Hitachi Ltd. is in talks with Switzerland-based ABB Ltd. on a joint venture to supply electric power equipment to Japan, where the government is moving to free up the household electricity market, sources said Tuesday.
The machinery maker would take the majority stake in the joint venture, the sources said. ABB has strength in the robotics and power technology areas.
The government plans to liberalize the retail electricity market in 2016, which is currently dominated by regional monopolies, in comprehensive reform that will also involve power companies spinning off their transmission and distribution businesses into separate units four to five years from now.
Those changes are aimed at enabling households and other small consumers to choose electricity suppliers more freely, making power grids more accessible to new entrants into the market and ensuring fairer competition while lowering electricity rates.
Expecting demand for new power equipment, Hitachi aims to boost sales in its power transmission and distribution segment to ¥200 billion in fiscal 2020, compared with ¥70 billion in fiscal 2013.
Reform of the nation's power industry has been considered crucial after the 2011 tsunami and nuclear crisis exposed vulnerabilities in the grid, with sharply elevated electricity prices.