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A look at Hitachi ABB Power Grids’ acquisition of Pioneer Solutions

With the acquisition of Pioneer Solutions LLC by Hitachi ABB Power Grids, first announced in September of last year, Pioneer’s Financial and Regulatory Risk Management (FARRMS) technology platform has joined Hitachi’s broad Energy Portfolio Management software solution set that covers planning, forecasting, trading, portfolio optimization and market operations across the global power markets.

We recently caught up with Bryan Friehauf, Sr. VP of Enterprise Software Solutions for Hitachi ABB Power Grids and Uday Baral, Pioneer’s founder and former president, and now Head of Global Energy Portfolio Management at Hitachi ABB Power Grids to get their insights on the acquisition.  In that conversation, they also discussed their plans going forward to create a more integrated power and commodity solution set that addresses energy market operational and commercial needs from generation through settlements and operations.

When asked what drew Hitachi to Pioneer, Mr. Friehauf indicated that he had known of and had worked with Pioneer in a previous role prior to joining Hitachi ABB Power Grids and was impressed not only with their capabilities, but also their technology platform, people and culture. “While the Energy Portfolio Management products, which include Velocity Suite, nMarket, Portfolio Optimization, and MMS among others, were proven solutions for the specific markets they served, we didn’t really have a solution for the commercial and trading segments of the market. After the merger of Hitachi and ABB Power Grids was completed earlier in 2020, we were determined to fill this gap in our capabilities and Pioneer was a natural fit to help bring the portfolio of digital solutions together and provide a platform for growth.”

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From the perspective of Pioneer, Mr. Baral added, “This acquisition was attractive because it provided us access to a much larger global market and a team of highly experienced resources.  With that reach and team, we will be able to leverage the best of the solutions already in place with Hitachi ABB Power Grids, such as the engines from the existing nMarket and Portfolio Optimization tools and embed those capabilities into our ETRM solution to provide a full featured front-end and comprehensive solution for energy market participants.”

Mr. Friehauf added that he sees strong potential for this expanded platform, “We see tremendous opportunities with the growth of renewables and the changing business models for utilities. With the decarbonization of the energy market and the growth of industrial prosumers, the landscape of power producers is changing rapidly. Though the US and Europe continue to be regions of focus for these changes, the Asia markets, such as China and Japan, are quickly evolving and we see that region as an area of particular growth for us and our Energy Portfolio Management solutions.” He noted that he also saw potential markets in other commodities and asset classes, including mining and financial markets.

From an analyst perspective, we do see this acquisition as a good fit for Pioneer.  If their efforts to create a full featured “generation to settlement” platform do come to fruition (and at this point, there is no reason to believe they won’t), it could position Hitachi ABB Power Grids as a serious contender for many of the deals that were previously out of reach for Pioneer, particularly in the quickly evolving Asia-Pac region.  That said, even without the newly architected platform completed, Pioneer’s legacy software has continued to sell well post-acquisition, with almost a half dozen new deals since the acquisition closed, including one that had been a loss but was reopened and won by Hitachi ABB Power Grids once the deal was announced.