What is Growth Strategy and Future Prospects of Kansai Electric Power Company?

As of April 2024, Kansai Electric Power Company is involved in 23 international projects across 12 countries, with a total overseas power generation capacity of 2,852 GW. A substantial 1,088 GW of this capacity comes from renewable energy sources, underscoring the company's dedication to clean energy development.

The company has set an ambitious target to achieve 6 GW of renewable energy capacity by 2030. At least 2 GW of this capacity is planned to come from new developments, both within Japan and internationally, demonstrating a clear path for future growth in this sector.

In 2022, Kansai Electric Power Company saw two new projects commence operations: a thermal power generation project in Indonesia and an onshore wind power generation project in Finland, which also began operations in 2023. Further solidifying its commitment to renewables, in March 2024, the company invested in a Norwegian firm specializing in floating foundation technology for offshore wind turbines.

Domestically, the company is actively exploring new energy frontiers. This includes a feasibility study initiated in April 2023 for importing blue hydrogen and ammonia from Canada, and an agreement in May 2023 for the front-end engineering design of a large-scale green hydrogen supply chain in Australia.

In June 2024, Kansai Electric Power secured a subsidy to study hydrogen infrastructure development in the Harima and Kobe areas of Hyogo Prefecture. The company is also expanding its gas retailing business, having taken over the gas business from Fukui City in April 2020 and participating in the household gas retailing business in Otsu City since October 2019.

Kansai Electric Power is exploring new business models, such as the 'Ene-Storage' service, which combines electricity with storage battery leases, announced in March 2024. This initiative aims to enhance grid stability and facilitate renewable energy integration.

In partnership with Kinden and Japan Extensive Infrastructure, Kansai Electric Power will develop a 99MW/396MWh battery storage facility in Osaka, with construction scheduled for June 2025 and commissioning by February 2028. This project builds upon the success of the 48MW/113MWh Kinokawa Power Storage Station, commissioned in December 2024.

Beyond its core energy operations, Kansai Electric Power is expanding its 'Life/Business Solution' and 'Information & Telecommunications' businesses. The company aims for a profit balance rate of 2:1 between energy and non-energy businesses to foster a more resilient portfolio, as detailed in its Revenue Streams & Business Model of Kansai Electric Power.

As of March 2025, Kansai Electric Power has entered into a new capital and business alliance with SkyDrive Inc. This collaboration focuses on developing optimal charging systems and energy management solutions for advanced air mobility services, signaling a forward-looking approach to future transportation needs.

For the fiscal year ending March 31, 2025, consolidated operating revenues are projected at ¥4.34 trillion, marking a 6.8% increase from the prior year. This growth is largely attributed to an anticipated rise in electricity sales revenue.

Looking ahead to the fiscal year ending March 31, 2026, ordinary income is forecasted at ¥400.00 billion, a decrease from ¥765.97 billion recorded in the year ended March 31, 2024. Similarly, net income attributable to owners of the parent company is projected at ¥295.00 billion for FY2025, down from ¥441.87 billion in the previous year.

The decline in income observed in Q1 2025, with net sales down 6.7% and operating profit falling 13.3%, is partly due to a reduction in income from the fuel cost adjustment system. This occurred despite an improvement in the nuclear capacity factor.

Despite short-term profit fluctuations, KEPCO's equity ratio saw a slight improvement in Q1 2025, indicating a strengthening financial position. The company has maintained its dividend forecasts, with an anticipated annual dividend of ¥60.00 per share for the fiscal year ending March 31, 2025.

KEPCO's commitment to reducing CO2 emissions by 50% by 2030 requires significant advancements in technologies like Carbon Capture, Utilization, and Storage (CCUS) to manage its reliance on fossil fuels.

The introduction of long-term decarbonized energy auction systems in Japan necessitates KEPCO's strategic participation and adaptation to secure future energy supply contracts and maintain its competitive edge.

KEPCO's focus on organizational climate reform and strengthening internal controls is paramount to rebuilding trust and ensuring ethical business practices, a key element for its Kansai Electric Power Company strategy.

Improving cost structures and enhancing return on capital are crucial for KEPCO to address its past decline in earning power and ensure financial stability for future growth initiatives.