Environmental restrictions and economic opportunities create demand to investigate the potential of further hybridization of non-road mobile machinery (NRMM). Many proposals for energy saving in hydraulic systems have been researched. In addition to well-established methods, there are zonal or decentralized hydraulics -an approach first introduced in the aircraft industry. In a fully decentralized system, the hydraulic pumps are disconnected from the engine and replaced with hydraulic power packs distributed throughout the system. In this study, decentralized hydraulics are realized with a direct driven hydraulics drive (DDH). By applying DDH, further hybridization can be achieved which will lead to increased productivity, minimized energy consumption, and robust performance in mobile machines operating in various environments. Therefore, the aim of this paper is to investigate the energy efficiency of the excavator hydraulic system equipped with DDH under typical digging cycles. For this purpose, a model which coupled multi-body dynamics, hydraulic system, and an electric motor is developed in the Matlab Simulink environment. Simulation results are validated by a simplified representation of micro excavator (one example of DDH) as a proof of concept.