Two major Japanese suppliers of power generators have announced plans to merge their thermal power businesses in a joint venture, anticipating a strictly limited role for such plant in a decarbonised system.
Mitsubishi Electric Corporation and Mitsubishi Heavy Industries expect that electricity demand will increase, due to economic growth and the energy transition. They insist that conventional large-scale power plants that are currently mainstays of the power industry will continue to “play an important role”, but describe that role as “a force to adjust for the increase in variable renewable energy sources”. They also anticipate the need to move away from natural gas, saying “In the future, existing thermal power generation will decarbonise its systems with fuel conversion to hydrogen, ammonia, and other carbon-free fuels.”
The two companies say that efforts to achieve carbon-neutrality, which would reduce greenhouse gas emissions to net zero, are accelerating around the world. “Considering this market environment, Mitsubishi Electric and Mitsubishi Heavy Industries have reached this basic agreement to strengthen their market competitiveness further by integrating their respective businesses and combining their respective technologies and assets.” They say this will create a strong partnership and expand the two companies’ power generator systems on a global scale, “thereby contributing to the realization of a carbon-neutral society”.
The scope of the integration will include basic planning, design, development, manufacturing, sales and servicing of power generators connected directly to turbines, as well as other key facilities at power generation plants.
Businesses subject to the integration will be transferred to a new joint venture company from Mitsubishi Electric and Mitsubishi Heavy Industries separately. It is expected that Mitsubishi Electric will be the majority shareholder and Mitsubishi Heavy Industries will be the minority shareholder of the new company.
The basic agreement is expected to be followed by a definitive agreement in May 2023 and the deal is expected to close on 1 April 2024.