Transforming Society through Renewable Energy: Introducing Sumitomo Corporation's Diversified Energy Business

Renewable energy refers to energy sources that exist naturally and can be replenished within a relatively short period of time after use, including solar, wind, hydroelectric, geothermal and biomass energy. Because they create little to no greenhouse gas emissions, including carbon dioxide (CO2), during power generation, they are regarded as one of the most important tools in addressing climate change.

So why is renewable energy attracting so much attention today? Several major reasons are outlined below.

The transition to renewable energy can be traced to the adoption of the Paris Agreement in 2015, which marked a major turning point. The Paris Agreement is an international commitment to hold the increase in the global average temperature to well below 2 ºC above pre-industrial levels, while pursuing efforts to limit the increase to 1.5 ºC.

Achieving this goal requires the realization of carbon neutrality – reducing net greenhouse gas emissions to zero. In response, countries around the world, including Japan, have adopted targets to achieve carbon neutrality by 2050 and are stepping up efforts to meet them.

For countries that rely heavily on imported fossil fuels, renewable energy generated domestically is an important means of improving energy self-sufficiency. Ensuring a stable energy supply while reducing the risks of price spikes and supply disruptions caused by changes in global affairs is directly linked to a nation's economic security. Building systems that harness natural resources to meet domestic energy needs without relying on imported fuels is essential to creating a sustainable social and economic foundation for the future. At a time when fuel prices continue to rise due to factors such as geopolitical risk, securing domestically produced energy that is less vulnerable to external circumstances has become an urgent challenge for both businesses and government.

Introducing the key benefits for companies transitioning to renewable energy.

For companies seeking to achieve sustainable growth, reducing greenhouse gas emissions is no longer optional. Transitioning to renewable energy is one effective option for meeting commitments under international initiatives such as RE100, and respond to growing demands for emissions reductions across entire supply chains.

Reducing CO2 emissions and demonstrating a tangible commitment to addressing climate change not only helps mitigate risk – it enhances a company's environmental value. In this context, environmental value refers to an intangible asset that can influence corporate competitiveness. In recent years, requirements for the disclosure of sustainability-related information have expanded, particularly among listed companies. Quantitatively demonstrating environmental initiatives has become a core component of corporate responsibility and governance.

Improving energy self-sufficiency is an important strategy for strengthening business resilience. Fossil fuel prices are vulnerable to fluctuations driven by geopolitical developments and market conditions. By contrast, securing and utilizing renewable energy directly enables companies to procure electricity more stably, with less exposure to fuel price volatility. While the initial investment required must be taken into account, over the medium to long term renewable energy can improve the predictability of energy costs and serve as a hedge against future procurement risks.

In the development of renewable energy, Sumitomo Corporation has a multifaceted approach centered on two key themes: prioritizing coexistence with local communities and making renewable power easier to use. Below are three examples of how Sumitomo Corporation is putting this approach into practice.

Sumitomo Corporation develops solar power projects on a range of scales, from large-scale mega-solar facilities to installations serving local commercial sites, tailoring each project to its location and customer needs. Two examples are introduced below.

Sumitomo Corporation operates two of the largest solar power plants in the Tohoku region on coastal sites that were devastated by the tsunami caused by the Great East Japan Earthquake. Across approximately 150 hectares, the facilities have a combined generating capacity of around 92 MW, producing enough electricity to supply approximately 30,000 households. In addition to power generation, the project incorporates drone-based inspection technologies, contributes to local employment and sponsors traditional community events. Through ongoing dialogue with local stakeholders, the facilities have come to serve as symbols of recovery that continue to grow alongside the community.

The project traces its origins to the "Renewable Energy Promotion Vision" established by Minamisoma City following the disaster. As the city pursued reconstruction efforts, it identified renewable energy as a pillar of its future development. The project was launched in alignment with that vision. From the outset, the objective was not simply to build power plants, but to share in the community's aspirations and help shape its future.

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An on-site PPA (Power Purchase Agreement) is a contractual arrangement in which solar power generation equipment is installed on the rooftops or car parks of facilities owned by a company, with the generated electricity purchased and used by that company over the long term. As a powerful tool for supporting corporate decarbonization, on-site PPAs are one of Sumitomo Corporation's key focus areas. For example, through an investee company, Sumitomo Corporation concluded a comprehensive on-site PPA agreement to install solar carports in outdoor parking areas at AEON Mall’s domestic commercial facilities across Japan. The clean electricity generated is used directly within the facilities, while the solar carports also provide practical benefits to visitors by offering protection from rain and sunlight.

One of Sumitomo Corporation's strengths lies not only in overcoming site-specific constraints, but also in taking responsibility for the entire lifecycle of a project. From proposing solar panel installations and arranging financing to construction, operation and even consideration of future reuse and recycling initiatives, the company provides end-to-end support for the development of sustainable energy infrastructure.

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Sumitomo Corporation has more than 40 years’ experience in geothermal power generation, a renewable energy source capable of providing stable, around-the-clock power. At the Muara Laboh Geothermal Power Project in Indonesia, Unit 1, with a generating capacity of approximately 85 MW, began operations in 2019. Sumitomo Corporation became the first Japanese company to participate from the early, pre-drilling stage, and successfully saw the project through to completion. The company is currently developing a second unit with a capacity of approximately 83 MW at an adjacent site, with commercial operations targeted for 2027. Together, the two units are expected to provide a combined generating capacity of approximately 168 MW, enough to supply around 900,000 households. Sumitomo Corporation has been involved in the development of both units and has accumulated extensive experience in geothermal power plant construction in Indonesia and New Zealand.

Because geothermal power relies on underground resources, developers face a fundamental uncertainty: there isn't any guarantee that sufficient geothermal steam will be available to support commercial power generation. Drawing on expertise gained through decades of resource development, while also leveraging cutting-edge exploration and digital technologies through partnerships with startups and other organizations, Sumitomo Corporation continues to take on the challenge of developing technically complex geothermal projects.

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Renewable energy refers to naturally occurring energy sources that do not run out, including solar, wind, hydroelectric, geothermal and biomass energy. Because they emit little to no greenhouse gases, including carbon dioxide (CO₂), during power generation, they are regarded as one of the most effective tools for addressing climate change. Renewable energy sources can be replenished within a relatively short period after use, making them a form of clean power that supports a sustainable society.

Adopting renewable energy contributes directly to enhanced corporate value through decarbonized management practices and the establishment of a foundation for sustainable business operations. It also enables companies to secure a stable electricity supply that is less vulnerable to fluctuations in fossil fuel prices, helping stabilize energy costs over the medium to long term. Further, the development of environmentally friendly products and services can create new business opportunities in an evolving marketplace.