Hitachi announces $479M plan to build transformer insulation factory in Ontario

HITACHI Energy and the federal and Ontario governments have announced a $479-million plan to build a new transformer insulation factory to help meet skyrocketing demand from data centres, green energy and industrial development.

“All those investments are creating more demand for components, and transformers are a major element in the customer energy chain,” Bruno Melles, chief executive of Hitachi’s transformer business unit, said in an interview ahead of Friday’s announcement in London, Ont.

“Because in every place where there is power generation and in every place where there is a connection, there is a transformer.”

The 21,000-square-metre facility would be the first in Canada to produce pressboard — a material made from paper pulp that’s key to keeping transformers cool — and the first Hitachi would establish in the Americas. Currently in Canada that material is sourced from Europe, Melles said.

Construction is set to be complete by the end of 2028 and the project is expected to create 100 permanent skilled jobs.

Hitachi is shouldering the bulk of the investment, with the federal and Ontario governments collectively contributing $50 million.

Of that, $20 million is through the federal strategic response fund, $10 million is from Natural Resources Canada and up to $20 million is through the Investor Ontario Fund.

The power industry has been dealing with supply chain challenges as electricity demand booms. The factory aims to ease at least one of the big pinch points.

“Today we are in a situation where the industry for transformer manufacturing is going at a very high speed, but not all the industrial parts are going at the same speed,” Melles, who is based in Zurich, said.

“This is why we want to give a strong message to the market and say, ‘We want to be an integral part of the supply chain resilience and we are going to invest in order to ensure that the market is not going to have any shortage.’”

In May, Prime Minister Mark Carney announced Canada’s new electricity strategy, which aims to double the country’s electricity grid by 2050.

“Electricity demand in Canada is growing at an unprecedented pace, something we’ve never seen before,” said Carla Vicent, managing director of Hitachi Energy’s Canadian division, in an interview.

“By ensuring that we have this factory operational by the end of 2028, we will be able to respond to the higher needs and demand for the transformers that are an essential part of any grid that we want to do to be able to electrify.”

Building new infrastructure has been a key focus for Carney’s government, and several power and transmission projects have been referred to the major projects office for a streamlined review.

“By investing in the critical infrastructure needed to power our future, we are supporting economic growth, creating good-paying jobs and strengthening Canada’s economic security,” Industry Minister Mélanie Joly said in a news release.

— The Canadian Press