Risk of rising power generation fuel and ocean freight costs under fixed FIT rates
First written in FY2023-Q2. 5 of 9 entries say "Mitigated", first in FY2024-Q1. Latest entry: FY2026.
No other company in this theme has enough history to compare yet.
- FY2026MitigatedAnnual report
「In the power business, the procurement price of PKS (palm kernel shells), the main fuel for the Onahama Biomass Power Plant, remained low, while stable operations were maintained with no unplanned shutdowns.」
It explains that, despite the risks associated with fuel and transportation costs under fixed FIT prices, the impact was contained in the current fiscal year through stable PKS prices and steady operations with no unplanned shutdowns. - FY2025MitigatedAnnual report
「At the Onahama Biomass Power Plant in the power business, operating days decreased from the usual level due to a major inspection. However, operating income exceeded the previous fiscal year's level because of lower market prices for PKS (palm kernel shells), the fuel used for power generation, and cost-reduction initiatives.」
Although the number of operating days declined because of major inspections, operating profit exceeded the previous fiscal year due to lower PKS market prices and cost reductions, partially limiting the impact of higher fuel and other costs under FIT fixed prices. - FY2025-H1MitigatedAnnual report
「In the power business, operating profit exceeded the year-earlier level, helped by the stabilisation of PKS prices and cost-reduction initiatives at the Onahama Biomass Power Plant.」
The Company explained that operating profit exceeded the same period of the previous year as the risk of higher fuel and transportation costs under the FIT fixed-price regime was mitigated by stable PKS prices and cost-reduction initiatives. - FY2024WorsenedAnnual report
「Although electricity selling prices are guaranteed under the FIT system (the feed-in tariff system for renewable energy), the power business is expected to face a difficult operating environment if procurement costs generally remain elevated, including the cost of PKS (palm kernel shells) and wood pellets used as power-generation fuel and their marine transport costs, due in part to the continued impact of the weaker yen. In fiscal 2024, the company will seek to reduce costs through foreign-exchange hedging, diversification of power-generation fuel procurement, and improvements in the operation of unloading port facilities.」
Regarding fuel and transportation cost risks under FIT fixed prices, which continued from the previous fiscal year, the company identified persistently high procurement costs overall, including the impact of yen depreciation, as an assumed risk for fiscal 2024. It cited foreign exchange hedging, diversification of fuel procurement and improvements in port operations as countermeasures. - FY2024-Q3MitigatedAnnual report
「The Power Business improved significantly from the prior-year period as marine transportation costs for power-generation fuels continued to decline and measures to ease vessel congestion at unloading port facilities progressed.」
The impact of marine transportation costs and demurrage costs for power-generation fuel, which had been an issue under the FIT fixed-price regime, declined due to lower transportation costs and mitigation measures, and results improved from the previous-year period. - FY2024-Q1MitigatedAnnual report
「Marine transportation costs for PKS (palm kernel shells) and woody pellets used as power generation fuels declined as shipping market conditions weakened, while progress was also made in measures to reduce demurrage at unloading port facilities, resulting in a recovery trend.」
The impact of marine transportation costs for fuel, which had been a problem under the fixed FIT price, was partially reduced by falling shipping market conditions and measures to ease vessel detention, putting the power business on a recovery trajectory. - FY2023WorsenedAnnual report
「The power business was significantly affected not only by continued increases in the prices of woody biomass and coal used as power generation fuels and in marine transportation costs, but also by demurrage costs caused by congestion at unloading port facilities and by equipment problems.」
The power generation business under the FIT fixed-price regime faced difficult conditions for the full year as soaring fuel and marine transport costs coincided with demurrage costs and equipment trouble. - FY2023-Q3WorsenedAnnual report
「The situation became extremely difficult because the selling price of electricity generated using woody biomass as fuel is fixed under the FIT scheme.」
In the power generation business, where selling prices are fixed under the FIT scheme, the overlapping cost burdens of fuel, ocean transportation, demurrage and equipment failures led the company to explicitly describe the operating environment as "extremely challenging." - FY2023-Q2First statedAnnual report
「The electricity business was significantly affected by continued increases in the prices of PKS and coal used as power-generation fuels and in ocean transportation costs, while the selling price of electricity generated using woody biomass as fuel was fixed under the FIT system.」
Although the FIT scheme fixes selling prices, the company identified for the first time as a standalone theme the inherent risk in the power generation business that soaring PKS and coal prices and marine transportation costs cannot be passed through to profit.