Eco-business / Social Venture

July 9, 2004


Kobe Steel Now Japan's Largest Independent Power Producer (IPP)

Keywords: Eco-business / Social Venture Fossil Fuels Manufacturing industry Non-manufacturing industry Policy / Systems 

When Kobe Steel, Ltd. started commercial operation of its second power plant on April 1, 2004, it became Japan's largest Independent Power Producer (IPP). Like its predecessor (in operation since April 2002), the new plant has a generating capacity of 700,000 kilowatts, giving Kobe Steel, Ltd. a total generating capacity of 1.4 million kilowatts.

The two coal-fired thermal power plants cost approximately 200 billion yen (approx. US $1.92 billion) to build (of which roughly 165 billion yen was raised from project financing), and the company expects the two plants to yield annual sales of approximately 60 billion yen (approx. US $576 million).

An April 1995 revision to Japan's Electricity Utilities Industry Law (allowing non-power companies to supply electricity on a wholesale basis) prompted Kansai Electric Power Co. Inc. (Kansai Electric) to call for bids from potential wholesale suppliers. Kobe Steel calculated that it could utilize its existing steelworks infrastructure (land, piers, etc.) as well as its coal procurement and in-house power generating abilities to succeed in this new business, so it proposed constructing a 1.4 million kilowatt power station (involving two 700,000 kilowatt facilities). Kansai Electric later accepted the bid.

All electricity produced by the power plants is supplied to Kansai Electric, and enough electricity is generated to cover 70 percent of Kobe City's peak summer demand. Because it is located within city limits, careful consideration has been given to environmental impacts. One-third of the plants' overall construction costs (roughly 200 billion yen) went towards state-of-the-art equipment for reducing nitrogen oxide, sulfur oxide and electric ash filtering devices, as well as other environmental measures such as enclosing storage silos and transport conveyors to prevent coal dust from scattering.

Posted: 2004/07/09 10:41:08 AM
Japanese version