Hitachi and ELES agree on common smart grids and smart communities action

Mizuho Bank participates as an entrusted company

Ljubljana, Slovenia, 25 November, 2016 -€“ Hitachi, Ltd. (TSE: 6501, Hitachi) and ELES, d.o.o. (ELES) today announced that they have agreed to undertake a joint project on smart grids and smart community business in Slovenia. The project will run for three years from November 2016 to October 2019. A number of advanced solutions will be demonstrated by Hitachi to establish or expand its existing service-based business. These solutions will be further extended to other European regions in the future. ELES will use the solutions for optimization of their network operation; for the future development of their systems to enable a coordinated approach for all network operators in Slovenia; and for the creation of new services at lower voltage levels that enable secure operation of transmission systems.

This agreement is based on an existing partnership between Japan'€™s New Energy and Industrial Technology Development Organization (“NEDO”) and ELES. Within this partnership, Hitachi, as the entrusted company of NEDO, provides advanced equipment and solutions while ELES invests in development of smart functionalities, with the joint aim of creating a smart network infrastructure.

Mizuho Bank, Ltd. (“Mizuho Bank”) will also conduct the demonstration project to study business models as an entrusted company by NEDO and we will all collaborate to proceed with the project.

Slovenia became independent from the former Federal Republic of Yugoslavia in June 1991 and joined the European Union (EU) in 2004. Currently, Slovenia has set targets for covering 20% of its final energy consumption with renewable energy by 2020, based on EU directives that include reductions in the emission of greenhouse gases. In addition, Slovenia has ratified the new international framework for measures against global warming - the “Paris Agreement” - that came into effect on November 4, 2016. The achievement of these targets will require both the installation of large amounts of renewable energy generation, and the technology that can provide sophisticated and coordinated network management.

Since joining the EU, Slovenia has enjoyed improving standards of living and a high rate of growth in the manufacturing industry. As a result, electricity demand is increasing and the cost of replacing the existing, aging network infrastructure is expected to increase.

The joint Japan and Slovenia project began with a feasibility study from December 2014 to September 2016, which was commissioned by NEDO and the Slovenian government to Hitachi and Mizuho Bank. Following positive results of the study, the Slovenian state-owned electricity transmission system operator (ELES), electricity distribution network companies and local companies have joined the project. Specifically, a cloud-based integrated distribution management system for small and medium-scale electricity distribution companies will be provided as a service-based business. The system will use advanced Japanese electricity management technologies and ICT such as voltage optimization and fault restoration. And ELES will invest in development of advanced functionalities including the functions of voltage optimization and the restoration of the faulty sections. As a result, the system will enable coordinated operation of the many small and medium network operators across Slovenia, leading to reduced capital investment costs and allowing further expansion of renewable energy in the country. As renewable energy advances in Europe, improved fault restoration, voltage optimization and the visualization of distribution network information will reduce outages and contribute to the supply high-quality electricity and safe operation of the electric power system.

Benefits for Slovenia:

• advanced and environmentally-friendly solutions for developing sustainable electric power systems on a national level
• advanced systems, ICT technologies and cloud-based services to better utilize existing infrastructure and reduce investment costs
• a coordinated approach between distribution and transmission operators to achieve safer system operation
• exchange of knowledge and experience through cooperation of Slovenian and with Japanese industry