Here in Kyushu,
we are at the forefront of Japan’s
effort toward decarbonization.
At Kyushu Electric Power, we believe that the trend
toward carbon neutrality and the social changes brought
about by COVID-19 contain opportunities for us to establish ourselves
as the leader in low- and carbon-free projects to
create a better future for the next generation.
Member of the Board of Directors,
President & Chief Executive Officer
Kazuhiro Ikebe
Message from the President10Message from the President
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(Continued)
The year 2020 was pivotal for the energy industry, not only in terms of the great social change brought
about by the COVID-19 pandemic, but also the increased momentum seen in efforts toward carbon
neutrality. The emergence and spread of COVID-19 had a severe impact on social and economic
activities, as well as causing a major shift in the way we work, with work-from-home arrangements
becoming mainstream. Meanwhile, in October, amid a global groundswell of demand for action to tackle
climate change, the Japanese government declared its intention to become carbon neutral, and reduce
greenhouse gas emissions to zero by 2050, thus adding extra force to the energy industry’s—and, indeed,
the entire Japanese industrial community’s—efforts toward decarbonization.
The government’s 2050 carbon neutrality target is challenging, as is its goal of cutting greenhouse gas
emissions by 46% from fiscal 2013 levels, but it is vital that we do whatever is required to prevent climate
change if the world is to achieve environmental sustainability. At the Kyuden Group, we are working hard to
reward our stakeholders’ faith in us by seeking out ways in which we can make a difference, and bringing
all our strengths to bear in the effort to do so.
Fiscal 2020 in Review
The launch of Japan’s first Specific Safety Facilities at Sendai Nuclear Power Station Units 1 and 2 was
a momentous achievement that significantly improves safety. Specific Safety Facilities are an extremely
important for safe and secure operation, as they can cool the reactor from a remote location even in an
emergency situation such as terrorist attacks. As such, they are vital to the ongoing safety of nuclear
power generation. Maximizing the efficiency of work processes helped the project proceed efficiently
and finish ahead of schedule. Nuclear energy will continue to be an important part of the nation’s push
for carbon neutrality; not only are there no CO2 emissions, but operational availability is not subject to
the whims of the weather, meaning it is highly stable. In order to maintain the hard-won trust of our local
communities, we at Kyushu Electric Power are devoted to upholding and improving safety and reliability.
P31–P32
In April 2020, we split off our power transmission and distribution business into a separate entity named
Kyushu Transmission and Distribution in order to ensure the neutrality of the transmission and distribution
network. Maintaining a stable supply of electricity is, and will always be, our overriding mission, and we are
determined not only to improve our ability to ensure swift restoration of services following natural disasters
(that are becoming more frequent and intense), but also to further enhance transmission and distribution
networks while maintaining a balance between stable supply and
low cost. P33
In an effort to grow electricity sales, we have worked to strengthen our sales structure by establishing
new branch offices that combine our existing branch offices and sales centers. Demand in the Kyushu
area decreased 1.1% year on year due to COVID-19, but the progress made by Kyuden Mirai Energy mainly
in the Kanto region ensured that total electricity sales volume increased 6.3% across the whole Kyuden
Group. P34
As of December 2020, Kyuden Mirai Energy boasts the fifth largest electricity sales volume in Japan
despite increasingly fierce competition from new entrants to the electricity market such as public gas
utilities and major telecom companies.
In our renewable energy business, which we believe will be one of our chief growth drivers in the future,
we are developing a variety of projects inside and outside the Kyushu area, including upgrading geothermal
and hydroelectricity facilities and building new wind power and biomass generation facilities. Our target is
to develop renewable energy facilities with a capacity of 5,000 MW by 2030, and we had reached 2,300
MW by the end of fiscal 2020. We believe that offshore wind power generation will be key to meeting that
target. Unlike solar and onshore wind generation, which are restricted to areas with favorable conditions,
offshore has the greater potential. Working in partnership with German renewable energy giant RWE
Renewables, we are looking to commercialize wind power generation projects in likely locations throughout
Japan, including off the coast of Yurihonjo in Akita. P35–P36
We are also looking to expand our renewable energy business overseas. To that end, in June 2020,
we acquired Thermochem, a geothermal technical services provider in the USA involved in operations11Message from the President
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around the world. At present, our geothermal generation capacity of just over 200 MW accounts for
around 40% of Japan’s total output, which sits at around 500 MW. The field-proven strengths of Kyushu
Electric Power, West Japan Engineering Consultants, and the rest of the Kyuden Group had already helped
us acquire overseas generation facilities, such as Sarulla, Indonesia, which outputs roughly 330 MW, but
the acquisition of Thermochem provides a secure footing from which to expand our operations worldwide.
Outside of geothermal power generation, our operations extend beyond Asia and the Americas into new
territories such as the Middle East. Our target is a total output of 5,000 MW by our overseas businesses,
and we had reached 2,430 MW by the end of fiscal 2020. P37–P38
Sales and income both increased year on year in fiscal 2020, despite a number of challenges. These
included rising wholesale prices in response to high winter demand in relation to supply capacity, the
spread of COVID-19, and the shutdown of the Sendai Nuclear Power Station while the Special Safety
Facilities were being installed. Factors behind the improved performance include an increase in retail
electricity sales outside of Kyushu and a concerted groupwide push to improve our financial situation.
As we work to turn the Kyuden Group Management Vision 2030 into reality, we recognize there is room
for improvement, for instance in the speed with which initiatives are carried out. Nonetheless, we have
made a number of achievements that bring us steadily closer to our goal. The shift from face-to-face, in-
person interaction to remote interaction has had a palpable impact on social and economic activity, but
we believe that such challenges inevitably bring opportunities and we are determined to harness the full
spectrum of the Kyuden Group’s strengths to pursue a variety of initiatives aimed at increasing corporate
value.
Using the Evolution of the Business Environment to Seek Further Progress
The COVID-19 pandemic has brought about great social change. Virtually the whole of humanity has faced
some degree of difficulty over the past couple of years and that shared experience has caused people to
give thought to how they can make a difference in the future. Even in our increasingly globalized times,
social change on such a scale is unprecedented. Our electricity business has also been impacted by
COVID-19: electricity sales in the Kyushu area decreased by around 2 billion kWh in 2020 to around
80 billion kWh. In uncertain times like these, when the whole of society is facing crisis and major change
is inevitable, I believe it is my role as a leader, and as the CEO of the Kyuden Group to ensure we are all
facing the right way and ready to help guide society to a bright future. Amid such ground-shifting changes
in the business environment, I am confident that each member of the Kyuden team is prepared to harness
our unique strengths, built up over long years of experience and progress, to find ways that we can
help protect the natural environment and make society a better place, thereby seeking out new growth
opportunities for the Kyuden Group.
In addition, Japan is facing long-standing issues, such as a declining and aging population, exacerbated
by its low birth rates, and the decline of regional economies due to the overconcentration of Japan’s
government and economy in Tokyo. There have been major changes to working practices in the wake of12Message from the President
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the pandemic; remote working has become increasingly widespread, and more companies are promoting
"workations." Data shows that Tokyo recorded a rare year of net population outflow in fiscal 2020. Perhaps
these developments would have appeared even if there was no coronavirus pandemic, maybe a decade or
so later, but the fact that they have become established in a mere year has been a major boon for regional
economies. Kyushu, the Kyuden Group’s home region, is blessed with a mild climate and the people who
live there are friendly. We are determined to contribute to Kyushu’s continued development by helping bring
extra momentum to these communities, for instance by attracting new enterprises, and launching new
services as part of our urban development, real estate, and social infrastructure businesses as vehicles for
solving local problems and driving development.
P40, P54–P55
Stronger economic activity throughout Kyushu leads to higher electricity sales and corporate growth
for the Kyuden Group. The Kyuden Group cannot develop without the development of Kyushu; that is why
we are eager to work side by side with our local communities, investing our shared effort and insights to
overcome the challenges to sustained growth. And although Kyushu’s population is in a period of decline,
this does not equate to an immediate threat to demand for electricity. Power usage is calculated per
household, so as long as household numbers remain stable, a decrease in the number of people in those
households will not have a huge effect on consumption. As we head toward a future of carbon neutrality,
I believe that encouraging electrification will help offset any decline in demand driven by declining
populations.
Another major change has been the marked increase worldwide in momentum toward carbon
neutrality, and we recognize that the energy industry is expected to play a significant role. Electric power
generation accounts for around 40% of the 1.2 billion tons of CO2 Japan emits, so it stands to reason that
decarbonization of electricity supply and a pivot by consumers away from other heat sources to electric
heating are vital to Japan’s efforts to achieve carbon neutrality, and we will work hard to play our part.
Not only must we leverage our existing technologies to their fullest potential, but we must also innovate
to create revolutionary technologies. For instance, given that renewable energy sources such as solar
power generation are susceptible to the whims of the weather, the ability of storage batteries to balance
out supply and demand mean they are a key factor in the effort to broaden the uptake of renewables. But
making storage batteries bigger in size and smaller in cost remains a challenge, and further investment
and innovation are required. At the Kyuden Group, while taking into account uncertainties such as technical
innovation and social structures, our focus is on flexibly pursuing all possibilities that might bring about an
age of carbon neutrality. P22–P25
Harnessing and Enhancing the Kyuden Group’s Unique Strengths for the Greater Good
It is my hope that our stakeholders—and investors in particular—will consider more than just the
electricity sector when gauging the Kyuden Group’s corporate value and growth potential. The Kyuden
Group Management Vision 2030 sets out a consolidated ordinary income target of 150 billion yen by 2030
(50% from the domestic electricity business, 50% from other businesses). P26
The nature of the power business itself is diversifying, propelled by factors such as rapid change in
electric power systems. Amid such transformation, we are working hard not only on our main business
which is supplying electricity in Kyushu, but also on retail operations in other areas, electricity generation in
Japan and overseas, and renewable energy. We have the largest number of renewable energy generation
facilities in Kyushu, and boast a wealth of expertise and knowhow regarding development and operations.
Moreover, we are pursuing a variety of new projects, such as urban development and airport operations.
In this way, our business model is geared toward expansion from our long-standing business of electricity
supply in Kyushu to incorporate a broad range of new businesses in Japan and around the world.
One of our foremost strengths is our ability to minimize CO2 emissions while maintaining low costs. This is
made possible by safe, stable operation of our nuclear power stations. As of July 2021, ten nuclear power
stations have been allowed to restart operations in the wake of the Great East Japan Earthquake in 2011,
and four of them are ours. Those four units were among the first approved to restart, and they remain in
safe, steady operation today.13Message from the President
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Another of our strengths is the high capacity and efficiency of our renewable energy operations. These
are underpinned by the technical capabilities we have built up over long years of experience in resource
development and operations, as we were among the first to establish a comprehensive, one-stop system
for all five renewable energies—solar, wind, hydro, biomass, and geothermal—covering initial surveying,
operations, sales, and everything in between. Moreover, proactive development and acceptance of
renewable energy made us the industry leader for zero-emission status and proportion of FIT energy
sources.
Achieving carbon neutrality is dependent on combining nuclear power and renewable energy, both
of which we excel at. Based on our determination to generate electricity without emitting CO2, we have
invested significant effort into the swift restart of our nuclear power generation facilities and expanding our
renewable energy capacity. As a result, fully 58% of our energy sources in fiscal 2019 were zero-emission
or FIT sources, with nuclear power accounting for 35% and renewable energy 23% (of which, 14% were
FIT). P22
Shifting from internal combustion engine (ICE) vehicles to electric vehicles (EV) is cited as a means of
reaching carbon neutrality, but auto manufacturer executives have made it clear that abandoning ICE for
EV will not be enough by itself, and that we need to think about how the electricity that powers the cars
(and, indeed the car manufacturing process) is generated. This is indeed a vital insight: carbon neutrality
is impossible if the electricity that powers electric vehicles and their production is generated via a process
that results in high CO2 emissions. At the Kyuden Group, we are dedicated to further carbon reduction
and decarbonization in power sources, and I believe that establishing Kyushu as a hub for EV production
plants and promoting the spread of electric vehicles nationwide will boost Japan’s effort to achieve carbon
neutrality.
We have long been the frontrunners of carbon reduction and decarbonization in power sources in
Japan, and it is pleasing to see the rest of the nation starting to catch up, thus affirming that the path we
forged was the right one. Now we are determined to enhance our initiatives in this area to once again lead
the way into the future. For instance, we plan to invest around 500 billion yen in the expansion of zero-
emission and FIT energy sources, in addition to the
approximately 800 billion yen spent between fiscal
2016 and fiscal 2020. This will not only contribute
to the nation’s quest for carbon neutrality, but the
effort to grow revenues from effective, efficient use
of zero-emission energy sources will bring us closer
to achieving our financial targets. P27–P28
Our third major strength is the close ties we
have forged over the years with the people and
communities in Kyushu, an area that is brimming
with untapped potential. In addition to its mild
climate and friendly people, Kyushu offers a variety
of other advantages, including proximity to the
capitals and major centers of neighboring countries,
making Fukuoka (the economic focal point of
Kyushu) particularly promising as an economic hub
for the Asian region. I believe that unlocking that potential and establishing Fukuoka as a major Asian
financial center would be a significant boon for the Japanese economy overall. Thus, it is our task to
strengthen the bonds of trust we enjoy with our communities and customers and work in partnership with
local governments and businesses to maximize synergies so that we might contribute further to Kyushu’s
development and growth, and to our own.14Message from the President
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Kyuden Group Carbon Neutral Vision 2050: Turning Our Vision into Reality
According to the Green Growth Strategy Through Achieving Carbon Neutrality in 2050, the government’s
strategy launched in December 2020, "one estimate says the power demand in 2050 will increase by
30-50% compared with the current demand level due to electrification." Electrification presents us with
tremendous growth potential, so we are working to promote it on both the demand and the supply side.
For instance, not only are we striving for the maximum uptake of electrification in the household, business,
industrial, and transport sectors, but we are also promoting energy efficiency through better home
insulation and more efficient energy use by transport and logistics businesses. Initiatives surrounding
electrification and energy efficiency require administrative cooperation and a certain degree of rules and
regulations. For instance, Berkley, California, is seeking to encourage electrification by introducing a bylaw
prohibiting newly built houses from connecting to the mains gas supply. We foresee that regulations aimed
at promoting electrification will be implemented in Japan too, and we have already begun working to
ensure we will be able to meet those rules and regulations to the letter.
On the supply side, our efforts are informed by our dedication to "S+3E" (safety, energy security,
economy, and environmental conservation), and are concentrated on carbon reduction and decarbonization
in power sources through a system aimed at maintaining an optimal mix of nuclear, renewable, and
high-efficiency thermal energy sources. The limits of current technologies prevent us from immediately
switching to entirely renewable energy sources; it is important that we move gradually to ensure our shift
toward carbon neutrality does not compromise the stable supply of electricity. As a responsible energy
supplier, we are endeavoring to make the most efficient use of our thermal and nuclear power plants so as
to get the maximum output with the minimum CO2 emissions, while also investing in the development of
other solutions, such as renewable energy, storage, hydrogen, and ammonia.
Innovation through the development of technology is also a vital factor in achieving carbon neutrality.
Significantly, innovation in thermal and renewable energy provision has begun to bear fruit; it will be a while
yet before those breakthroughs are put to practical use in the field, but we are definitely making progress
and the tipping point is indeed near.
Moreover, the Kyuden Group has established a Sustainability Promotion Committee, with me as
head, to oversee progress toward achieving the Kyuden Group Carbon Neutral Vision 2050. We have
also established a department dedicated to running and overseeing our initiatives surrounding ESG
management, and appointed a corporate officer to head the department. Through firm leadership, we will
pursue ESG management (including our quest for carbon neutrality) in order to contribute to the realization
of a sustainable society. P41
Core Initiatives Aimed at Achieving Kyuden Group Management Vision 2030
Launched in June 2019, Kyuden Group Management Vision 2030 sets forth long-term policies for using
our business activities as a vehicle to contribute to sustained development in Kyushu so that we may grow
together with our communities. Contributing to the creation of a decarbonized society, maintaining our
position as a trusted service company, creating shared value with our communities, and maintaining a
workforce capable of identifying and overcoming the challenges to achieving these things...these will be
vital to our success in making that vision a reality.
Not only is contributing to the creation of a decarbonized society the duty of all energy businesses, but
it is also wind in our sails, adding extra momentum to our efforts in this area. And we know that working
hard at decarbonization helps maintain our position as a trusted service company and create shared values
with our communities. These days, more and more customers demand electricity generated by processes
that emit no CO2. This is a marked change from a mere three years ago, when our launch of renewable
energy options was met with a muted reaction. Nowadays, businesses pay careful attention to their carbon
footprint, and choose suppliers accordingly, and local public entities are making an effort to eliminate CO2
emissions. The times are indeed changing.
Maintaining a workforce capable of identifying and overcoming challenges refers to the importance of
having a workforce and an organization that can continually evolve to stay abreast of the times and deliver15Message from the President
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the kind of businesses and services that people need. P51–P52
The Kyuden Group workforce, a team of skilled and dedicated individuals, are the foundation that
underpins our ability to provide unique solutions. Their earnestness compels them to think, to innovate,
and to cooperate in the face of challenges, so as to find the right solution. To complement these qualities
with greater flexibility, we launched a new program, the KYUDEN i-PROJECT, which seeks to encourage
individuals to show greater initiative and act autonomously in tackling challenges—in this sense, the "i"
in i-PROJECT stands not only for "I" as in me, but also for "innovation." In addition to creating a corporate
culture that encourages initiative, the KYUDEN i- PROJECT is a sign to our various workplaces that
flexibility and diversity of values are to be valued and respected, and that we will support their efforts to
innovate. I believe that the project is beginning to have an effect on the Kyuden Group culture, and that a
tendency toward initiative and innovation is becoming a part of our mindset.
Each week, I record a 15-minute message for all Kyuden Group employees, which is broadcast as part
of Kaz Site, a program on our in-house TV network. It is an informal way (coming from "Kazu-san" rather
than "the president") to communicate the importance of our various initiatives aimed at achieving the goals
of the Group’s vision, and my gratitude to our workforce for their efforts in making it happen. It is an ideal
way to motivate our workforce and improve morale.
To Our Stakeholders
Even in the midst of a drastically changing business environment, we will continue to meet the
expectations of all our stakeholders by considering what is best for the natural environment and society,
and by continuing to utilize the full potential of our strengths to strive for ever greater heights. We are
devoted to pursuing medium- to long-term increases in corporate value and shareholder value through
growth investments and robust ESG management, not only to generate shareholder returns, but also
to meet shareholders’ expectations. In addition, from the perspective of being in the same boat as our
shareholders, I have personally increased my holding in the company in the three years since I became
President. Moving forward, I look forward to fine-tuning our earning structure so that half of our revenues
come from the domestic electricity business and half come from growth businesses. This will entail a
review of our shareholder returns, but for now, I am committed to restoring dividends as soon as possible
to their pre-Great East Japan Earthquake level of 50 yen per share.
All of us at the Kyuden Group relish the challenges of forging a new age, and will work as a team to
ensure we meet your expectations. We look forward to your ongoing cooperation and support in our
journey.16Message from the President
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