Problem
We were considering transitioning from FIT to FIP, but questions such as “How to establish the business?” “Is the revenue bound to increase?” remain unclear. We even started pondering if transitioning would indeed benefit the company.
Solution
Toshiba Energy Systems & Solutions Corporation purchased electricity we generated through the “pseudo-FIT” scheme at fixed prices and returned a portion of the excess electricity to the power generation business via an “Upside Share Option.” Both services alleviated our concern to transition to FIP.
Problem
We were considering transitioning from FIT to FIP, but questions such as “How to establish the business?” “Is the revenue bound to increase?” remain unclear. We even started pondering if transitioning would indeed benefit the company.
Solution
Toshiba Energy Systems & Solutions Corporation purchased electricity we generated through the “pseudo-FIT” scheme at fixed prices and returned a portion of the excess electricity to the power generation business via an “Upside Share Option.” Both services alleviated our concern to transition to FIP.
Background
Entered the power generation selling industry in 2013. Currently operating power generation sites across the nation.
Senko Corporation Denki Co., Ltd. (abbreviated as Senko Corporation below) is a group company of the “Senko Denki Co., Ltd,” which specializes in wholesaling electric equipment. The parent company, “Senko Denki Co., Ltd,” is located in Yokkaichi City, Mie Prefecture. In 2013, Senko Group began repurposing an idle amusement park to develop and operate solar power PV sites, entering the renewable energy power selling business.
“When we were considering how to utilize the idle amusement park, initially, rather than having high expectations of the future of the renewable business, we only thought we might as well give it a try, even though we weren’t that confident either” (Senko Corporation, Maeda)
The trend Senko Corporation wanted to catch was the FIT regulations for July 2012. During that time, Japan’s fixed purchasing price had just begun and remained at an all-time high. Senko Corporation decided that business was viable, thus began establishing PV sites all over the country and increased the number gradually. As of 2024, Senko Corporation owns mega solar power plants nationwide and has greatly expanded its power selling business ever since.
Initial Challenges
Whether the business can still be established after transferring to FIP remained unclear
Though the Senko Corporation grew successfully as a power selling business under the FIT system, similar to other companies in the same industry during the 2010s, Senko Corporation must face the fact that fixed purchasing prices didn’t exist anymore.
“We were a small company with less than 20 employees. Even if we continued to operate the power plants we had, we could sustain ourselves. However, it was clear the mainstream had changed from FIT to non-FIT. To grow the business further, we must tackle new challenges, so we began considering the transition from FIT to FIP.” (Senko Corporation, Maeda)
As Maeda single-handedly gathered detailed information of the systems, he concluded that FIP could generate as much profit as FIT. Nevertheless, he said that he wasn’t confident.
“After talking to people and doing my own research, I figured that switching to FIP might even bring merits. Yet, I could only make decisions based on what I knew and the system itself is sophisticated. Suddenly, I started wondering: ‘Is my understanding correct?’ ‘Would profit actually increase?’ ‘Did I miss anything important?’ I couldn’t dispel the uncertainty completely” (Senko Corporation, Maeda).
How the Challenges were Overcome
“Pseudo-FIT” and “Upside Share Option” were the Decisive Keys
Senko Corporation initially contacted Toshiba Energy Systems & Solutions Corporation to gather information. Though Senko Corporation also inquired about other aggregators, it eventually chose to sign the power purchase agreement with Toshiba Energy Systems & Solutions Corporation. There were several important reasons.
The first one is the combination scheme between “pseudo-FIT” and “Upside Share Option.” If we use the scheme, even if electricity’s market prices fall below the FIP baseline prices, profit is still guaranteed. Senko Corporation foresaw such a stable profit. Moreover, if the market prices were to increase above the baseline, we could return a portion of the excess amount to the power generation business.
“Profits may increase when market prices rise, but they do not decrease when the market prices decline. We concluded that it would not bring any negative impact to our company” (Senko Corporation, Maeda)
Moreover, our trust in Toshiba Energy Systems & Solutions Corporation is also tremendously influential.
“We are grateful for Toshiba’s construction of the power generation sites. Back then, we were impressed by Toshiba’s work performance and behavior. Thus, we decided to ask for Toshiba Energy Systems & Solutions Corporation’s help again for the aggregator under the FIP system” (Senko Corporation, Maeda)
* The specific allocation ratio for the excess portion will be decided during the negotiation of purchasing conditions.
In this case, Senko Corporation and Toshiba Energy Systems & Solutions Corporation share the profits from the market appreciation that exceeds the FIP baseline price through "Pseudo-FIT" and "Upside Share Option.
Benefits following Implementation
Pilot transition of 4 solar power stations to the FIP system
Senko Corporation transitioned from FIT to FIP at 4 solar power plants, each located in Itoshima and Kama in Fukuoka Prefecture, Suzuka in Mie Prefecture, and Gotemba in Shizuoka Prefecture. All the PV sites started operating after 2020; Senko Corporation’s fixed FIT prices were as low as JPY18/kWh.
“How much does the profit differ between FIT and FIP, which is linked to market prices? First, as trials, we chose to buy 4 power generation sites with low FIT prices.”
Senko Corporation adopted the FIP regulation between February to March 2024. While the latest data is not yet available to calculate profit, there is an “Upside Share Option” --- when market prices soar, (a portion of the soaring rise) would be added to the fixed purchasing price of the ‘pseudo-FIT’ scheme. “I have really high hopes,” says Maeda.
“Once we can confirm the increased profits of the 4 generation sites, through Toshiba Energy Systems & Solutions Corporation, we will consider transitioning from FIT to FIP” (Senko Corporation, Maeda).
Feedback from the Customers
Senko Corporation Co., Ltd.
General Sales Department, headquarter section manager, Kazuya Maeda
Not only transitioning to the FIP system, but we also want to optimize benefits with installations such as the energy storage system.
I am a hands-on person, so I took time to gather information and study the FIP system. Yet, this was a brand-new system, and I still held quite a few concerns. In critical times like this, by consulting Toshiba Energy Systems & Solutions Corporation, I was able to deepen my understanding and became more confident with my thoughts and decisions. I had a difficult time particularly understanding the procedures, so we worked together to learn a lot of things.
In the future, aside from transitioning other power plants to the FIP system, to sell electricity at high market prices, we are also considering installing storage batteries at existing power stations and developing more power stations. To enhance profitability, I want to use the most inexpensive batteries, but I’m also worried about performance and safety. I think I will ask Toshiba Energy Systems for more consultations.
Company Profile
Company name
Senko Corporation Co,. Ltd.
Foundation
1963
Representiative
Kazuto Ota (CEO)
Headquarter Location
8-16 Kitahamachō, Yokkaichi, Mie 510-0091
Business Contents
Renewable energy power generation business
Solutions to this problem
I want to stabilize revenues under FIP, as in FIT (pseudo-FIT)
By utilizing the premium granted by OCCTO, we set the monthly purchase price to be equivalent to the FIT price, achieving revenue stabilization similar to FIT
* When market prices soar, we can also propose “Upside Share” as the alternative proposal. Please feel free to contact us for more details.
