Driving today’s technological revolutions
ABB’s customer markets are undergoing a profound shift as internet-based technologies take hold in the industrial sector, revolutionizing the production and supply of energy as well as of goods and services.
As a pioneering technology leader serving the utilities, industry, and transport & infrastructure markets, ABB is at the heart of the Energy and Fourth Industrial Revolutions. The Energy Revolution encompasses a shift toward low carbon energy generation, including a dramatic increase in wind and solar generation capacity; a major shift toward distributed generation as opposed to centralized generation systems, whereby consumers also become producers, or prosumers, of energy; and finally the introduction of smart grids that will enable more efficient use of energy. The number of feed-in points from solar and wind is expected to continue to multiply, and transmissions are increasingly covering longer distances. At the same time, electricity demand is anticipated to rise, due to the accelerating take-up of electric vehicles (EVs) and significant increases in data storage needs. As a result, electrical systems are expected to require new equipment, technology and smart solutions to ensure that electricity supply remains reliable and secure.
In addition to the shifts in the energy market, digitalization is driving the Fourth Industrial Revolution and touches upon all our customer segments, creating sizeable new market opportunities. More than 55 percent of ABB products are already digitalized and offer connectivity. With the end-markets ABB serves still at an early stage of digitalization, including automotive, food and beverage, rail, buildings, oil and gas, chemicals, marine, utilities, and other discrete markets, ABB expects the demand for connected devices from the company’s existing customer base to grow significantly in the coming years.
With the commercial launch of more than 210 digital ABB Ability™ solutions and services in 2017, ABB is unlocking value for customers as part of the Energy and Fourth Industrial Revolution. ABB Ability™ is the Company’s unified, cross-industry digital portfolio, extending from device to edge to cloud on an open architecture system. ABB Ability™ helps customers develop new processes and advance existing ones by providing insights and optimizing planning and controls for real-time operations. The results can then be fed into control systems to deliver customer value through the improvement of key metrics such as factory safety, uptime, speed and yield. Digital solutions provided by ABB Ability™ include performance management offerings for asset-intensive industries; control systems for process and discrete industries; remote monitoring services for robots, motors and machinery; and control solutions for buildings, EV charging networks and offshore platforms. Some of the more specialized offerings address energy management for data centers and navigation optimization for maritime shipping fleets, among many others.
ABB focuses on delivering solutions that match the changing needs of utility customers with a complete offering for transmission and distribution. The Energy Revolution opens up numerous opportunities, and more than 30 percent of the market ABB operates in are high-growth segments within the sector, such as grid automation, high-voltage direct current (HVDC), software, grid control systems and microgrids. Generation, transmission and distribution are being unbundled, long-standing monopolies now have competitors and new entrants (e.g. pension funds, insurance funds, project developers) are investing in the sector. Many traditional utilities are being forced to reinvent themselves; some are refocusing on renewables, others on providing additional services to the consumers they serve.
Utilities continued to make selective investments in 2017, adding new capacity in emerging markets, upgrading aging power infrastructure in mature markets and integrating new renewable energy capacity globally. They are also investing in automation and control solutions to enhance the stability of the grid and thus demand for ABB Ability™ solutions gained traction during the year.
ABB won orders in Sweden, Germany and the Democratic Republic of Congo to upgrade the control and protection system of existing HVDC links with advanced digitalization technologies. In addition, ABB was awarded several orders for ABB Ability™ based digital substations in the U.S., Poland and India. ABB’s modular and containerized microgrid solution, PowerStore™ was ordered by Chugach Electric in Alaska, to bring clean energy and power reliability to its local community.
ABB serves factories all around the world from discrete to process industries. Industry customers are diverse in nature and may be publicly traded or privately held companies. Energy efficiency and productivity improvements are the intended hallmarks of ABB’s offerings in this customer segment. Through the acquisition of Bernecker + Rainer Industrie-Elektronik GmbH (B&R) in July 2017, ABB expanded its leadership in industrial automation and closed ABB’s historic gap in machine and factory automation. ABB now offers a comprehensive automation portfolio for customers globally.
Investments in 2017 in robotics and machinery automation solutions from the automotive sector and the wider industry market generally remained positive. Process industries, especially mining and oil and gas, remained subdued, with selective investments made primarily in service and productivity improvements.
The need for cutting-edge solutions to increase efficiency and to use renewable power generation to lower environmental costs continued to be important demand drivers for industry in 2017. ABB introduced to the market an electric motor with almost 100 percent energy efficiency, which is designed to significantly reduce energy consumption and operating costs. In order to meet the increasing demand for storage solutions, ABB entered into a wide-ranging supply and technology partnership with Northvolt AB for Europe’s largest and most advanced lithium-ion battery factory in Sweden. Industrial customers also continued to invest in reliable power. In this context, ABB won an order from Semiconductor Manufacturing International Corporation (SMIC) for ABB Ability™ power distribution solution. In robotics, ABB presented to the market a preview of its newest collaborative robot, a compact small-parts assembly robot with a single arm, that aims to build on the success of YuMi®, the world’s first collaborative dual-arm industrial robot.
Transport & Infrastructure Market
ABB’s expertise provides efficient and reliable solutions for transport & infrastructure customers. We believe our offerings are key to transport customers that are focused on energy efficiency and reduced operating costs. Other major growth drivers for this customer segment are urbanization, the move to electrify transportation, and growth in data centers.
Demand in transport and infrastructure markets was mixed in 2017. Demand for building automation solutions as well as solutions involving energy efficiency remained strong, while the marine sector, except for cruise ships, suffered because of subdued activity in the container vessel and oil and gas sector. In rail, ABB won orders worth $70 million from Swiss train manufacturer Stadler Rail to supply traction and onboard power equipment to three European rail operators.
A highlight of 2017 was the ongoing development of EV charging markets. Demand for ABB Ability™ EV charging infrastructure – from grid to socket, supporting all charging standards – is accelerating. ABB received multiple orders from customers in several countries across Europe and North America for EV fast chargers as well as for electric bus charging stations. ABB also introduced to market e-buses with world-record speed flash-charging technology.
As a global pioneering technology leader, we serve utilities, industry and transport & infrastructure customers through our business divisions. These markets and our divisions are discussed in more detail in the financial review of ABB Group.