Mitsubishi Corporation

Diversifying Market Needs Identifying Solutions to Ensure Optimized Power Supplies

Diversifying Market Needs Identifying Solutions to Ensure Optimized Power Supplies

Since the 1960s, MC has been selling and delivering power generation, transmission, and transformer equipment to its customers overseas. In the beginning, our operations mainly focused on the export of primary components like turbines, boilers, transformers, circuit breakers, and so on. In the early 1980s, we began undertaking full-turnkey, power plant construction projects, in which we were involved in a wider range of activities together with our local partners, from design to public works and construction projects, guidance for trial operations, and warranties. We began managing every facet of these projects, including local taxation and labor management. In the decades that followed, we reinvented our business model in line with the changing times. When construction financing was needed, we assisted with low-interest funding through international yen loans or institutional financing, or by building investment- or lease-based schemes. When eco-friendly solutions were needed, we provided support to power plant and equipment manufacturers to expedite the commercialization of their advanced technologies.

In recent years, a number of countries and regions have privatized their electric power markets or deregulated power generation and sales. Plant and equipment needs continue to diversify, and there is high demand for infrastructure in many regions around the world, including China, Southeast Asia, Europe, and the Middle East. To meet market-side needs and realize optimized power supplies for each region, MC recognizes the importance of proposing flexible solutions in its power infrastructure business, covering equipment for generation, transmission, and distribution.

Reducing the Environmental Impact of Power Generation

We are becoming more and more aware of the environmental impact of power generation, and the need to reduce CO2 emissions. To help realize a low-carbon society, and at the same time stimulate economic growth, a well-balanced and sustainable energy mix is needed. This has to include not only renewable energies and nuclear power, but fossil fuels which for now remain relatively affordable and available. As more players emerge in the power generation industry thanks to ongoing privatization, it will be essential to develop a wide variety of power plants and offer value-added services.

According to a report by the IEA, unless effective measures are taken to counter this trend, global CO2 emissions will increase 40% over 2007 levels by the year 2030. To keep temperatures from rising more than 2 degrees Celsius by 2030, however, CO2 emissions would actually have to be cut by 8%, or 26.4 billion tons, compared to 2007 levels. Needless to say, there is a considerable onus on the power generation sector to help bring these emissions down.

Outlook for Global Primary Energy Consumption

Already it has become very difficult to gain approval to build coal-fired power plants in advanced nations, as these facilities are notorious for their high CO2 emissions. Even in developing nations that have been achieving high economic growth, there is a greater need for infrastructure that keeps both costs and the environmental impact to a minimum.

Environmental and energy fields are two promising areas for Japanese plant and equipment manufacturers to utilize their advanced technologies. These are also key business domains for MC, and we are working hard to develop low-carbon power plant businesses where we are taking on our own risk, whether through investments or project financing. By helping to spread advanced Japanese technologies to other parts of the world, we are confident that MC can help reduce the environmental impact on our planet.

Geothermal, Solar Thermal, Clean Coal Meeting Challenges with Foresight and Dedication

The fields MC is presently concentrating on are quite diverse. They include geothermal and solar thermal projects, in which Japanese plant and equipment manufacturers boast strong technical expertise, power plants utilizing coal-gasification boilers, coal mine developments and pipeline supplies, and the eco-conscious energy sector. In this last area, carbon capture and storage (CCS) operations pose a lot of promise for MC in terms of creating synergy with the diverse projects we are involved in as a global integrated business enterprise, including emissions trading. The technologies required for low-carbon power plants are fairly complex, and some have yet to develop to the point where they are cost feasible.

Selecting the right technologies and overcoming barriers to commercialization will require close cooperation, both internally and with our outside partners. As a global integrated business enterprise with more than 200 bases of operations in 80 countries around the world, MC has the experience and wherewithal to manage projects from A to Z. Our expertise includes know-how gained through our regionally-oriented businesses, extensive public and private sector networks, the capacity to develop sound financing schemes, and skill in dealing with local taxation and labor issues.

In terms of plant and equipment for geothermal power generation, Japanese manufacturers hold a 75% share of the global market. Japan is located in a volcanically active region, and the geothermal technologies developed here are understandably quite advanced. At MC, we expect our power generation portfolio to become even more diverse in the future, and since the 1980s we have been pioneering geothermal projects in places like Kenya and Iceland, together with our partner Mitsubishi Heavy Industries (MHI).

Furthermore, in recent years we have been supporting MHI's development of new solar thermal technologies. The traditional process of solar thermal power generation is to use concentrated sunlight to turn water into steam, and use the steam to rotate turbines and generate electricity. The method currently under development at Mitsubishi, however, uses solar-heated air to drive the turbines. Many regions that get a lot of sunlight tend to suffer from water shortages, but if we can commercialize this new technology, we may be able to set up power plants in desert regions that have no water at all.

Meanwhile in Australia, the world's largest exporter of coal, there is an escalating need to use this resource sustainably but with as little negative impact to the environment as possible. Coal is important to Australia for bringing in foreign capital and maintaining the country's energy self-sufficiency. The Australian government is actively supporting efforts for early commercialization of both IGCC (Integrated Gasification Combined Cycle) and CCS (Carbon Capture & Storage) technologies. IGCC involves the gasification of coal to greatly increase energy efficiency, while CCS involves containing the CO2 emitted during coal-fired power generation and storing it deep down within the earth's crust. In response to these needs, MC launched development projects to commercialize both technologies in the northeastern state of Queensland and southeastern state of Victoria. Both projects are backed by the Australian and Japanese governments (please see the next chapter for an explanation of the IGCC+CCS project underway in Queensland).

To respond to diversifying regional and customer needs, companies have to gain a solid market position through their business activities. They must pick up on the changing times and paradigm shifts before the competition and act swiftly, demonstrating both foresight and the spirit to tackle new challenges. Naturally, there are bound to be some failures along the way, but through failures come experience and know-how which can prove invaluable down the road. At MC, we remain committed to helping ensure stable supplies of electricity around the world.

Aiming to Realize Low-Carbon Societies

Contents Produced in Cooperation with Nikkei Business Online Special / Cross Architects, Inc.

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