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 Business Strategies / Priority Measures 2012 Fuji Electric Co., Ltd. 2
Business Overview 2012 Fuji Electric Co., Ltd. 3
Power / Social Infrastructure Business Contribute to the realization of a society of smart communities by creating environmentally friendly energy creation and offering optimal control and supply of energy Wind power generation facilities Solar power generation facilities Geothermal power generation facilities Thermal power generation facilities Substations Fuel cells Energy management systems Power grids Environmentally friendly data centers Smart meters Water environments Railways Smart houses EVs Smart industrial parks Smart buildings 2012 Fuji Electric Co., Ltd. 4
Business Overview Power plant field Thermal power generation Medium-capacity thermal power generation facilities Combined-cycle power generation facilities Biomass power generation / Solar power generation facilities Geothermal power generation Flash geothermal power generation facilities Geothermal binary power generation facilities Hydroelectric power generation Large-scale hydroelectric power generation facilities Low head hydro power New energy Fuel cells Wind power generation facilities Nuclear power generation Nuclear fuel cycle field Radioactive waste material treatment facilities Social infrastructure field Energy network and distribution systems Smart communities Energy management systems Smart meters Solar power generation systems Substations Transportation systems Traffic information facilities Electric equipments for rolling stock Railway substation facilities Society and environment Radiation equipments/systems Social and environmental systems IT solutions/cloud systems 2012 Fuji Electric Co., Ltd. 5
Business Targets 2012 Fuji Electric Co., Ltd. 6
Energy Market Trends Global electricity demand projections Global power generation facility capacity projections Electricity demand (TWh) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2009 2015 2025 2035 Natural energy Water Nuclear Power LNG Coal Oil 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 New construction 5,900GW 5,143GW Decommissioning 2,000GW 9,000GW 2010 2035 Africa Middle East Asia Europe South America North America Source: IEA World Energy Outlook 2011 Source: IEA World Energy Outlook 2011 Electricity demand will rise 2.4%/year due to population and economic growth (OECD countries: 1.0%/year / Non-OECD countries: 3.5%/year) Continued advances in bolstering efficiency of power generation facilities, changing fuel sources, and introducing renewable energy targeting the realization of a clean energy society - Power generation using fossil fuels: 67% > 57% - Power generation using renewable energy (including hydroelectric): 19% > 31% Facilities with combined capacity of 2,000GW will deteriorate and be decommissioned between 2011 and 2035 Facilities with combined capacity totaling 5,900GW will need to be constructed in response to rise in electricity demand and decommissioning of old facilities Investment to increase facilities of 10 trillion anticipated 2012 Fuji Electric Co., Ltd. 7
Business Targets Basic Policy Begin full-fledged introduction of combined cycle thermal power generation facilities in Japan Commence capital participation in geothermal power ventures and expand global share Commercialize smart communities Reenter substation business Address radioactive waste disposal and other post-earthquake restoration demand Net sales / Operating income ( billion) Net sales by sub-segment ( billion) Sales in Japan / Overseas ( billion) 193.1 187.0 200.0 Power Plants 79.5 62.4 67.0 155.6 143.4 146.5 Net sales Operating income Ratio to net sales % 156.6 12.0 7.7% 9.5 4.9% 10.6 5.7% 12.5 6.3% Social infrastructure 48.2 108.4 113.6 124.6 133.0 Japan Overseas 127.2 29.4 37.5 43.6 53.5 FY2011 Results FY2012 Forecasts FY2013 Forecasts FY2014 Forecasts FY2011 Results FY2012 Forecasts FY2013 Forecasts FY2014 Forecasts FY2011 Results FY2012 Forecasts FY2013 Forecasts FY2014 Forecasts 2012 Fuji Electric Co., Ltd. 8
FY2012 Business Strategies / Priority Measures 2012 Fuji Electric Co., Ltd. 9
Growth Strategies (Power Plants) New technologies/products Combined-cycle power generation in Japan Investment in geothermal power generation Geothermal binary/hybrid power generation & New business model (hypoxic supply system fuel cells, wind power generation) Advanced technology innovation Enter new fields Enter new overseas markets Increase orders, sales Existing technologies/products Medium-capacity thermal power generation Geothermal power generation New energy (fuel cells) Expand business overseas - Thermal power generation: Middle and Near East, South America -Geothermal power generation: Latin America, Africa - Fuel cells: Europe (Germany) Existing customers New customers 2012 Fuji Electric Co., Ltd. 10
Priority Measures (Thermal Power Generation) Introduce combined-cycle power generation in Japan and increase orders in new markets Begin full-fledged introduction of combinedcycle power generation in Japan - Strengthen alliance with Siemens AG (state-of-the-art high-efficiency gas turbines) - Develop high-efficiency steam turbines/generators for CCPPs Unit 台数 Medium-capacity thermal power generation market forecast (excluding China) 200 150 100 188 CAGR 3% 160 165 170 175 Enter markets in Middle and Near East and South America - Strengthen alliance with strategic overseas partners - Establish service bases, realize partnering with customers Reduce costs in response to strong yen - Reduce costs including those for order backlogged plants - Increase overseas procurement and production 50 0 115 109 2008 2009 2010 2011 2012 2013 2014 Fuji Electric s estimates 2012 Fuji Electric Co., Ltd. 11
Priority Measures (Geothermal Power Generation) Expand global share and develop domestic geothermal operations Commence capital participation in US geothermal power generation venture - Commence capital participation in Hudson Ranch II geothermal power generation venture - Raise market presence and expand share Enter new markets and increase orders - Focus on growth markets in Latin America and Africa - Increase orders in current markets through partnering strategy Develop geothermal operations by improving domestic environment for geothermal power - Realize binary geothermal power generation - Realize hybrid geothermal power generation Unit 台数 Geothermal power generation market trends and forecast (2008-2014) 14 12 10 8 6 4 2 0 9 6 5 Geothermal power generation facility orders received in FY2011 Turkey: Kizildere II (1 x 60MW) Philippines: Maibarara I (1 x 20MW) 10 13 11 11 2008 2009 2010 2011 2012 2013 2014 Fuji Electric s estimates 2012 Fuji Electric Co., Ltd. 12
Capital Participation in US Geothermal Power Generation Venture Raise market presence as leading manufacturer of geothermal power generation facilities and increase orders Provide companies with renewable energy Hudson Ranch II location Overview of capital participation in geothermal power generation venture (IPP) - Investment target: Hudson Ranch II LLC - Plant: Hudson Ranch II - Location: Imperial Valley, USA - Output: 49MW - Start of operation: May 2015 (tentative) Amount of investment by FE: US$10 million Overview of Hudson Ranch II - Business: Construction and operation of Hudson Ranch II and sales of electricity from plant - Major shareholders: EnergySource LLC (90%), Fuji Electric Co., Ltd. (10%) Hudson Ranch I geothermal power generation plant Fuji Electric has supplied Hudson Ranch I with geothermal turbines. 1 turbine, 49MW output Start of operation: March 2012 2012 Fuji Electric Co., Ltd. 13
Growth Strategies (Social Infrastructure) New technologies/products Smart communities Globally PCS*, mega solar systems Electricity & substations Radiation recovery support (food radiation detection systems, decontamination systems) Expand smart community business Expand business overseas Increase orders, sales Existing technologies/products Energy management systems Grid control, distribution automation Transportation systems Radiation equipments/systems Social and environment solutions Existing customers * PCS: Power conditioning system Expand business overseas - Smart communities: Asia, China - Substations: Africa, Oceania - Electric equipments for rolling stock: US -Radiation equipments/systems: US, China, Asia New markets 2012 Fuji Electric Co., Ltd. 14
Priority Measures (Smart Communities) Realize advanced energy management and operation systems Address post-earthquake restoration and new city development demand - Propose new city and affluent society concepts - Propose restoration ventures in cooperation with Fujitsu Limited Smart community development verification testing project, Kitakyushu community energy management system Quickly commercial results of verification testing - Develop product/service packages and strengthen sales promotions Secure orders for smart meters - Bolster smart meter lineup Strengthen global expansion efforts Smart meter Household display 2012 Fuji Electric Co., Ltd. 15
Smart Community Initiatives Smart grids Smart cities Proving-test project > Nago, Okinawa/mega solar Dispersed power sources/grid stabilization > Ministry of Economy, Trade and Industry Smart power network/power distribution network voltage control > Kitakyushu smart community Regional energy supply-demand optimization > Keihanna Science City Building energy management Practical application Post-earthquake restoration Kamaishi Aizuwakamatsu Urayasu Micro grids Smart industrial parks/factories Smart distribution > Six remote islands in Kyushu Reduced power generation costs > Three remote islands in Okinawa Reduced power generation costs > Java, Indonesia Eco industrial parks, power stabilization > Saudi Arabia/MODON Eco industrial parks, environmental countermeasures > Thailand Eco industrial parks, energy saving > Kumamoto Prefecture Eco plastic greenhouses, solar power generation > Minamata Making farming/fishing operations eco-friendly, CEMS > Convenience stores in Japan and overseas Eco stores Overseas - Hangzhou Qianjiang Economic Development Area - Suryacipta City of Industry, Indonesia - Surabaya City of Industry, Indonesia - Siem Reap Tourist City, Cambodia - Industrial park, Saudi Arabia 2012 Fuji Electric Co., Ltd. 16
Priority Measures (Substations) Reenter substation business and construct smart community systems Develop business foundation for Fuji Electric s substation business - Strengthen strategic products and boost competiveness - Pursue cost reductions Construct smart community systems including substation facilities and equipments - Construct hard- and soft-element systems including substation facilities and equipments Substation market projections by region (2011-2013) Americas 11% Europe, etc. 22% Japan 5% Asia 11% Middle East / Africa 18% China 33% Fuji Electric s estimates Expand business overseas - Retain orders in markets in Bahrain and South Africa - Develop operations in markets in Asia (particularly India) and Oceania 2012 Fuji Electric Co., Ltd. 17
Priority Measures (Radiation Systems) Strengthen areas related to support for earthquake disaster restoration and expand business overseas Strengthen areas related to support for earthquake disaster restoration - Food inspection, personal dose monitoring systems - Soil decontamination/debris and ash treatment facilities Enter overseas markets - Focus on U.S., China, Asia markets - Develop overseas compatible equipments and conduct joint-ventures with overseas manufacturers Monitoring post Food radiation detection system Realize radiation control/monitoring systems with more advanced functions - Realize functions that are even more advanced, incorporate cloud systems 2012 Fuji Electric Co., Ltd. 18
Disclaimer 1.These materials are outside the scope of auditing procedures required by law, and as of the date of this results presentation, financial statement auditing procedures required by law have not yet been completed. 2. 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. 3. These documents are for information purpose only, and do not constitute an inducement by the company to make investments. 4. Unauthorized reproduction of these documents, in part or in whole, is prohibited. 2012 Fuji Electric Co., Ltd. 19