December 16, 2014 / 7:35 AM / in 4 years

UPDATE 2-ABB, Hitachi set up power grid joint venture in Japan

* Hitachi to take a 51 pct stake in JV, ABB 49 pct

* Pair hope to profit from Japanese electricity reforms (Recasts, adds details on electricity reforms in Japan)

ZURICH/TOKYO Dec 16 (Reuters) - Switzerland’s ABB and Hitachi Ltd have set up a joint venture to sell high voltage systems in Japan, looking to benefit from reforms in the electricity industry after the Fukushima disaster.

Japan will start opening up the tightly-controlled electricity industry to more competition from next April, with the start of operations of a national grid company followed by full competition in retail sales the following year.

For ABB the reforms offer an opportunity to sell high voltage direct current (HVDC) systems for transferring electricity across Japan’s fractured regional networks as well as linking up renewable energy supplies that have surged in recent years.

ABB is a leading supplier of HVDC power lines that minimise electricity losses over long distances making it cheaper and more efficient to connect renewable energy sources, such as offshore wind power, to the grid.

Japan’s government has pledged to boost renewable energy and in April said it aims to surpass previous targets to double power generation from such sources to around 20 percent in 2030 from around 10 percent in 2012.

ABB is betting Hitachi’s long-term relationships with Japan’s utilities as a supplier of equipment and technology will help it make inroads in the country as the market opens up.

Analysts said tying up with Japan’s Hitachi should help the Swiss firm overcome strong local competition.

Hitachi will be the main contractor to apply ABB’s high voltage systems, the companies said in a statement. They expect the venture to start operations in the “coming months” subject to the necessary approvals.

Hitachi will take a 51 percent stake in the venture, which will be based in Tokyo, with ABB taking the remainder.

ABB built the world’s first commercial HVDC link in Sweden in 1954. It has since been awarded around 100 HVDC projects, including a contract to deliver a 2,375 km transmission link in Brazil, the world’s longest power line. (Reporting by Caroline Copley in Zurich and Aaron Sheldrick in Tokyo. Editing by Jane Merriman/Keith Weir)

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