Tohoku Electric Power is one of the largest power generation and transmission companies in Japan. It has 17 GW of own generation capacity of which ~70% relates to thermal power but only ~1% is solar and wind. The volatile power generation business has acted as a drag on consolidated operating margins driven by volatility in underlying coal and gas prices.

In this note, Lee Ray, Senior Corporate Research Analyst – Emerging Markets and Developed Asia, analyses the trajectory of Tohoku’s transition plans and the risks associated with it, which can be seen as a case study for the wider sector. In particular the report looks at:

  • The credibility of Tohoku’s transition plans given a relatively ambitious 2030 emissions reduction target.
  • The financial risks to prolonging the operation of thermal power plants in a world rapidly moving towards a cheaper energy system.
  • The impact of a more aggressive carbon pricing scenario.
  • Key questions for investors to focus on when evaluating this investment.

If you are a portfolio manager, analyst (equity/credit), engagement lead, finance provider, insurer, or rating agency this report will provide you with insights and data to aid with your own analysis and engagement.

The energy transition is changing the power industry at increasing speed as cheaper power generation comes online. Decisions made by govts, regulators and corporates as to how to react to this change will dictate a country’s competitiveness in a world where energy comparative advantages will emerge. And that will matter to an industrial based economy like Japan, a lot.

The report is free to download from our website and is also available on the usual research aggregators – Bloomberg, Capital IQ, Factset & Thompson Reuters (search – Energy Transition: Tohoku Electric Power.

If you have any further questions, feel free to email Lee at