Toshiba Eyes Expanding Its Geothermal Business Beyond Turbines

Toshiba Corp., the world’s biggest supplier of turbines used to produce electricity from the heat trapped underground, will expand its geothermal power business into operation and maintenance services as it aims to extend its lead in a global market dominated by a handful of competitors.

“We are just doing turbines now but we want to take full advantage of business opportunities in every stage of the value chain,” Tsutsomu Higashizawa, who is in charge of the Tokyo-based company’s global geothermal business, said in an interview.

Three Japanese manufacturers dominate the market for geothermal turbines. Toshiba, which has provided equipment for projects accounting for more than 3,000 MW of capacity, has a 23.4 percent share, trailed by Fuji Electric Co. and Mitsubishi Hitachi Power Systems Ltd. with 21.2 percent and 20.7 percent, respectively, according to data from Bloomberg New Energy Finance. Mitsubishi Hitachi is a venture between Mitsubishi Heavy Industries Ltd. and Hitachi Ltd.

“Our goal is to get a 100 percent share of the market, but more realistically we are aiming for at least half,” Higashizawa said.

Toshiba has sold equipment for projects in countries such as the U.S., Mexico, the Philippines and Indonesia, and said in May that it had won an order for a project in Turkey. The company also supplied a turbine for Japan’s first geothermal power plant, which opened in 1966 in the northern prefecture of Iwate.

Partnership Approach

Toshiba, which has been trying to recover from an accounting scandal, aims to win more orders in Turkey and African nations such as Kenya through its partnership with Ormat Technologies Inc., a Nevada-based geothermal company, according to Higashizawa.

The two companies signed an agreement in October to offer a wider variety of products and services for geothermal projects, with Ormat’s binary technology complementing Toshiba’s conventional flash turbine systems. Binary systems allow for cooler geothermal reserves to be used as opposed to flash steam plants.

The partnership allows Toshiba to “catch up” with Fuji and Mitsubishi Hitachi as they supply both binary and flash systems, Higashizawa said.

Toshiba will also benefit from Ormat’s expertise in various stages of developing geothermal power projects from funding to drilling to operations. Toshiba, whose geothermal business has been focused on the manufacturing of turbines, will provide O&M services with Ormat or on its own depending on the project, Higashizawa said.

Toshiba is also eyeing other steps beyond developing geothermal projects and supplying equipment. The company is open to various options, including owning geothermal power plants, Higashizawa said.

©2016 Bloomberg News

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