Sumitomo Corporation launched its solar (photovoltaic) module related business in the early 1990's. Following investment in a manufacturer of raw materials for solar cells, the first deal in this area, the Company gradually expanded the business to begin export sales of solar power modules in 2001. Sumitomo Corporation soon established a value chain that includes various elements, from raw materials procurement to the popularization of solar power generation through solar power module sales.
Against this backdrop, Environment Business Department, which engages in solar power-related business, launched numerous initiatives aimed at creating new businesses. In a drive to enter the solar power generation sector, one employee, Toyoki Fukuhara, was appointed to lead the way. Fukuhara reflects, "The market at the time was beginning to grow at such speed that there was a shortage of (solar) power modules, but there were many uncertainties, and we were still at a stage in which it was difficult to make decisions about business feasibility."
That being so, Fukuhara consulted Akihiro Ishimura, in charge of business assessment and risk management, who commented, "It is true that many elements of uncertainty existed, but, in the framework of a broader scenario, making a foray into the solar power generation sector was the right thing to do. We were able to decide ‘now is the time,' especially if we wanted to be the forerunner."
The first task for Fukuhara and the team was to find a construction site for the solar power plant. Among numerous candidate sites, Spain was particularly attractive, with abundant sunshine and vast lands. Expectations for the introduction of a preferential system known as "feed-in tariff," in which renewable energy is purchased at fixed prices, increased its appeal. Coincidentally, the team received a proposal via the Company's Automotive Division No. 2. The division's local business partner in automotive sales had offered to "jointly launch a solar power generation business" with them. Power generation is a community-oriented business -- it involves the local land and the people who help generate electricity, as well as local consumption. Local relationships and links are the keys to success, as has been demonstrated through the Company's various experiences in thermal and hydraulic power generation businesses. Nothing could be as reassuring as a partner who understands Sumitomo Corporation well acting as a bridge to the local community.
In January 2007, an agreement was reached to launch a power generation business with local capital, including the longstanding partner. The parties decided to establish an operating company as soon as the feed-in tariff program was implemented, and to initially construct a nine-megawatt solar power generation plant that would become one of the largest in the world.
Tenerife Island is located 1,800 kilometers southwest of mainland Spain, and only 100 kilometers off the west coast of Africa. The Island, a favorite European winter resort, receives 20 percent more sunlight compared to southern Spain, which itself enjoys relatively more sunshine compared to other areas in Europe.
Tenerife is known for the villages of "San Cristóbal de la Laguna," a UNESCO World Heritage of beautiful beaches with black sand, and Mount Teide, the highest peak in Spain, with an elevation of 3,718 meters. Golf courses are recently becoming popular as well. The beauty of natural landscapes and various must-see sights together attract tourists from around Europe to this resort island throughout the year.
Here, Sumitomo Corporation jointly founded, with local capital including ITER (Institute of Technology and Renewable Energy), the "EVM2 Energias Renovables, S.L." operating company, a subsidiary to the Tenerife government, and launched a solar power generation business as the largest shareholder.
The rated output of the power plant -- 12.6 megawatts -- is enough electricity to service 4,500 households. Over the project period of 25 years going forward, electricity will be sold to a wholly owned subsidiary of Endesa, the largest power company in Spain.
