Why is Japanese Technology Giant Toshiba entering the Solar EPC business?

Toshiba Follows Global Conglomerates making a Beeline into Solar Energy

Toshiba the Japanese Giant known for its Global Leadership in Nuclear Power Equipment,Electronics and Memory Businesses has decided to become a big player in  the Solar EPC business.While Toshiba has decided to increase Green Investments strongly with a JV already concluded for Batteries with Mitsubishi,the EPC venture certainly comes as a surprise.This strategy is quite different from the other global conglomerates entering the Solar Energy Field.South Korean Players like Samsung,LG,Hanwha and Hyundai are all building Crystalline Silicon Modules.General Electric is focusing on the Thin Film Production while Siemens is targeting Concentrated Solar Thermal (CSP) manufacturing.Taiwanese companies like TSMC and AUO are also planning on producing modules rather than building solar power plants.Japanese companies lie Kyocera,Sharp,Mitsubishi and Panasonic are already well established in the production of Solar Modules with Sharp being the largest solar company in terms of revenues.Toshiba’s EPC Strategy therefore seems quite different from the other companies.

Toshiba Planning a big foray into the Solar EPC Business

Note the Solar EPC business typically is a low margin business like the general Enginereering Procurement and Contract (EPC) Sector.A number of Solar Companies like Q-Cells,MEMC,Sunpower and First Solar in recent times have entered this segment to generate a captive demand for their solar products.Nobody derives significant profits from this part of the supply chain due to its lower margin structure.With low barriers of entry and little bargaining power,this part of the Solar Food Chain is the last place you would expect a high technology company like Toshiba to enter.The Nikkei report says that Toshiba wants to enter the Smart Grid business by leveraging its experiece of the Solar EPC business.It is already in the process of building a 10 MW plant in Bulgaria and plans to generate around  $2 Billion Dollars annually from US and Europe by 2015.I can’t fathom the reasons behind Toshiba’s entry except that Toshiba finding the other parts of the Solar Supply Chain too crowded decided to enter the EPC Business.

Toshiba plans solar power push in U.S. and Europe: Nikkei – Reuters

Toshiba Corp plans to construct solar power projects in Europe and the United States, hoping to generate 150 billion yen ($1.76 billion) in overseas sales from solar power operations in fiscal 2015, the Nikkei business daily reported.Toshiba is initiating the push with the construction of a 10,000-kilowatt Bulgarian facility scheduled to come on stream next fiscal year, the paper said.

The firm is weighing forays into Italian and U.S. markets and aims to use the expertise in solar power plants to tap demand for smart-grid infrastructure, a market poised to grow worldwide, the Nikkei said.Toshiba plans to be build eight large solar power plants a year in Europe alone in 2015 and may consider local acquisitions of firms with construction knowledge, the daily said.