Tuesday, November 10, 2020


Toshiba stops taking orders for coal-fired power plants


Company plans $1.5bn investment in renewables as PM Suga targets zero-carbon goal

Toshiba is ditching its coal-related businesses for cleaner sources of energy. (Source photos by AFP/Jiji and AP) 

Nikkei staff writers November 10, 2020 

TOKYO -- Toshiba will stop taking orders for coal-fired power plants in line with growing global trends toward reducing carbon emissions, Nikkei learned on Tuesday, as Prime Minister Yoshihide Suga pledges to reduce Japan's greenhouse gas emissions to zero by 2050.

Shifting its priority in the energy business to renewables, Toshiba will increase investment in them fivefold to 160 billion yen ($1.52 billion) by fiscal 2022.

With Mitsubishi Heavy Industries joining American and European heavy-machinery makers in reducing their coal-energy businesses, competition in the renewable energy sector is likely to be driven by the ability to adapt to rapidly changing demand.


Toshiba holds 11% of the global thermal-power generation market, excluding China. This includes building power plants, producing steam turbines and providing maintenance. While the company will stop accepting new orders for coal-burning plants, it will build 10 stations under existing orders in Japan, Vietnam and other countries.

Toshiba chalked up nearly 3.4 trillion yen in consolidated sales in fiscal 2019 ended March. Sales related to construction of thermal and hydraulic power plants totaled 223 billion yen, or about 40% of the global energy sector. Although the company will continue producing turbines mainly for replacements, it will drastically reduce sales in its thermal-power generation business.

The increased use of renewable energy -- along with more attention to environmental, social and corporate governance -- is weakening global demand for coal-fired power plants, which generate large amounts of greenhouse gases.

Suga has pledged that Japan will reduce the country's net carbon emissions to zero by 2050, while presumed incoming U.S. President Joe Biden has also declared a similar goal.

Demand for coal-fired power remains strong among countries in Southeast Asia. In January, however, Environment Minister Shinjiro Koizumi said he would call for reviewing a Japanese-led project to build a coal-fired power plant in Vietnam.

In 2019, Toshiba won orders for building the plants overseas. But as the number of projects dwindled, the company has decided to stop the construction of new coal-burning power plants.

Toshiba will boost investment in research and development of offshore wind power and next-generation photovoltaic cells. It also hopes to expand its renewable energy business to 650 billion yen by 2030, from 190 billion in 2019.

Earlier this month, Toshiba decided to enter the "virtual power plant" business, buying electricity from renewable-energy power plants across Japan for resale to local power companies.

Among Japanese companies, Mitsubishi Heavy Industries, which holds a 12% share of the global thermal power generation market, is also facing headwinds. Mitsubishi Power, a subsidiary established from the integration of Hitachi's power-generation businesses in 2014, has struggled to find business as demand for coal-fired thermal power plants falls. Sales of turbines and other power-generation facilities have also remained sluggish.

Maintenance and other services generate 40% of Mitsubishi Heavy's sales of coal-fired thermal power-generation facilities. The company plans to raise the ratio to about 80%. The company has also decided to cut about 20,000 employees by around 30% by curbing hiring and reshuffling personnel in fiscal 2021 and beyond.

Overseas heavy electric machinery makers are also scaling back businesses. General Electric in September announced that it will stop building new coal-fired thermal power stations and supplying facilities. The U.S. company will shift its focus from the building of new power stations to maintenance and other services.

Siemens of Germany in April spun off its electricity and gas division, with plans to scale back its coal-fired power generation business, including a possible withdrawal.

Japan's coal-fired power generation industry has pointed to its environmental performance, but a movement toward decarbonization is causing companies to review the use of coal itself.

General trading houses have helped Japanese makers win orders for building power stations overseas. As far as facilities are concerned, IHI and Sumitomo Heavy Industries have produced boilers, while Mitsubishi Electric have made generators. These companies will also be forced to shift their strategies, including expanding their renewable energy business.

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