Sustainability Across The Value Chain by Namita Asnani

Sustainability in the
Transformers Value Chain

Namita Asnani
Head of Sustainability Program
Transformers Business
Hitachi Energy
October 2022
Public
© 2022 Hitachi Energy. All rights reserved.
Sustainable development: A responsibility and an opportunity
Eco-systems
This (IPCC) report is a dire Plastic Snowfall in the Alps –
Climate change warning about the consequences toxicity Nanoplastics Permeate the
of inaction,” said Hoesung Lee, Environment – Report by Swiss
Chair of the IPCC. “It shows that Federal Laboratories for Material
climate change is a grave and Science and Technology (EMPA)
mounting threat to our wellbeing https://scitechdaily.com/plastic-
and a healthy planet”. Enhanced snowfall-in-the-alps-nanoplastics-
https://www.ipcc.ch/report/ar6/wg2/r permeate-the-environment/
Decarbonization esources/press/press-release
responsibility /
compliance
The energy sector’s needs for critical

Social As our world struggles to build the
Resource
minerals could increase by as much well-being necessary investment in the
shortages as six times by 2040 for achieving net- transition to clean energy, our latest
zero targets - International Energy Transition Minerals Tracker update
Agency reveals widespread abuse of land,
https://www.iea.org/news/clean-energy- water and Indigenous rights
demand-for-critical-minerals-set-to- https://media.business-
soar-as-the-world-pursues-net-zero- Enhanced humanrights.org/media/documents/
goals
responsibility / Transition_Minerals_Tracker_Global
Circularity _analysis.pdf
compliance
Public
Sustainable development: A new business paradigm
1. Extended responsibilities of a corporate citizen United Nations Sustainable Development Goals

▪ Wide range of stakeholders
▪ Temporal and spatial impacts of economic activity, e.g., -
➢ Environmental - State of the planet in the future
➢ Social - Human rights in supply chains
+ economic / financial capital growth
2. New opportunities & risks
3. Evolving regulations “The private sector plays a critical role in providing

solutions that can contribute to solving these challenges,
while also generating new business opportunities. The
SDGs are anticipated to generate at least US$12 trillion
worth of market opportunities by 2030” UN SDG Report
Public
Transformers are enablers for access to clean and affordable electricity
In 2050 World
Integrating Enabling grid Enabling access to
population is renewables electricity
interconnections
expected to reach Transformers designed for Powerful transformers for grid Transformers play a critical
~10bn variable Renewable Energy
Systems
interconnections role in providing access to
affordable electricity with
+72 GW of HVDC grid
+37 GW of solar energy and efficiency and reliability
interconnections
+65 GW of wind energy
Urgent and
important to limit
global warming to
1.5°C

A sustainability framework for Transformers
Enhancing
Potential Waste
safety footprint
and social
issues
1 Quality
of life
Efficient
and safe 4
electricity
End of life processes

Supply chain Reducing Recyclability, waste
Material extraction disposal, disassembly
Potential Resource
and processing,
environmental footprint
parts manufacturing
incidents
2 Carbon and
other emissions
3
Over the life cycle
Own operations Customer site
Manufacturing and Product and
assembly services portfolio
Public
Transformer supply chains and operations
Sustainability best practices

Advancing sustainability in our supply chain
Supplier partnerships – Responsibility

• Supplier Sustainability Development Program (SSDP)
• EcoVadis sustainability rating
Material Compliance – Responsibility

• Full global compliance to all local, regional and
global legislations
Raw material impacts – Decarbonization & Circularity

• Carbon emission reduction in key categories: Steel, Aluminum,
Copper
• Recycled material in direct materials

Our journey towards carbon neutrality
We achieved our first-step target of

> 50% reduction of overall CO 2
equivalent emissions
100%
Fossil-free electricity in own
175,000 tonnes per year
This equals to removing 35,000
operations passenger cars off the road

Two examples of energy generation in our facilities
Photovoltaic installation Photovoltaic installation,

(e-mesh), Zhongshan, China Colombia

Transformer operations / use phase
Decarbonization – global and user perspective

Decarbonization of transformer operations - global view
Transformers are efficient devices, with most having efficiency levels greater
than 98%.
Losses of up to 5% in transformers occur due to(1) –

▪ Generally, electricity passes through up to five transformers between the
power plant and consumer
▪ Wide range of efficiency levels on ground - number of countries have still
not implemented national efficiency mandatory policies for distribution
transformers
▪ In view of the projected increase of electricity generation and
consumption over the next decades, energy losses in transformers are
expected to grow by more than 60% by 2040 in case of no changes in
current energy efficiency specifications
T&D losses in grids resulted in around 1 gigatonne of carbon dioxide (Gt

CO2e) emissions in 2018(2)
▪ This is about 2.5% of total emissions globally(3)
▪ Roughly half of these can be attributed to losses in transformers
(1) https://united4efficiency.org/wp-content/uploads/2017/11/Transformers-Policy-Brief.pdf
(2) https://www.iea.org/reports/sustainable-recovery
(3) https://ourworldindata.org/co2-emissions#global-co2-emissions-from-fossil-fuels-and-land-use-change
Public
Decarbonization of transformer operations – way forward
Energy efficiency standards, TCO and Optimum Total cost of ownership with
shifting energy mix sustainability costs
Major influencing factors in the future to reduce GHG
emissions from transformer operating losses
▪ Evolving energy efficiency standards worldwide and wider
adoption of Total Cost of Ownership (TCO) concept by
transformer end users, including accounting for carbon
costs
▪ As the share of renewables in the energy mix increases
CO2e grid emission factors will reduce
Example of minimum energy performance standards

(MEPS) for three phase liquid filled transformers(1)
(1) https://united4efficiency.org/wp-
Public content/uploads/2017/11/Transformers-Policy-Brief.pdf
Accounting for decarbonization – transformer user
The GHG (Greenhouse gases) protocol is the main

global standard to account for organizational GHG
emissions. It defines emissions as Scope 1, Scope 2
and Scope 3. For a transformer user-
‒ Transformer operational losses contribute to

carbon emissions from ‘purchased electricity’ i.e.,
scope 2. They mainly depend on transformer
efficiency and energy mix/grid emission factor
‒ Emissions from manufacturing of transformers

contribute to carbon emissions from ‘capital
goods’ i.e., scope 3 GHG emissions. They mainly
depend on carbon footprint of raw materials used,
followed by energy mix of the manufacturing
facility
‒ The above emissions data can be obtained from

the transformer’s LCA (Life Cycle Analysis) study Overview of GHG Protocol scopes and emissions across the value chain(1)
(1)
https://www.ghgprotocol.org/sites/default/files/ghgp/standards_supporting/Diagram%20of%20scopes%20and%20em
issions%20across%20the%20value%20chain.pdf
Public
Transformer environmental impacts
Context matters
Public
Managing environment impacts of a transformer over its life-cycle
Effect of grid electricity mix on
7.000.000 carbon emissions over life cycles*
6.395.095 ▪ Considering the future evolution of electricity mix
6.000.000 (more renewable sources) importance of managing
306.851 impacts from materials and resource shortages will
5.000.000 grow
4.000.000 ▪ This leads to the direction of adopting principles of

circular economy
3.000.000
▪ Environmental impacts go beyond carbon emissions –
Wind
2.000.000
e.g., in certain cases, bio-degradable fluids can better
(Values at different scale)
serve safety and reduced threat to local ecosystem (in
1.000.000
case of an accident / mineral oil leakages)
-
▪ Optimization needs to be done based on context –
EU-28 application and site area, electricity mix, loading profile
Materials Manufacturing Transport
Operation End of Life Total
* Based on Hitachi Energy LCA (Life Cycle Analysis) Study for a typical 40 MVA transformer
Public
Transformer environmental impacts
Life Cycle Analysis (LCA) for impact assessments
Public
Accounting for a transformer’s life cycle environmental impacts
Life Cycle Analysis (LCA) – what, who, how Product life-cycle stages and LCA scope
Manufacturing
▪ Quantifies the environmental impact of a product or a system for
a defined scope e.g., cradle to gate, grave or cradle and defined Semi-finished
Raw materials T
Upstream
products
functional unit e.g., a unique transformer
Cradle-to-gate LCA
▪ Standardization bodies: ISO and EN standards on T
methodology, scope definitions, impact categories
Cradle-to-grave LCA
▪ Tools: LCA software tools e.g., SimaPro, GaBi or openLCA and
Assembly e finishing
Industry databases for supply chain impacts e.g., ecoinvent
Core
▪ EPD (Environment Product Declarations) Operators: Develop
Product Category Rules and facilitate third-party verification to Testing
enhance comparability and minimize the risk of green-washing
▪ EPDs published within the same product category, if
Downstream
originating from different programs, may not be comparable Distribution Installation
▪ LCAs and EPDs typically do not factor-in impacts from

accidents
Use and maintenance End of life
Public
Accounting for a transformer’s life cycle environmental impacts
Tools for obtaining the environmental impact of your transformer
Environment impact /Carbon Life Cycle Analysis (LCA) studies Product Carbon Footprint – Environment Product Declaration –
footprint calculator tool – a good - derived from LCA software tools derived from LCA study including derived from LCA study, including
estimation. based on methodologies aligned Product Category Rules (PCR), it is Product Category Rules (PCR), It is
with ISO standards. third party verified. third-party verified, available on EPD
operator website.
Public
Environment Product Declaration – common impact categories
Typical output of a Transformer EPD EPD impact categories have been defined by the Standard EN 50693:2019.
They are related to human health & safety, ecosystem/biodiversity health
Environment impacts of a 40 MVA 132/15.6 kV Hitachi
Energy Transformer from Monselice facility. EPD available
and material well-being/resource depletion.
online on EPD Italy website(1)
▪ GWP or Global Warming Potential. An indicator of climate change with potentially adverse
effects on ecosystem health, human health and material well-being.
▪ ODP or Ozone depletion potential. Can have adverse effects on human health, animal health,
terrestrial and aquatic ecosystems, biochemical cycles and materials.
▪ AP or Acidifying Potential. It covers acidifying substances that cause a wide range of impacts
on soil, groundwater, surface water, organisms, ecosystems and materials (buildings).
▪ EP-freshwater or Eutrophication Potential of aquatic freshwater. Includes all impacts due to

excessive levels of macronutrients in the environment caused by emissions of nutrients to water.
▪ POCP or Photochemical Ozone Formation. Indicates formation of reactive substances (mainly

ozone) that are harmful to human health and ecosystems and can also damage crops.
▪ ADP or Abiotic Depletion Potential of resources-mineral, metals and fossil fuels. Relate to the
protection of human well-being, human health and ecosystem health and the extraction of
minerals and fossil fuels.
▪ WDP or Water Depletion Potential. This indicator evaluates the potential for deprivation of water
resources, both for humans and ecosystems.
(1) https://www.epditaly.it/epd/mineral-oil-immersed-transformers-40-mva/
Public
Evolving customer requirements
Sustainability in transformers value chain
Public
Meeting customer requirements across the value chain
Transparent
Sustainability
targets and
strategy
Basic sustainability Recycled raw
requirements: Product material /
Carbon foot- recyclable
• Health, Safety and print/ EPD(1) material at
Environment End-of-Life %
Examples of
Management Systems evolving
in facilities customer
sustainability
• Product and material End-of-life requirements
Electricity
compliance guidance – from fossil
free sources
• Transformer energy Dismantling
in
and material
efficiency as per recovery manufacturing
manual Alternative operations
regulations or higher fluids - bio-
degradable /
Recycled
mineral oil
Partnering in the sustainability journey
Public
Value proposition
Sustainability in transformers value chain
Public
Sustainability across the transformer life cycle / value chain
Responsibility
1 People & Environment
› Transparency
2
›
Decarbonization Innovation
›
›
Collaboration
3 Circularity
Public
Sustainability across the transformer life cycle / value chain in Hitachi Energy
Responsibility Decarbonization Circularity

People & Planet
Supplier Sustainability
Supply chains Development Program; Manage carbon footprint of Drive usage of recycled
Supplier EcoVadis ratings raw materials materials
Target zero Health, Safety, 100% fossil-free electricity in Efficient water, energy and
Operations Environmental incidents; own operations starting 2022; waste management; EconiQTM
Diversity program Carbon neutrality target - 2030 reduce, reuse, recycle
Transformers
Enable safe & sustainable Integration of renewables; Life-cycle optimization
Products-Services operations; alternative fluids; Enablement of grid services; End-of-Life guidance
life & End-of-Life Access to affordable electricity interconnections; for dismantling and material
Optimized energy efficiency recovery
* Focus on material issues

Transparency Innovation Collaboration
Public
Sustainability 2030 targets
Hitachi Energy
Public
Sustainability 2030 Targets – Hitachi energy
Hitachi Energy Targets
We have placed Planet

sustainability at the Carbon-neutral in our own operations
↓ 50% CO2 emissions along the value chain
heart of our ↓ 50% waste disposed
Purpose: focused on ↓ 25% freshwater use
↓ 25% hazardous substances and chemicals
advancing a sustainable
energy future. People
Zero harm
Top quartile health absence rates
Claudio Facchin Life-long learning culture
CEO, Hitachi Energy Increase female diversity from 19% to 25% by 2025
Peace
Zero incidents of corruption and bribery
Partnerships
Increase involvement in multi-stakeholder partnerships
Public
Thank you!
Public

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Sustainability in the

Transformers Value Chain

The energy sector’s needs for critical

1. Extended responsibilities of a corporate citizen United Nations Sustainable Development Goals

+ economic / financial capital growth

2. New opportunities & risks

3. Evolving regulations “The private sector plays a critical role in providing

© 2022 Hitachi Energy. All rights reserved.

End of life processes

© 2022 Hitachi Energy. All rights reserved.

Supplier partnerships – Responsibility

Material Compliance – Responsibility

Raw material impacts – Decarbonization & Circularity

© 2022 Hitachi Energy. All rights reserved.

We achieved our first-step target of

© 2022 Hitachi Energy. All rights reserved.

Photovoltaic installation Photovoltaic installation,

© 2022 Hitachi Energy. All rights reserved.

© 2022 Hitachi Energy. All rights reserved.

Losses of up to 5% in transformers occur due to(1) –

T&D losses in grids resulted in around 1 gigatonne of carbon dioxide (Gt

Example of minimum energy performance standards

The GHG (Greenhouse gases) protocol is the main

‒ Transformer operational losses contribute to

‒ Emissions from manufacturing of transformers

‒ The above emissions data can be obtained from

4.000.000 ▪ This leads to the direction of adopting principles of

▪ EPDs published within the same product category, if

▪ LCAs and EPDs typically do not factor-in impacts from

Tools for obtaining the environmental impact of your transformer

▪ EP-freshwater or Eutrophication Potential of aquatic freshwater. Includes all impacts due to

▪ POCP or Photochemical Ozone Formation. Indicates formation of reactive substances (mainly

Partnering in the sustainability journey

Responsibility Decarbonization Circularity

* Focus on material issues

Hitachi Energy Targets

We have placed Planet

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