Business Update
November 4, 2010
November 4, 2010
Statements made in this overview of operations regarding Kyushu Electric Power’s strategies
and forecasts and other statements that are not historical facts are forward-looking statements
based on management’s assumptions and beliefs in light of information currently available, and
should not be interpreted as promises or guarantees.
Owing to various uncertainties, actual results may differ materially from these statements.
Investors are hereby cautioned against making investment decisions solely on the basis of
forward-looking statements contained herein.
Table of Contents
Table of Contents
◇ Section 1
○しろまる
○しろまる The progress of Business Management Plan for FY2010
The progress of Business Management Plan for FY201011 Promotion of Nuclear Power
Promotion of Nuclear Power ・・・・・・・・・・1
・・・・・・・・・・122 Overseas Business Development
Overseas Business Development ・・・・・・・・2
・・・・・・・・233 E
Efficiency
fficiency Improvement
Improvement・・・・・・・・・・・・・4
・・・・・・・・・・・・・444 Other
Other ・・・・・・・・・・・・・・・・・・・・・5
・・・・・・・・・・・・・・・・・・・・・5
◇ Section 2
○しろまる
○しろまる Economic Trend of Kyushu Region
Economic Trend of Kyushu Region・・・・・・・・・6
・・・・・・・・・6
Section 1
The progress of Business
The progress of Business
Management Plan for FY2010
Management Plan for FY2010 11 Promotion of Nuclear Power
Promotion of Nuclear Power1[ Major Process ]
・The Company is actively developing nuclear power as a core power source because it
takes an important role in energy security (long‐term fuel procurement stability) and
measures on global environmental issues (no CO2 emission during operation) and has
great economic efficiency. The Company is working toward starting operation of Unit 3
at Sendai Nuclear Power Station in FY2019.
・ In FY 2020, our zero‐emission power supply rate will be approx. 60% due to
development of the Unit 3 at Sendai Nuclear Power Station.
・ Annual CO2 reduction effect of the Unit 3 Sendai Nuclear Power Station development
will be approx. 7‐9 million tons.
−Outline of Facilities−
・System: Advanced pressurized water reactor (Advanced PWR)
・Output: 1,590 MW
[Composition of Power Output by Fuel Type ]
[Development Plan for Unit 3 at Sendai Nuclear Power Station]
・On September 24th, the Company applied to the Minister of Economy, Trade and Industry for important electric power development site designation
for the development plan for Unit 3 at Sendai Nuclear Power Station. (This was conducted based on the Regulation Relating to Designation of
Important Electric Power Development Sites, Notification of the Ministry of Economy, Trade and Industry No. 31 of February 18, 2005).
・Important electric power development sites are designated by the Minister of Economy, Trade and Industry for the purposes of building local consensus
and facilitating related approval procedures, etc., based on applications by electric power companies for sites associated with electricity sources
that are regarded to be especially important for the government to promote.FYItem
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Major Process
Development
project
application
Environmental
impact
assessment
submission
First
public
hearing
Government’s
approvalofchangesinnuclear
reactor
installation
Construction
startsFuelloading
Operations
start29%18% 13%25%27%22%29%
42% 49%5%5%8%0%2%1%8%5%7%3%1%1%
Domestic
Companies
(FY2009
Presumption)
Kyushu
(FY2009 Result)
Kyushu
(FY2020 Plan)
NuclearNewEnergy
Hydro
GeothermalCoalLNG
Oil, etc.
Approx.60%
Approx.50% ←Zero Emission Power
Source Ratio
Approx.40%
[ CO2 emissions kg‐CO2/kWh, results and forecasts for CO2 emissions kg‐CO2/kWh
from electricity sales volume ] 22 Overseas Business Development
Overseas Business Development(1)(1)・Orient Eco Energy Ltd. (OEEL), a company that conducts biomass power generation projects and is 40% owned by
NEECO, has entered a long‐term power sales agreement with the Tamil Nadu Electricity Board (TNEB), etc., in India to
conduct a power generating business that supplies electricity. Total project costs including fuel mixture facilities are
approximately 1 billion yen, with plans to start operations in FY 2011.
・The Group will use the experience and know‐how gained from the development and management of Miyazaki Biomass
Recycling Co., Inc., a poultry manure power generating business in Miyazaki, to contribute to the stable supply of
electricity in India, known for its chronic power shortages, and contribute to the spread of biomass power generation,
which is a form of renewable energy.
[ Outline of Orient Eco Energy Limited ]
[ Location ]2(Reference)Outline of Miyazaki Biomass Recycle Co., Inc.
[Present Situation]
・The Company has 7 overseas generating projects in 6 spots with total output of 6.884 million kW. The amount of electric power output from each
project corresponding to the Company's investment share is 1.5 million kW.
・Total investment amount is approx. 40 billion yen. [Future Plan]
・The Company will build high‐efficiency thermal power IPP projects and power generation projects with renewable energy resources including geothermal
and wind power mainly in Asian region, contributing to CO2 emissions reduction on a global scale.
・Over the coming 10 years, the Company plans to expand its total investment to about 100 billion yen and its ownership interest to about 3 million kW.
Specifics
Description of
Business
Sales of Electricity Generated with Heat by Poultry
Manure Incineration
Sales of Ashes Derived from Poultry Manure Incineration
Ownership
Breakdown
Farmhouses 54%, Nishinippon Environmental Energy
Co., Inc. 42%
Broiler Companies 4%
Location Kawaminami, Koyu‐gun, Miyazaki Prefecture
Output Capacity Approx. 11,000kW
Fuel Poultry Manure
Start of Operation May 2005
[Recent Topics 1]
・Our fully owned subsidiary Nishinippon Environmental Energy Co., Inc. (NEECO) has made a shareholders agreement with Indiaʼs Orient Green Power Company
Limited (OGPL), a renewable energy development company, to conduct a biomass IPP power generation business (fueled by poultry manure and woody biomass)
in Namakkal, Tamil Nadu.(July 2010)
Specifics
Description of Business IPP with Fuel of Poultry Manure and Woody Biomass
Ownership Breakdown
Orient Green Power Company Limited 60%
Nishinippon Environmental Energy Co., Inc. 40%
Location Namakkal, Tamil Nadu, India(380km to the southwest from Chennai)
Output Capacity 7,500kW
Fuel Poultry Manure and Woody Biomass
Start of Operation FY2011(plan)
Namakkal, Tamil Nadu
India 22 Overseas Business Development
Overseas Business Development(2)(2)・Hsin Tao Power Corporation is a company that generates 600,000 kW with an LNG combined‐cycle power plant that was developed after
the second round of IPP bidding conducted by the Taiwan Power Company in 1995. Operations started at the electric power plant in
March 2002, and all of the power generated is sold to the publicly owned Taiwan Power Company.
・This project is the Companyʼs first in Taiwan, and this overseas expansion follows market entries in Mexico, the Philippines, Vietnam,
Singapore, and China. The IPP system is well organized in Taiwan, and it is expected that demand for electric power will steadily grow
(there are plans to develop 16,700,000 kW of new energy sources by FY 2020). Our strategy is to use this project to establish a base in
Taiwan in order to actively promote new business in the country.
[Project Outline ] [ Location ]3新桃発電所
台北
高雄
新桃発電所
台北
高雄
Specifics
Company Name Hsin Tao Power Corporation
Ownership Breakdown
Marubeni Corporation 50.0%, the Company 33.2%
Cathay Life Insurance(※(注記))10.0%, Other 6.8%
Location Shinchiku‐ken, Taiwan (Approx.50km to the southwest from Taipei)
Start of Operation 22th March 2002
Power‐generating Facilities 600,000kW Gas Combined Cycle(×ばつ3 ×ばつ1)
Electricity Buyer Taiwan Power Company: 25 year contract until 2027
Fuel Supplier CPC Corporation, Taiwan: 25 year contract until 2027
EPC GE/Bechtel
O&M GE International (long‐term O&M contract until 2020)
(※(注記))Taiwanese number one publicly‐listed insurance company
[Recent Topics 2]
・The Company has acquired a portion (33.2%) of the issued shares of the Hsin Tao Power Corporation, a power producer
located in Hsinchu Prefecture in Northern Taiwan. (October 2010)
Hsin Tao Power Plant
Taipei 33 Efficiency Improvement
Efficiency Improvement
[Maintenance and Overhead Expenses]4※(注記)Overhead Expenses : 9 expense items of waste disposal expenses, consumables expenses, compensation expenses, leasing fees, subcontract fees,
expansion and development expenses, training expenses, research expenses and others
[Specific Examples for Reduction of Maintenance and Overhead Expenses]
・ Reschedule of maintenance work and revision of repair area based on the detailed consideration of the degree of emergency and impact
・ Revision of subcontract fees (outsourcing area, unit cost) and leasing fees, other overhead expenses reduction etc.
[Reduction of Maintenance and Overhead Expenses]
・The Company is working thoroughly to improve overall efficiency in operation by rescheduling construction based on the risk
evaluation including inspection results, reviewing construction area based on cost‐effectiveness and renegotiating unit prices,
while there are factors of increase such as the aging of facilities. ・In FY 2010, maintenance and overhead expenses are expected to total 330 billion yen, which is the level of results from
FY 2006, and down 38 billion yen compared to the previous fiscal year, which was incorporated in the original projections.
As for the fiscal year forecast, currently we are progressing nearly in line with original projections.
1,636 1,612 1,659 1,728 1,753 1,590
1,573 1,707
1,849
1,978 1,951
1,74501,000
2,000
3,000
4,000
2005 2006 2007 2008 2009 2010
(100 million yen)
Maintenance Expenses
Overhead Expenses
3,704
3,508
3,706
3,319
3,209
3,3352010(Forecast)
■しかく Active Development and Introduction of Renewable Energy44 Other
Other
○しろまる Completed Replacement of Gas Turbine of Unit 1 (1‐2 axis) at Shin‐Oita Thermal Power Station [July]
・Under replacement construction of all 6 axes of Unit 1 in sequence from July 2009 (Completed in 1‐4 axis and 1‐2 axis)
・Scheduled to complete replacement of all 6 axes of Unit 1 in October 2012
・Thermal Efficiency +3.3%(43.0%→46.3%), Annual CO2 Emission Reduction Volume 200,000 tons, Annual Fuel Consumption Reduction
Volume 40,000 tons
○しろまる Introduction of Solar Power Generation(from homes) [116 thousand contracts as of the end of September]
・Number of contracts increased with about twice the pace of before introduction of the system
○しろまる Development of Mega‐solar Omuta Power Station(3,000kW) [commencement of operation in November]
○しろまる On‐site Solar Power Generation Business by Kyuden Ecosol Co., Ltd.
・It has been decided to introduce on‐site solar power generation systems to 6 customers including Fukuoka Airport Building Co., Ltd.(207kW)
○しろまる Proving Tests of Electric Power Generation with Woody Biomass Mixed Combustion at Reihoku Power Station [scheduled
commencement in around January to February 2011]
・Maximum woody biomass combustion volume of 15,000 tons per year (co‐firing ratio of approx. 1%)
○しろまる Change in Rated Output of Takigami Geothermal Power Station (25,000kW→27,500kW) [June]
○しろまる Commenced Demonstration Experiment of Micro Grid [April(〜March 2013)]
■しかく Improving Facility Efficiency and Maintaining Aged Facilities
■しかく Long‐term and Stable Fuel Procurement
○しろまる Establishment of Hibiki LNG Company Ltd. (the Companyʼs investment ratio : 10%) [April]
・Hibiki LNG terminal : commencement of work in July 2010, commencement of operation in November 2014
・Providing backup to the Tobata LNG terminal owned and operated by our group company Kitakyushu LNG Company Ltd.5 Section 2
Economic Trend of Kyushu Region
Economic Trend of Kyushu Region 830844881859834867222237252240236224700750800850900950
1,000
2005 2006 2007 2008 2009 2010
(億kWh)140160180200220240260(億kWh)
販売電力量計 大口需要
Economic Trend of Kyushu Region
Economic Trend of Kyushu Region(1)(1)■しかく Electricity Demand6[Year‐on‐year change by industry]
[Forecast for FY2010]
[Electricity Sales Volume and Large‐scale Demand]
Note:( )Compared with previous announcement, [ ] Difference from previous announcement
(100 million kWh,%)5060708090100110120130140
4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9
VS. the Previous year (%)
Machinery Steel and Iron Chemicals Clay and Stone Non‐ferrous Metals Total
2009 2010
・The Company revised the forecast of electricity sales volume for FY2010 upward to 86.7 billion kWh, +3.3 billion kWh compared with the previous year, mainly due to the effect of
high temperature in this summer.
・The forecast demand of large‐scale customers for FY2010 recovered to the level of approx. 94% compared to FY2007 (before Lehman shock), almost equivalent level of FY2006.
・For the month of September 2010, the increased sales in main industries including Electric machinery, Transportation machinery, Chemicals and Non‐ferrous Metals brought sales
volume up by 6.5% from the previous year. The sales volume exceeded the previous year for 10 months in a row.
・The Company revised the forecast demand of large‐scale customers for second half of FY2010 upward mainly because a new Electric machinery factory is expected to start operation.
・In terms of the economic outlook, the economy is expected to head towards a smooth recovery in the future. However, there are concerns about the reduced effect of monetary policy,
the impact from currency fluctuations such as yen appreciation, etc., and underperformance of the economy overseas especially in Europe and the United States.
(103.4) [10.5] (100.9) [2.8] (102.1)
319.0 311.6 630.6 617.3 13.3
(100.8) [1.0] (101.3) [1.4] (101.0)
120.4 115.6 236.0 233.6 2.4
(102.7) [11.5] (101.0) [4.2] (101.8)
439.4 427.2 866.6 850.9 15.7
Total
Previous
Announcement(B)Difference(A−B)
General
Demand
Large‐scale
Customers
First Half Second Half Full Year(A)
Current Announcement
(100 million kWh)
(100 million kWh)
Large‐scale Demand
Electricity Sales
Volume (Total) 0246810124 5 6 7 8 9 10 11 12 1 2 3
(100 million units)
FY2008
FY2010
FY2009
FY2007051015
4 5 6 7 8 9 10 11 12 1 2 3
(10 thousand vehicles)
FY2008
Fy2007
FY2009
FY20100501001502004 5 6 7 8 9 10 11 12 1 2 3
(10 thousand tons)
FY2008
Fy2007
FY2009
FY2010
■しかく Production situation of the main products ― It recovered to almost the same level before recession ―
Economic Trend of Kyushu Region
Economic Trend of Kyushu Region(2)(2)7
■しかく Major Capital Investment Plan
(Source)Based on Newspaper articles etc.70Newly build a major LNG receiving facility "Hibiki LNG Terminal"
Saibu Gas Co.,Ltd.
〜201410Enhance capacity of power semiconductor factory(Fukuoka, Kumamoto)
Mitsubishi Electric Corporation
〜20126Enhance capacity of liquid crystal panel film factory
The Nippon Synthetic Chemical Industry Co.,Ltd.
〜201237Enhance capacity of solar cell factory (Kumamoto)
Fuji Electric Systems
〜2012100Newly build world‐largest class solar cell factory(Miyazaki)
SOLAR FRONTIER .K.K. (Showa Shell Solar Co., Ltd.)
〜201121Enhance capacity of liquid crystal panel protection film factory
FUJIFILM Corporation
〜201129.5Enhance capacity of radial tires for construction vehicles(Kitakyushu)
Bridgestone Corporation
2010〜12TBAOpen design/development center (Fukuoka)
Daihatsu KyushuTBA10
Newly build a lithium‐ion battery factory(Nagasaki)
Mitsubishi Heavy Industries, Ltd.
〜201010Newly build a factory to manufacture axis of turbine for nuclear power
generation (Kitakyushu)
Japan Casting & Forging Co.,
〜2010
Investment
Project Details
Company
Period
(billion yen)
(Source) Kyushu Bureau of Economy, Trade and Industry "Industrial trend in Kyushu region"
Integrated circuit production
(Kyushu)
Vehicle production
(Kyushu)
Crude steel production
(Kyushu)
For more information, please contact:
Investor Relations Group
Strategy Planning Dept.
Corporate Planning Division
KYUSHU ELECTRIC POWER CO., INC.
Email ir@kyuden.co.jp
URL:http://www.kyuden.co.jp/en̲ir̲index.html