Business Strategy of Energy Solutions

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Dina Simpson
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3 Business Outline The Fuji Electric Group will focus on the field of energy and the environment The Group will develop the Green Energy Solutions and Grid Solutions subsegments in a manner that addresses the social concerns of creating a low-carbon society, achieving stable electric power supplies, and optimizing the management of energy Markets and trends Energy creation Energy distribution Energy saving Increasing and enhancing power generation systems Creating a low-carbon society Reducing CO2 emissions Stabilizing power systems Optimizing the balance between supply and demand of electric power Storing electric power Energy saving Optimizing energy operation Developing smart communities Energy solutions Green Energy Solutions Basic power generation Renewable energy Grid Solutions Optimized systems and solutions Stabilized electric power Grid connection Smart grids Smart meters Optimal energy operation Smart communities Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 3

4 Business Outline Green Energy Solutions Subsegment Thermal power generation Medium-scale thermal power turbine power generation facilities Gasification combined cycle power generation (GCC) Solar thermal power generation / Biomass power generation Expanded share of the medium-scale market GCC generation: Yoshinoura Thermal Power Station (2 units 250 MW) under construction for The Okinawa Electric Power Company Focused on solar thermal / biomass power generation in the U.S. Geothermal power generation Flash geothermal power generation facilities Binary power generation facilities Geothermal power generation business (newly entered) Top share of the global market (44%) Supplied the Nga Awa Purua Geothermal Power Station in New Zealand with a turbine boasting the world s largest power output for a single unit Entered into the binary power generation market Nuclear power generation Nuclear fuel cycle field Waste material treatment facilities Next generation high-temperature gas furnaces (Development) Designed and is producing J-MOX fuel manufacturing facilities for Japan Nuclear Fuel Limited Participated in concept designing of hightemperature gas furnaces in the U.S. Hydroelectric power generation Hydroelectric power generation facilities, pumped-storage hydroelectric power generation Low head hydro power Cooperation with the Foit Siemens Hydro Group of Germany Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 4

5 Business Outline Grid Solutions Subsegment Grid Solutions Power transmission/power distribution control systems Optimal energy control systems Smart grid systems Dam monitoring control systems Participated in various smart grid demonstration tests that were national projects Supplied smart grids for isolated islands such as those used by KYUSHU ELECTRIC POWER and The Okinawa Electric Power Company Developed a smart grid business based on demonstration tests Meters Watt-hour meters Smart meters Established a joint venture company with GE (scheduled for October 2010) Developed next-generation smart meters New energy Solar cells, modules, photovoltaic power generation systems Fuel cells Wind power generation components Developed photovoltaic power generation systems Demonstrated fuel cells for hypoxic supply systems Developed large-scale permanent magnet generators for wind power generation Radiation systems Dosimeter management systems Radiation monitoring systems Medical facilities safety management systems Top domestic market share In particular, the market share for dosimeter management systems is 90% Entered into the sophisticated medical systems field Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 5

7 Trends in the Electric Power Market Volume of energy demand in the world will rise 2.5% year on year, generation facilities will continue to be expanded Creation of a low-carbon society and reduction of CO2 emissions will become social responsibilities There will be continued advances in bolstering efficiency of power generation facilities, changing fuel sources, and introducing renewable energy Electricity generation volumes (TWh) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Estimated global electricity generation volumes Increase in electricity generation volume: 2.5% per year Renewable energy Hydroelectric power Nuclear power Gas Petroleum Coal Estimated renewable energy volumes 年年年 2007 年 2015 年 2030 年 (Source: World Energy Outlook 2009) Electricity generation volumes (TWh) 2,000 1,800 1,600 1,400 1,200 1,000 Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved Geothermal 地熱 power Photovoltaic 太陽光 power Wind 風力 Power Biomass バイオマス

Trends in the Grid Market Social trends Creation of a low-carbon society Introduction of renewable energy Energy saving Construction of a smart grid society Stabilization of power systems

8 Trends in the Grid Market Social trends Creation of a low-carbon society Introduction of renewable energy Energy saving Construction of a smart grid society Stabilization of power systems Optimization of the balance between supply and demand of electric power Storage of electric power (Accumulators, etc.) Advancement toward smart communities Optimization of the management of social infrastructure (electric power, gas, water, etc.) and establishment of a comfortable society Rate of introduction of natural energy 30% 10% 5% Introduction period Demonstration of smart grids Construction and standardization of business model Micro grids Promoting introduction of renewable energy Improving efficiency of energy usage Expansion period Formation of smart grids Expanding systems that enable local production and consumption of energy Smart grids Construction of smart communities Normalization period Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 8

10 Basic Policies Basic Energy Solution Policies Increasing energy and creating a low-carbon society Promoting green energy with a particular focus on geothermal power generation Creating new markets Create a smart grid market based on the strength of our power electronics and control technologies Increasing overseas sales as percentage of net sales Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 10

Growth Strategy: Geothermal Power Generation Aim for a 50% Share of the Global Market (Currently 44%) Focus on the US market World s leading volume of geothermal resources High levels of government

11 Growth Strategy: Geothermal Power Generation Aim for a 50% Share of the Global Market (Currently 44%) Focus on the US market World s leading volume of geothermal resources High levels of government support (Green Deal initiative) 126 geothermal power generators planned Company B 10% Average market share over the past 10 years ( ) Other 12% Company A 34% Fuji Electric Holdings 44% Strengthen engineering function Strengthen peripheral equipment technology through strategic alliances and M&A transactions Bolster orders for turnkey projects (Source: Fuji Electric Holdings Co., Ltd.) NZ NPA Geothermal Power Station (Commenced operation in April 2010) World s largest power output for a single unit (140 MW) Enhance R&D Develop reinforced corrosion-resistant turbines Develop binary power generation facilities Participate in binary power generation Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 11

12 Growth Strategy: Geothermal Power Generation Strengthen Efforts in Key Markets (U.S., Indonesia, NZ) Advance the expansion of growing focus markets Key Markets U.S. World s leader in geothermal energy Strong Green Deal support initiative Indonesia, the Philippines Rich geothermal resources, target figures set by the government Favorable tax systems, etc. New Zealand Government initiatives (Target: renewable energy as 90% of energy used) Iceland Government initiatives (Target: renewable energy as 100% of energy used) Focus Markets Central & South America: Mexico, El Salvador, Chile Rich geothermal resources, measures to increase percent of natural energy used Africa: Kenya, Ethiopia Rich geothermal resources, promotion of development 米国フィリッピンインドネシアメキシコイタリアアイスランド日本ニュージーランド Japanese Market Third leading country in volume of geothermal resources Efforts accelerating due to deregulation and the introduction of support measures U.S. The Philippines Indonesia Mexico Italia Iceland Japan New Zealand Geothermal power: Capacity of existing facilities and facilities scheduled for construction Capacity of existing facilities Capacity of facilities scheduled for construction ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 (MW) (Source: Emerging Energy Research) Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 12

Reaction turbines that are highly efficient, functional, and reliable Corrosion-resistance, wear-resistance, and anti-scaling technologies to protect turbines from geothermal steam

Geothermal Power Generation Technologies Use of modules to decrease design, manufacturing, and installment times Optimal plant design technologies including steam characteristic derivation equipment

13 Reaction turbines that are highly efficient, functional, and reliable Corrosion-resistance, wear-resistance, and anti-scaling technologies to protect turbines from geothermal steam Corrosion-resistance technologies to protect generators and electrical control units against the geothermal atmosphere Growth Strategy: Geothermal Power Generation Further Enhance the World s Leading Geothermal Power Generation Technologies Use of modules to decrease design, manufacturing, and installment times Optimal plant design technologies including steam characteristic derivation equipment Optimal operation technologies through remote geothermal steam characteristic monitoring control systems Highly functional geothermal reaction turbine Steam separator Two-phase flow analysis Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 13

Expand Overseas by Leveraging the Synergies between Nuclear Power and Radiation Systems Nuclear power Growth Strategy: Nuclear power / Radiation systems Focus on the nuclear fuel cycle field and the

14 Expand Overseas by Leveraging the Synergies between Nuclear Power and Radiation Systems Nuclear power Growth Strategy: Nuclear power / Radiation systems Focus on the nuclear fuel cycle field and the waste material treatment facilities field Received order for J-MOX nuclear fuel manufacturing facilities for Japan Nuclear Fuel Limited, measures addressing waste furnaces and treatment of radioactive waste J-MOX Fuel Processing Plant Research and development of high-temperature gas furnaces Received order for concept designing of high-temperature gas furnaces from the U.S. Department of Energy Radiation Systems Expand presence in domestic and overseas markets based on domestic performance Individual radiation management systems, contamination monitors, radiation monitors Increased usage of radiation safety management systems due wider usage of sophisticated medical systems Increase the high-added-value characteristic of radiation management systems based on sensor and control technologies Develop next generation area process monitors, etc. Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 14

15 Growth Strategy: Smart meters Expand Operations through GE Fuji Electric Meters Establish GE Fuji Electric Meters Co., Ltd. (Scheduled for October 2010) Holding Fuji Electric: 50.01% GE: 49.99% Develop next generation smart meters by combining Fuji Electric and GE s technologies Aim to develop a competitive business by leveraging Fuji Electric and GE s strengths Trends in the smart meter market Approximately 83 million electricity meters belonging to electric power companies in operation (of which 60 million are for residential housing) Currently, the majority is mechanical (penetration rate of electrical meters: 5%) In the future, the shift from mechanical to electrical will accelerate New meters for electric power companies Two-way communication type smart meters for electric power companies Energy monitoring terminals for other industries Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 15

Growth Strategy: Smart grids Create a Smart Grid Market that Combines Energy, Control, and Information

smart grid platform and provide total solutions Large-scale centralized generator (Hydraulic power, thermal

solar Wind farm Substation Electricity distribution network Regional energy Electric power stabilization

distribution Power electronics technologies Electric power stabilization management Electric power storage

calculation Protected relay Energy saving Green IDC Green factories Smart communities Smart buildings Smart

16 Growth Strategy: Smart grids Create a Smart Grid Market that Combines Energy, Control, and Information Technologies Leverage the strengths of the power electronics and energy control technologies Construct a smart grid platform and provide total solutions Large-scale centralized generator (Hydraulic power, thermal power, nuclear power) hydraulic power Nuclear power Thermal power Electricity reception network Sensor Mega solar Wind farm Substation Electricity distribution network Regional energy Electric power stabilization management Energy creation New energy Photovoltaic power Wind power Geothermal Power Fuel Cell Energy distribution Power electronics technologies Electric power stabilization management Electric power storage Next generation power distribution automation system Distribution automation Wide range simultaneous calculation Protected relay Energy saving Green IDC Green factories Smart communities Smart buildings Smart houses Smart meters Energy saving equipment Energy saving systems Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 16

Growth Strategy: Smart grids Expand operations overseas based on the results of smart

system Tarama-jima Wind power generation KYUSHU ELECTRIC POWER: 6 islands The Okinawa

model smart community business Kyoto, Osaka, and Nara model smart community business

capacitor module) Photovoltaic power generation systems (FWAVE) Specialized power

17 Growth Strategy: Smart grids Expand operations overseas based on the results of smart grid demonstration tests Participation in demonstration tests Isolated island micro grid system Tarama-jima Wind power generation KYUSHU ELECTRIC POWER: 6 islands The Okinawa Electric Power Company: 3 islands Smart community demonstration tests Kitakyushu City model smart community business Kyoto, Osaka, and Nara model smart community business Internal-combustion power generation Electrical power stabilization equipment (Li ion capacitor module) Photovoltaic power generation systems (FWAVE) Specialized power distribution lines Overseas smart grid projects New Mexico State, U.S.: Green Grid Initiative Indonesia: Smart community preliminary investigation The Okinawa Electric Power Company Tarama-jima Isolated island micro grid system Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 17

Kitakyushu City Smart Community Growth Strategy: Smart grids (Next generation energy / Infrastructure system demonstration) Promoted by Kitakyushu City Smart Community Development Association

(Energy), NIPPON STEEL CORPORATION (Energy), IBM Japan, Ltd.

Town Binary power generation Projects primarily managed by Fuji Electric Introduce an energy saving system for the entire city block Introduce BEMS* and HEMS* that are responsive to demand Smart

18 Kitakyushu City Smart Community Growth Strategy: Smart grids (Next generation energy / Infrastructure system demonstration) Promoted by Kitakyushu City Smart Community Development Association (Kitakyushu City + 40 companies + 5 organizations) Principal members: Kitakyushu City (Infrastructure system), Fuji Electric Systems Co., Ltd. (Energy), NIPPON STEEL CORPORATION (Energy), IBM Japan, Ltd. (Information infrastructure) Local community participation style energy community Society that can fully utilize energy 50% CO 2 reduction Introduce new energy Town Mega Solar Kitakyushu Hydrogen Town Binary power generation Projects primarily managed by Fuji Electric Introduce an energy saving system for the entire city block Introduce BEMS* and HEMS* that are responsive to demand Smart offices Smart data centers Smart factories Develop the local community using next generation transportation systems, etc. Introduce large amounts of EV, etc. Introduce small-scale vehicles using fuel cells Cooperate with public transportation, community buses, etc. Develop local energy management systems Local energy conservation facilities By-product hydrogen 副生水素 Next-generation service stations Smart condos Large-scale accumulators Electricity transmission network photovoltaic generation Introduce smart meters Data centers Bicycle rental stations Smart schools Carbon offset and eco-point systems *BEMS: Building Energy Management System *HEMS: Home Energy Management System Hydrogen network Natural gas cogeneration Smart buildings IT network スマート Smart community コミュニティセンター center Simulated introduction of wind power generation Wind plant 15,000KW Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 18

20 Performance Trends / Targets FY2011 Medium-term Management Plan Aim for net sales of billion and ratio of operating income to net sales of 6% Net sales ( billion) Green グリーンエネルギー Energy SolutionsSL Grid グリッド Solutions SL 1, , % % Ratio of Operating Income % Ratio of Operating Income (%) 0 FY2010 (Forecast) FY2009 年 (Actual) ( 実績 ) 2010 年 ( 予想 ) 2011 年 ( 目標 ) (2010/7/30) FY2011 Medium-term Management Plan (2010/2/25) Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 20

21 Disclaimer 1. Statements made in this documents or in the presentation to which they pertain regarding estimates or projections are forward-looking statements based on the company s judgments and assumptions in light of information currently available. Actual results may differ materially from those projected as a result of uncertainties inherent in such judgments and assumptions, as well as changes in business operations or other internal or external conditions. Accordingly, the company gives no guarantee regarding the reliability of any information contained in these forwardlooking statements. 2. These documents are for information purpose only, and do not constitute an inducement by the company to make investments. 3. Unauthorized reproduction of these documents, in part or in whole, is prohibited. Copyright 2010 Fuji Electric Holdings Co., Ltd. All rights reserved. 21

Power & Social Infrastructure Business Strategies

Power & Social Infrastructure Business Strategies May 17, 2012 Fuji Electric Co., Ltd. Power & Social Infrastructure Business Group 2012 Fuji Electric Co., Ltd. 1 Contents Business Overview Business Targets