Tepco reveals plan to spin off global renewables unit

Tokyo Electric Power Co. Holdings (Tepco) has revealed plans to create a new corporate entity that will handle the group’s renewable generation business.

Tepco says it is setting up the new company as part of its efforts to build up to 7 GW of unspecified renewables capacity, in Japan and beyond. The new company will be operational by April 1, 2020, according to an online statement.

The group has long built solar and wind projects throughout the world via its Eurus Energy unit. The Tokyo-based renewables developer’s current operational portfolio of global solar and wind assets currently stands at about 2.81 GW, according to Tepco’s website.

“The aims of this company-split are to create a company that will specialize in renewable energy sources,” the company said, claiming that the new entity will help to raise global recognition of the group’s activities, while helping it to flexibly secure the capital it needs to fund future projects.

It aims to create a 100% group subsidiary in October 2019. Following that, Tepco and the new entity plan to execute an absorption-type split deal in November. Once the new unit has been successfully spun off, the group hopes to ramp up its profit to roughly JPY 100 billion ($949.7 million) by fiscal 2030, it added.

In July, Tepco recorded consolidated ordinary income of JPY 98.5 billion in the first quarter, up 46.3% year on year. However, group power sales fell by volume to 52.2 billion kWh, down 0.8% from the preceding year.

The Japanese utility has struggled to chart a new path forward in the years since the March 2011 meltdown at its Fukushima Daiichi nuclear power plant. However, in early 2018, Tomoaki Kobayakawa — president of the company — reaffirmed that the group planned to aggressively expand its renewables business beyond its home market.