China Electric Power News: SEP Expands New Energy Business in Japan

In response to China's Belt and Road Initiative, SEP has been actively expanding the overseas market in recent years. In Japan, a high energy consumption country with its energy supply heavily dependent on imports, SEP, under the flag of SPIC, taking green energy such as solar energy and wind power as the sally port, resorting to good operation model and win-win cooperation concept, has gradually gained a firm foothold in the Japanese electricity industry with an extremely high barrier.


Ibaraki prefecture, 60 km from Tokyo, is well-known for agricultural production, especially for rice, lettuce, lotus, etc., with the total cultivation area ranking the second in Japan. Located at the foot of locally-known Tsukuba Mountain, a large-scale PV power plant invested and constructed by SEP Japan is shining in the sun. The project installed approximately 20,000 PV panels with a total installed capacity of 35 MW on the vast farmland with total area of 54 hectares, and all the equipment is made in China. The PV power plant could offer electricity to 10,000 households for a whole year.


Founded in September 2013, SEP Japan is a wholly-owned subsidiary of SEP in Japan, which is mainly engaged in the investment, development, construction, operation, maintenance and management business of clean energy power generation projects in Japan.


The residents of Ibaraki live on agriculture for generations, but with the aggravated problem of aging population, the average age of the farmers is about 70, and large quantities of farmland have been abandoned due to lack of successors. In the end of 2014, SEP Japan put forward an idea of utilizing a piece of abandoned farmland in Ibaraki to build a solar power plant.


However, the company met with unimaginable difficulties at the very beginning of the project. Moriyama Hirotoshi, deputy head of Project Promotion Department of the company, was mainly in charge of handling all kinds of administrative formalities needed for the project commencement, including communication with around 200 local households one by one. But it was not easy to acquire unanimous understanding and support from the local residents.


"I considered it a mission impossible when I was first assigned this task. Especially for those Japanese natives by birth, their first reaction was saying 'No' to a foreign enterprise seeking to rent their land," said Moriyama.


Moriyama and his colleagues kept constant communication with the local residents, attempted to impress them with sincerity and good proposals, and managed to win their recognition finally. In April 2017, Tsukuba Ibaraki PV Power Plant invested and constructed by SEP Japan in Tsukuba city was put into operation. Having installed 35 MW of PV panels on the farmland with total area of 54 hectares, the power plant is also the largest agriculture-PV hybrid power plant in Japan at present.


Diao Xu, General Manager of SEP Japan introduced that the company rented the farmland from the local agricultural cooperative, and local farmers could not only obtain rent income 10 times that of ordinary farmland, but also share a certain proportion of electricity sale while producing crop on the leased farmland, with total revenue increasing several times than before.


Local farmers are planting Korean ginseng on the farmland within the power plant. The Korean ginseng, introduced from Yanbian prefecture of China, is growing quickly, expected to be sold at 25,000 yen (equivalent of RMB 1,483) per kilo. Thanks to the largest agriculture-PV hybrid power plant in Japan, the local economy has been injected with new vitality, and the farmers have returned to their farmland. In brief, the construction of the agriculture-PV hybrid power plant has rejuvenated this area.


Takuji Kimura, a farmer in Tsukuba, said: "My family's annual income from farming was once less than 200,000 yen, so I had to work part-time in the slack season to support the family. Since we joined the local agricultural society, we have lent our land to SEP for build PV power plant through the agricultural society. Thanks to the guidance of the agricultural society, the local farmers planted crops such as ginseng and coriander below the PV modules in small scale experimentally, and my family's annual income exceeded 200,000 yen for the first year. I believe that our income will continue to grow with the large-scale planting in future and thus my family's economic conditions will be further improved."


Currently, such an industrial model serving multiple purposes is being promoted across Japan, and will develop as a brand new industrial pattern.


Sanda Hyogo PV Power Plant, located in Sanda city, Hyogo prefecture, has started to generate electricity since the end of December, 2015. As the power plant resolved the local water and earth damage issue effectively, it became one of the most popular power plants among local residents.


The power plant site once was a landfill area for the construction residue. Due to a floppy foundation, the area would form huge quantities of water every time it rained and thus made the life of surrounding residents miserable. Quite a few Japanese enterprises considered investing power plants in this area, but all of them had been frustrated by a series of complicated foundation improvement works necessary before the construction of the power plant. Therefore, SEP Japan decided to solve this urgent problem concerning people's livelihood in the first place so as to gain the trust of local residents.


In May 2015, SEP Japan discussed the matter with the government of Sanda city and jointly held an explanation session for the local residents, reaching a consensus with local residents on a scheme involving a gravel bed laid on the ground to lower the speed of rainwater infiltration as well as a sand basin and drainage facility newly built in the local area. Rainwater flows through the soil grown with plants, slows down, then flows into three U-shaped side ditches with different heights, and converges into three sand basins eventually, in order to mitigate the pressure of flood due to rainstorm in the typhoon season. With earth and sand separated in the sand basins, rainwater will flow into the neighboring pool for irrigation, turning muddy water ready for agricultural use.


In order to prevent geological disasters, SEP Japan implemented a large-scale foundation improvement project which strengthened the local foundation and enhanced disaster resistance ability greatly. Hence, the long-term water and earth damage troubling the local residents was solved effectively.


As the representative office of SPIC in Japan, the company has been endeavoring to display a good image of Chinese central SOE in the mainstream society of Japan while seeking business breakthrough actively.


In July 2015, SEP Japan became the first wholly-owned subsidiary of Chinese SOE in Japan to join the Japanese Federation of Economic Organizations successfully. The company has been maintaining good interaction with Japanese Federation of Economic Organizations and Japan Association for the Promotion of International Trade, introducing SPIC's measures and achievements made in energy conservation and environmental protection and development of green and clean energy, and demonstrating a good image of Chinese electricity enterprise in paying attention to people's livelihood and forging ahead positively.


SEP Japan started from scratch with no resource and no project to having completed construction and thrown three PV power plants into operation so far, from which Moriyama has learned a lot. As all circles of Japan started to actively participate in the Belt and Road Initiative towards which they once adopted a cautious and complicated attitude, Moriyama and his colleagues have become more and more confident in their own career.


"Through our efforts in the past four years, we have built a staff team with a harmonious relationship between Chinese and Japanese employees both of whom are capable of work. The company has secured a fairly firm footing in the Japanese electricity industry, laying a solid foundation for the future development," said Diao Xu.


At present, one fourth of the company staff are dispatched from SEP, and most of the major management staff are Chinese. The company has been dedicated to creating a harmonious cultural atmosphere, with both Chinese and Japanese employees learning the languages of their counterparts earnestly, and attempting to understand and respect the culture and customs of their counterparts' countries. For instance, Chinese employees promote Chinese traditional culture among their Japanese colleagues actively, and invite them to join the parties celebrating the traditional Chinese festivals such as the Dragon Boat Festival, Mid-Autumn Festival and Spring Festival. The company has also organized Japanese employees and local partners to SEP headquarters in Shanghai to participate in all kinds of briefings and meetings many times, which brings them a more direct understanding of the corporate culture of SEP and SPIC.


In 2014, a Japanese employee who joined the company lately was diagnosed with cancer in the physical examination, and moreover, his condition was quite serious and needed ongoing treatment. Having learned that the employee's family was fairly poor with heavy living burden and thus could not afford the high medical expenses in future, the company assigned him to a position with comparatively less workload so as to reduce his work pressure. In addition, the company maintained his existing salary level based on humanitarian consideration, which ensured his monthly medical and living expenses.


On the last working day of 2015, around 100 Japanese workers from the project construction contracting company who had not returned home for holiday gathered at the project site of Sanda Hyogo PV Power Plant to wait for the acceptance check of the project. Diao Xu led the employees from Engineer Department of SEP Japan to inspect the construction site, all dressed in working clothes, fully affirmed the engineering quality, and took a group photo with all the staff of the contracting company to mark the occasion. More surprisingly, as the general manager of the owner company, Diao Xu handed out "red envelopes" to each of the construction personnel on site according to the Japanese New Year custom. All the Japanese staff were greatly moved by the manager of the Chinese enterprise for observing and respecting the local cultural customs.


So far, SEP Japan has completed and put three PV power plants in operation, with total installed capacity of 42.6 MW and aggregated power generation of 33.87 GWH. In 2017, the above three power plants sold total on-grid electricity of 33.7 GWH, with total sales amounting to 1.332 billion yen and average net profit margin of 18 percent. Also in 2017, the company posted net profit of 50 million yen, realizing profit for the first time. In addition, the company has newly acquired the project commencement permits for two PV power plant, two wind power plants and a biomass power plant, and it is scheduled to finish the construction of the largest PV power plant in Japan till now in Fukushima by the opening of the Tokyo Olympics in 2020.

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