As we have seen this
past year, the landscape has been altered somewhat as a result of the
burst of the Internet bubble. However, while we are experiencing some
short-term shifts in consumption, we believe that the longer term view
remains strong for power demand and for the type of solutions we know
that our customers need and want.
We received orders
from Goldendale Energy for a steam turbine generator, HRSG, SCR System
and a step-up transformer for use in a combined cycle plant. This was
the first of a number of "Integrated Equipment and Performance Solutions",
which we now call a "Wrap", because it enables one manufacturer,
like Hitachi, to combine and optimize the equipment configuration, both
technically and commercially, providing a solution to both the contractor
and end-user which minimizes their risk of interface difficulties and
provides guarantees for both performance and emissions.
Hitachi intends to
continue to build on this success in 2002 and offer more "Wraps"
to those customers and contractors looking to convert their existing simple-cycle
installations into combined cycle plants.
But this wrap concept
has many applications for Hitachi that go far beyond combined cycle plants.
For example, we can combine offerings of high-voltage switchgear, transformers
and bus-duct to a utility customer planning a substation expansion, or
a combination of compressors and motors and SCR catalysts to a customer
building a large process plant.
But one of the most
exciting opportunities for Hitachi in the US in 2002 and beyond is the
resurgence of interest in large pulverized coal fired plants and the applicability
of our wrap concept to this market.
As most of you will
know, in the last fifteen years in the US, no large pulverized coal plants
have been built considering overall project economic conditions, particularly
low gas prices, thereby favoring gas fired combined cycle plants. But
in Japan, with no indigenous gas, the economics and market drivers are
much more diverse.
Japanese utilities
have continued to build large pulverized coal plants, both sub-critical
and supercritical, burning coal imported from many countries, including
Powder River Basin coal from the US. Hitachi has been the leading supplier
of these plants building twelve supercritical plants over 500 MW in the
last 10 years, with several being 1000MW and above.
Hitachi now offers
this expertise in the US. Our world-leading technology in the areas of
sliding pressure boiler designs, which give unrivaled flexibility and
performance down to 15% load levels as well as our patented low-emission
combustor designs, combined with Hitachi's expertise in air quality control
equipment, provides end users with proven solutions based on our extensive
experience in the Japan market.
The experience of
building these plants in Japan on a turnkey basis will be shared with
US engineering companies, allowing them to quickly assimilate knowledge
of the latest pulverized coal technologies. It is Hitachi's intention
to co-operate with, not compete with, the US engineering companies in
the building of these plants by providing a "Wrap" of the Supercritical
Coal Fired Boiler, the Steam Turbine Generator and the Air Quality Management
System.
With the very large
generation outputs and therefore, the very high capital cost of these
plants, both end users and engineering companies are looking to find ways
of reducing their risks before they proceed to build these facilities.
The ability and willingness
of Hitachi to wrap all of the critical components of the plant and provide
the appropriate guarantees for plant output, performance and emission
levels, combined with our proven experience of building extremely reliable
plants, will afford a high level of comfort to the customer and provide
potential equity investors and commercial lenders with the confidence
they need to participate in the project.
We do appreciate
that large Pulverized Coal supercritical plants will not, and indeed,
cannot be built in the same quantities as gas-fired combined cycle plants.
Expert opinions, in fact, vary as to how many will ultimately be built,
but numbers in the 10 to 20 range seem to be the most commonly accepted
in the industry. With our large in-house engineering and manufacturing
capability, Hitachi is ready to participate.
I would like to
spend a few moments to describe the first installation of our H 25, 27-MW
gas turbine in North America.
Six of these units
are installed at Sask Power's Queen Elizabeth Power Station just outside
of Saskatoon, in the province of Saskatchewan, Canada. This plant will
provide peak power to this region. Two of the units are already running
and the plant will be fully operational by summer 2002.
I'm also pleased
to advise you about the expansion of our Hitachi America, Ltd. after-sales
operation to support our new and existing units in the field. In the last
twelve months, we have recruited service managers from both the US and
Japan, and they have assembled a service organization that will be based
in Tarrytown, New York, to support the full range of Hitachi's products.
I wish to emphasize
that Hitachi is well positioned to quickly address the growing requirements
of the global power generating industry employing the manufacturing prowess
of our factories in Japan and our worldwide network of engineering resources
in the Americas, Asia Pacific, Europe and the Middle East.
Hitachi's Power
and Industrial Systems Group employs more than 90,000 people around the
globe. Hitachi is one of only a few companies worldwide that can provide
the expertise and total systems needed to cover a wide spectrum of energy
needs: nuclear, thermal and hydroelectric power plant systems, as well
as the speedy, efficient information system infrastructures required to
compete in a global marketplace. By developing new technologies and streamlining
various installation processes, Hitachi will continue to provide new,
highly efficient generating systems that meet the energy needs of tomorrow.
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