Challenges in Securing a Stable Long-Term Biomass Fuel Supply
First written in FY2021. 2 of 7 entries say "Worsened", first in FY2022-Q2. Latest entry: FY2024.
TESS Holdings moved to the "Worse" side of this theme in 2024, 2 years after the typical company in this theme (2022).
1 other company's latest entry also says "Materialised".
- FY2024MaterialisedAnnual report
「Profitability declined due to higher plant construction costs and higher procurement prices for biomass fuels, including unused thinned wood from domestic forests, amid the recent surge in timber prices. We will record an impairment loss of ¥3,939 million as an extraordinary loss on the non-current assets of 合同会社熊本錦グリーンパワー in the fourth quarter of the current consolidated fiscal year.」
Higher procurement prices for woody biomass fuel and increased construction costs reduced the profitability of the Kumamoto-Nishiki Town project, resulting in an impairment loss of ¥3,939 million. - FY2024-Q3RestatedAnnual report
「In recent years, domestic procurement prices for PKS fuel have remained at historically high levels due to surging fuel prices, higher ocean freight rates and the weaker yen. Based on calculations by our group that take into account fuel price volatility risk, assuming that procurement prices remain at their current record-high levels throughout the applicable approximately 19.5-year fixed-price purchase period and that certain long-term foreign exchange forward contracts are in place, we forecast continued losses during the first half of the period due in part to interest and tax expenses. Although the project would remain profitable over the period as a whole, the level of profit would remain low.」
The company continues to disclose the possibility that elevated PKS procurement prices will result in continued losses during the first half of the fixed-price purchase period and low profit levels over the period as a whole. It is also considering cost reductions through the use of EFB fuel, but states that there is no assurance that this will proceed as expected. - FY2024-Q1MitigatedAnnual report
「To address the recent surge in procurement prices for PKS (palm kernel shell) fuel used in this biomass power generation project, we intend to secure the project's profitability by purchasing from multiple suppliers and promoting stable in-house procurement through the supply chain for PKS fuel procurement and sales established by PT INTERNATIONAL GREEN ENERGY, our consolidated subsidiary that sells PKS fuel in Indonesia.」
The company has specified measures to address the risk of surging PKS prices, including purchases from multiple suppliers and stable procurement through the group's own supply chain. However, it continues to disclose a low-profitability scenario if fuel prices remain elevated. - FY2023WorsenedAnnual report
「In recent years, domestic procurement prices for PKS fuel have remained at historically high levels due to surging fuel prices, higher ocean freight rates and the weaker yen. Based on calculations by our group that take into account fuel price volatility risk, if procurement prices were to remain at their current record-high levels throughout the applicable approximately 19.5-year fixed-price purchase period, we forecast continued losses during the first half of the period due in part to interest and tax expenses. Although the project would remain profitable over the period as a whole, the level of profit would remain low.」
For the Imari large-scale biomass power generation project, the company has specified a scenario of continued losses and low profitability if PKS procurement prices remain at historically high levels for an extended period. - FY2022-Q3RestatedAnnual report
「In addition, if development is discontinued for any reason, or if the profitability of the business declines substantially below initial expectations due to procurement risks for biomass fuel or various other reasons,」
The company continues to disclose the fuel procurement risk and potential decline in profitability associated with the large-scale biomass power generation project. - FY2022-Q2WorsenedAnnual report
「In addition, if development is discontinued for any reason, or if the profitability of the business declines substantially below initial expectations due to procurement risks for biomass fuel or various other reasons,」
In connection with the approximately 46 MW large-scale biomass power generation project, the procurement risk for biomass fuel was specifically identified as a factor that could reduce profitability. - FY2021First statedAnnual report
「We believe that securing a stable, long-term fuel supply will be a challenge as the biomass energy market grows.」
The company identifies the stable, long-term procurement of fuel accompanying the expansion of the biomass energy market as a challenge.