulhos’ transformer factory in São Paulo and the construction of a greenfield transformer manufacturing facility, expected to be set up by 2028.
During its 70 years in Brazil, Hitachi Energy has supplied transformers for major HVDC transmissions systems like Belo Monte II; Itaipu, one of the world’s largest hydroelectric plants; and Rio Madeira, one of the longest and most powerful transmission links in the world at 2,375km.
Transformers are an important part of the power value chain, enabling efficient transmission and distribution of electricity and facilitating the decarbonisation of the energy systems.
They are a key component for applications such as integrating renewables, grid interconnections, powering data centres and electrifying transportation.
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Hitachi Energy claims to be the world’s largest transformer manufacturer in terms of installed base, portfolio range, manufacturing capacity, and market coverage, with over 90 transformer factories and service centres across the world.
The announcement forms part of the company’s previously announced $1.5 billion investment plan and marks their latest move to consolidate their position in the transformers market, which has been experiencing significant supply shortages and increased prices.
According to Wood Mackenzie in their April 2024 report, Supply shortage and high lead times: market dynamics and supply chain update, transformer lead times have been increasing for the last two years, from around 50 weeks in 2021, to 120 weeks on average in 2024.
Large transformers, both substation power and generator step-up transformers, states the research company, have lead times ranging from 80 to 210 weeks.
Additionally, transformer prices have risen 60% to 80% on average since January 2020 and, despite raw material costs easing over the past 12 months, transformer costs have continued to increase as suppliers elevate margins to maintain higher costs due to strong demand and long lead times.
