Hitachi Energy is struggling to keep pace with surging demand for electricity infrastructure, with Global CEO Andreas Schierenbeck saying the industry needs greater visibility into future orders and closer partnerships with customers to expand manufacturing capacity faster.

The company is investing more than $9 billion worldwide to increase production, but long lead times for manufacturing facilities and grid projects are making it difficult for supply to catch up with demand, Schierenbeck said in an exclusive interview with CNBC-TV18.

“We actually aren't coping. Demand and supply are not in balance at the moment. There is much more demand than supply,” he said.

A data center can be built in about two years, while a manufacturing facility takes around three to four years to establish. Grid expansion plans can take 10–15 years, with individual projects requiring five to six years to complete. These timelines leave equipment manufacturers with limited scope to respond quickly to rising demand.

Schierenbeck said the industry's traditional transactional approach, in which customers place orders and suppliers fulfil them without sufficient long-term coordination, needs to change.

Manufacturers must have greater certainty about future demand before committing hundreds of millions of dollars to new factories. Long-term planning, framework agreements and advance capacity reservations would help companies make investment decisions with greater confidence.

“We have to establish partnerships, engage in more long-term planning, enter into framework agreements and reserve capacity so that we can invest faster,” Schierenbeck said.

Hitachi Energy is expanding existing manufacturing sites and building new facilities. However, Schierenbeck said greater visibility into future business would help the industry accelerate investment, as companies need clear business cases to justify additional spending to shareholders.

Source link