12/9/2019 Decline in thermal power plant demand leads to layoffs at Mitsubishi Hitachi Power ­ Institute for Energy Economics & Financial Analysis : Institute f…

Decline in thermal power plant demand leads to layoffs at

Mitsubishi Hitachi Power

Nikkei Asian Review:

The dawn of renewable energy is starting to pinch at companies that build fossil-fuel-fired power plants, forcing
substantial layoffs at manufacturers such as Japan’s Mitsubishi Hitachi Power Systems.

Since Mitsubishi Heavy Industries and Hitachi merged their thermal power plant operations in 2014 to create
Mitsubishi Hitachi, the tide in the energy sector has shifted in favor of low-emission technologies. The company
has scrapped its goal of reaching 2 trillion yen ($18.3 billion) in sales, and is now scaling back its production
system for power generators running on fossil fuels. Mitsubishi Hitachi will cut 300 jobs at a German site, 30% of
the total, and is restructuring its Japanese production network, reassigning workers around the country.

Rival manufacturers in the U.S. and Europe are cutting back as well. General Electric has announced it will lay off
12,000 workers around the world at its power operations, while Siemens has said it will cut 6,100 jobs at
businesses linked to power plant equipment. Demand for thermal power plants in 2017 amounted to just one-
fourth of production capacity at Mitsubishi Hitachi, GE and Siemens combined.

Under the Paris climate accord, which took effect in November 2016, developed and developing countries alike
have pledged to limit greenhouse gas emissions over the coming decades. This has spurred a broad shift toward
power production that eschews fossil fuels, both as a matter of national strategy and in terms of corporate
investment.

In light of this funding crunch, around 80% of plans for new coal-fired power plants in India — 533 gigawatts in
all — have been halted or canceled. “The costs of fossil-fuel power generation will rise even further as funding
dries up and environmental regulations grow stricter,” said Kentaro Tamura, research leader at the Institute for
Global Environmental Strategies. “There isn’t just going to be a temporary pause in demand.”

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