In order to reduce fuel costs, we have been investing our efforts in increasing efficiency by taking various measures. Those include gradual improvement construction work made to the gas turbines at our Yokohama Thermal Power Station in 2015 and Futtsu Thermal Power Station in 2016. Instead of replacing the entire power generation facilities, we are planning to use the existing facilities and improve them. Our goal is to increase our power generation efficiency while reducing investments.
In the future, the effects of the market environments surrounding our company are taken into consideration to secure new revenue sources by using existing assets and to increase our corporate value. Our short-term plan involves expanding the optimal economic operations, wholesale of electricity, and wholesale of gas. On the other hand, our long-term plan focuses on the electricity markets of the future and the creation of an optimal power supply portfolio.
By accumulating and analyzing market information, fuel properties, ship position information, fuel storage data, and maintenance information related to power generation facilities, we can update our business in real time according to the unit price of power generation, fuel inventory, thermal efficiency, facility defects, and other factors to ensure the optimal economic operations.
In order to respond to the ever-changing demand for electricity, we have established the "Operation Center" at our headquarters, through which we implement our optimal economic operations 24 hours a day all year round.
In order to generate less expensive electricity, we operate the power generation facilities at our power stations by prioritizing them according to their calculated thermal efficiency and costs related to power generation (unit price of power generation). We also adjust the order of priority in which the facilities are operated whenever necessary according to the LNG or coal inventory, system constraints, repair work, and other factors.
The types of fuel used at a thermal power station include coal, LNG, and oil. LNG accounts for about 70% and represents an indispensable fuel source for the operation of thermal power stations. In order to ensure that our customers receive a stable supply of electricity, we take an integrated approach to our operations. This includes utilizing the gas pipelines that connect our three terminals (the Higashi-Ohgishima terminal, the Futtsu terminal, and the Sodegaura joint terminal) to manage our inventory while taking into account the constantly changing amounts of generated power and utilized fuel, weather and sea conditions, and other factors.
Since electricity cannot be stored, we maintain its quality by adjusting the supply (amount of generated power) from our power stations to maintain the balance (50Hz) according to the constantly changing demand (amount of power used).
Thermal power generation plays a pivotal role in the supply of electricity since it enables a flexible response to changes in demand. Thermal power stations adjust the supply (by starting or stopping generators and adjusting the output) according to the orders issued by the Central Load Dispatching Center and carry out adjustments by using the self-control systems of the power generators.
Due to the popularization of photovoltaic solar power generation and other sources of renewable energy in recent years, the demand for thermal power generation has changed. We are currently responding to the fluctuations in the amount of photovoltaic solar energy generated during the day by increasing or decreasing the amount of power produced by conventional generators. In order to enhance our coordination capabilities, however, we also aim to improve the economic efficiency of our operations by (1) decreasing minimum output and expanding the scope of operation, (2) by speeding up the output changing rate and improving our load-following operation capabilities, and (3) by expanding the time frame for DSS (*) operations.
In the future, we are going to examine the necessary improvements for our thermal power generation facilities and work towards enhancing our coordination capabilities by taking into account the future increase in photovoltaic solar power generation and its influence on the demand curve.
*This abbreviation stands for "daily start and stop." The term refers to daily cycles of start and stop operations, whereby a generator is operated during the day and stopped at night when the demand for electricity is low.
In order to adapt to the changes in output caused by an increase in the amount of photovoltaic solar power, we are aiming to improve our coordination capabilities related to middle-peak power supply by decreasing minimum output, expanding the start-and-stop operations, introducing additional output bands, and taking other measures. This allows us to maintain high operation rates of the coal-fired thermal power stations with low fuel costs and highly efficient combined-cycle power stations.
Our business operations include the wholesale of electricity and raw gas. Our wholesale operations are currently focused on TEPCO Energy Partner, but we are planning to maximize our profitability by expanding our sales channels to other companies too.
In addition to building calorific value adjustment facilities (production capacity: 600,000 tons per year) at Anegasaki Thermal Power Station, we established a corporation called Ohgishima City-Gas Supply Company, Incorporated in cooperation with JXTG Nippon Oil & Energy Corporation and Osaka Gas Co., Ltd. in October 2017. The main role of this company is to produce and supply city gas to Shinagawa Thermal Power Station. Our plan is to add calorific value adjustment facilities with a production capacity of 1.1 million tons per year to the company.
This will allow us to go beyond the traditional sources of electricity and include the wholesale of gas in our operations.