Impact and Benefits of Implementing Renewable Energy at Production Bases: NEC Technical Journal

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NEC Platforms is actively working to reduce CO₂ emissions (Scope 1 and 2) at its production bases by setting targets aligned with the NEC Group and implementing initiatives to achieve net-zero CO₂ emissions through the use of renewable energy and other activities. As part of this commitment, we are promoting the use of “green power” generated by solar power systems, in line with our mid-term strategy. In addition, in response to customer requests to minimize CO₂ emissions in manufacturing, our Fukushima Plant transitioned to using 100% renewable energy as of June 2024. This paper details the initiatives undertaken at our production to expand the use of solar power generation.

1. Introduction

1.1 NEC Platforms' Environmental Initiatives

NEC Platforms, Ltd. was formed in 2014 by integrating the NEC Group’s manufacturing subsidiaries. In 2017, we strengthened our capabilities in hardware development and production, shaping our current structure. Today, our company offers a wide array of ICT platforms, spanning hardware development and manufacturing, IT and network system integration, and innovative solution development (Fig. 1).

zoom — Fig. 1 The role of NEC Platforms.

The NEC Group is actively pursuing environmental initiatives to create a sustainable society. The predecessor companies to NEC Platforms were already advancing these efforts before the integration. Today, we continue to build on this foundation by implementing and adhering to company-wide policies.

We consider our climate change mitigation efforts an essential component of environmental management. By reducing CO₂ emissions from our own production bases (Scope 1 and Scope 2¹⁾), we not only minimize our own environmental impact, but also support our customers reduce their Scope 3 emissions. This, in turn, helps our customers expand their green product offerings and improve their environmental management practices. At the same time, these initiatives align with our sustainability goals and help strengthen our corporate value.

This paper introduces our initiatives to expand the use of renewable energy and the benefits of these efforts.

1.2 Goals for Climate Change Countermeasures

The NEC Group has set a long-term target of achieving carbon neutrality by 2040 as part of its climate action strategy. To ensure steady progress toward this goal, we are actively working to reduce CO₂ emissions from our production bases (Scope 1 and Scope 2) as shown in Fig. 2. To effectively track our progress, we have also set interim targets for fiscal years 2025 and 2030.

Fig. 2 NEC Platforms' CO₂ emission reduction targets (Scope1, Scope 2).

Our specific initiatives are guided by a five-year mid-term plan that focuses on three key actions: improving efficiency by replacing aging equipment (commonly known as eco-replacement), improving energy efficiency by optimizing facility operations, and expanding the use of renewable energy.

2. Expanding the Use of Renewable Energy in Japan

2.1 Diversification of Renewable Energy Procurement Methods

The main methods for procuring renewable energy include: (Table 1):

Installing in-house solar power systems
Leveraging corporate Power Purchase Agreements (PPAs)
Purchasing from electricity plans provided by retail electricity suppliers that include environmental value
Acquiring non-fossil certificates²⁾ to verify the environmental attributes²⁾ of electricity

Table 1 Main procurement methods for renewable energy.

Among renewable energy sources, solar power generation stands out for its relative ease of deployment, its wide range of installation locations, and its role as a distributed energy resource that supports self-consumption and localized energy production and use. In recent years, a growing number of companies have embraced renewable energy by installing onsite solar power systems, entering into corporate power purchase agreements³⁾ (corporate PPAs), or purchasing non-fossil energy certificates.

In addition, non-fossil certificates with additionality certification⁴⁾ are becoming increasingly important for companies seeking to meet the requirements of the international RE100 (Renewable Energy 100%) initiative.

2.2 Procurement Methods for Green Power

The main methods for procuring green power include:

Installing onsite solar power systems
This approach involves investing in and owning a solar power system with the company's own capital. By directly financing the installation, the company retains full control over the operation of the system and the use of the green power generated.
Utilizing corporate PPAs
This is an approach to purchasing green power generated by solar power systems owned by third-party providers on the basis of long-term contracts.
These contracts come in two models: onsite, where the solar panels are installed on the company's premises, and offsite, where they are installed at external sites.
The offsite model offers additional benefits, such as reducing dependence on centralized energy systems, diversifying energy supply risks, and supporting local communities by promoting local renewable energy generation, which facilitates the local production and use of electricity.

3. NEC Platforms’ Implementation of Renewable Energy at Production Bases

3.1 Strategy for Expanding the Use of Renewable Energy

As part of our mid-term plan to expand the use of renewable energy use, we are installing solar panels on the rooftops of our production bases. By fiscal year 2025, we aim to achieve a total generation capacity of 6,540 kW and an annual power generation of 7,577 MWh, including contributions from our overseas bases.

While our primary focus is on reducing CO₂ emissions, evaluating the efficiency of investments remains crucial to our decision-making process. To optimize cost-effectiveness, we compare quotes from various contractors for both self-investment models and onsite PPA models, allowing us to select the most viable option.

In addition, we conduct risk assessments for each investment, considering factors such as equipment failure from natural disasters, weather-related changes in power generation, cost risks from fluctuating electricity prices, and restrictions on operational flexibility from long-term contracts. These assessments help us make informed decisions.

3.2 Renewable Energy Implementation Results

As of July 2024, the amount our total implemented and planned use of renewable energy is 16,313 MWh/year, as shown in Table 2. Based on actual power generation in fiscal year 2023, 7% of our total electricity consumption comes from renewable energy.

Self-Investment: 3,059MWh/year
Onsite PPA: 2,116 MWh/year
Offsite PPA: 1,855 MWh/year
Non-fossil certificates: 9,283 MWh/year

Table 2 Renewable energy implementation results and future plans.

3.3 Using 100% Renewable Energy at the NEC Platforms Fukushima Plant

3.3.1 Transitioning to 100% Renewable Energy at the Fukushima Plant

In response to customer requests to minimize CO₂ emissions in our manufacturing processes, our Fukushima Plant embarked on a transition to 100% renewable energy. This initiative aims to achieve:

Reduction of Scope 2 emissions for our company and Scope 3 emissions for our customers
Strengthened collaboration between customers, our company, and the NEC Group in environmental management and decarbonization
Enhanced corporate value through our dedication to decarbonization
Increased added value of the Fukushima Plant as a production base capable of producing carbon-neutral products

3.3.2 Evaluating Procurement Methods and Achieving 100% Renewable Energy at the Fukushima Plant

The selected procurement approach (Fig. 3) and its expected benefits are as follows:

Selection of renewable energy procurement method
Achieving 100% renewable energy at the Fukushima Plant required more than the installation of onsite solar panels. We adopted a procurement strategy that combined offsite PPAs with the purchase of non-fossil certificates.
Specifying offsite PPA details
The specifics of the offsite PPA, such as generation capacity and delivery methods, are determined by the power provider and have a significant impact on the project schedule and cost. We worked closely with the power provider to define these details and ensure a smooth implementation. The system configuration of a solar power generation system is diverse because there are many components, such as solar panels, the Power Conditioning System (PCS), connection methods, and whether or not to use storage batteries.
Even when selecting a location for the panels, when developing a new site on forested land, it takes a long time to select a candidate site, negotiate with the landowner, submit a development notification, and perform other administrative procedures., before construction can begin. We narrowed down the options to what we thought were the four best systems for this project and compared them.
Finalizing implementation strategy and expected benefits.
After evaluating the available options, we chose a strategy that balances schedule and cost to ensure sufficient power generation for customer product manufacturing. This strategy primarily utilizes the offsite PPA method. If the offsite PPA electricity falls short, additional electricity will be supplemented by purchasing non-fossil certificate backed power from the market through a retail power supplier.
As a result, the Fukushima Plant transitioned to 100% renewable energy in fiscal year 2024, significantly reducing our customers' Scope 3 emissions. By eliminating Scope 2 emissions at the Fukushima Plant, this initiative supports our interim CO₂ emissions reduction target for fiscal year 2025.

Fig. 3 Overview of renewable energy procurement method for the Fukushima Plant.

4. Conclusion

To achieve our interim target for fiscal year 2025, we are committed to consistently advancing the initiatives set forth in our mid-term plan. These efforts involve enhancing internal energy-saving measures to accelerate the reduction of CO₂ emissions in our production facilities, production lines, and factory floors.

For the next medium-term plan (2026-2030), we believe that it is necessary to plan measures that will help us achieve the interim targets for fiscal 2030, and we will consider measures such as expanding the scope of solar panel installation to carports and building walls, expanding the offsite PPA method to other production bases, and applying the self-consignment of green power produced by NEC to our operations.

We remain dedicated to advancing initiatives that align with the NEC Group’s goal of achieving carbon neutrality by 2040.