Some Like It Hot: Japanese Supermarket Mogul to Sell Geothermal Energy as a Franchise
It's a novel way to harness Japan's untapped geothermal natural resources to provide the island nation with cheap, efficient and environmentally friendly energy.
What’s new: Supermarket mogul Shoji Numata (沼田昭二), 69, founder of the Gyomu Supa (業務スーパー) chain of more than 1,000 discount supermarkets nationwide, is on a mission to harness Japan's geothermal energy resources by providing electricity through a traditional franchise model.
"We need to do this... The 'Gyomu Supa' business model can be used to revolutionize geothermal power generation in Japan." - Shoji Numata
This fresh, new approach to harnessing the largely untapped, abundant natural resource of geothermal energy could revolutionize the industry.
Context: Japan sits atop the world's third-largest source of geothermal energy, but except for the country's world-famous hot-spring resorts, this abundant natural resource is often wasted, literally going up in smoke (or steam in this case).
How it works: In geothermal power generation, hot water and steam are extracted from deep underground and separated. The steam is then used to turn a turbine to generate electricity.
What's happening: In early February, in the mountains near the town of Oguni, Kumamoto Prefecture, Numata successfully completed the final test run of his first geothermal well designed for power generation.
"Today is the first day we will put steam into the turbine and turn it for the first time. It is an important milestone. - Shoji Numata
Numata began working on the project in 2016. He has invested about 12 billion yen (about $80 million) of his own money in the plant, which relies on a steady flow of geothermal steam from 660 meters (about 2,200 feet) underground. The trial run was a resounding success, with the turbine reaching the planned 1,800 rotations per minute (rpm).
Why it matters: Japan has few natural resources and is heavily dependent on foreign sources of coal, gas, oil, etc. to meet its immense energy needs. Locally-sourced geothermal energy is a stable, clean source of electricity that is not affected by weather conditions.
One of the obstacles to the development of geothermal energy in Japan today is, however, the long development period, which usually takes more than 10 years and can be prohibitively costly. Numata is trying to overcome these hurdles with his revolutionary "Gyomu Supa" business approach.
Its national chain of supermarkets is characterized by self-reliance and operational excellence. Numata's network of 1,000 stores is supported by 25 wholly owned distribution centers across the country. The company's core competency is its ability to reduce costs by producing its own private label products. For example, the chain even designs its own freezer cases, which are used on the sales floor so that a case of products shipped from a distribution center can be efficiently replenished without having to repack freezers at individual stores.
"We reduce waste, loss and inefficiency. Geothermal is no different. We made all the machines (for geothermal development) ourselves." - Shoji Numata
As an example, Numata cites a special self-propelled excavator developed in-house that can drive freely up any narrow road. Even deep in the mountains, where large vehicles cannot enter, his team can get to a drill site quickly without having to clear the road. As a result, Numata has been able to cut the cost of surveying potential drilling sites to one-fifth of what it would otherwise be.
"We are drilling for geothermal energy, but most of the test sites are unsuccessful, so it would be very expensive and time-consuming to repair all the forest roads. Thanks to our specialized drilling equipment, this is no longer a problem. What we don't have, we develop ourselves. I think this approach is absolutely necessary for both my supermarket chain and the development of geothermal energy. - Shoji Numata
Numata is a committed visionary who is not afraid to put his money where his mouth is.
Going deeper: Typical geothermal power plants are tailor-made, with the size of the plant depending on the size of the heat source. Numata, on the other hand, is trying to standardize the production of such plants with a uniform design for the turbine, generator, and cooling tower, regardless of the size of the heat source. For larger heat sources, he says, Numata will simply string several of these units together.
"The design fee for the first unit was 250 million yen (about $1.7 million), but there is, naturally, no design fee for the second unit and so on." - Shoji Numata
Moreover, while it took Numata's team nearly two and a half years to design the first plant, he estimates that site-specific modifications for all subsequent cookie-cutter designs should take no more than about a month.
"Geothermal power generation can also be done quickly and at a much lower cost by 'packaging' it." - Shoji Numata
By the numbers: While Numata's ambitions are admirable, geothermal energy is still very underdeveloped in Japan.
Geothermal energy currently accounts for about 0.3% of Japan's total electricity production.
Japan's 98 geothermal power plants across the country have a combined capacity of approximately 540,000 kilowatts (kW). This is enough to supply electricity to a large city with a population of 500,000.
Numata's first geothermal power plant became fully operational on March 1, 2024. It has just started to produce enough electricity to power approximately 8,000 average-size homes.
What's next? Numata also plans to rapidly expand this business model through franchising. To date, there are 1,051 Gyomu Supa supermarkets nationwide, and all but 4 are operated by franchisees.
For his geothermal power plants, Numata’s plan is to assume the risk of drilling the underground portion of the project, while the huge construction costs of the above-ground portion are split 50-50 with the franchisee. The development of Plant #2 is already being planned in this manner.
"We have only been accepting applications for this project for two weeks, but more than a dozen publicly traded companies have come to us. We believe it is possible to expand nationwide while diversifying risk. - Shoji Numata
Numata is pitching this novel approach to local governments across the country, and he has already secured drilling permits at more than 30 sites nationwide. In typical Japanese fashion, the timeframe for his vision extends several hundred years into the future, as Numata sees geothermal energy as one of the best options for helping Japan achieve long-term energy independence.
Commentary: My home is only about a 90-minute drive from Numata's first geothermal power plant, and my wife and I often visit the amazing hot springs that surround this mountainous area known as the "Roof of Kyushu.” I applaud Numata's choice of location for his first geothermal power plant. This part of Kyushu is literally dotted with hundreds of hot springs. To get an idea of what it looks like, take a look at an earlier article I wrote about hot springs: "News Flash: Japanese Onsen Hot Springs Are Good for Your Health!" The cover photo was taken at a hot spring called Waita Onsen, which is just a short drive from Numata's Plant #1.
It was refreshing to learn how Numata combines his can-do attitude, passion for geothermal energy as a long-term renewable energy source for the country, and proven business acumen to achieve his goals. He is a great example of how someone who has achieved success in one field can leverage such experience to pivot in a completely different direction.
To be brutally honest, there is still a long way to go. So Numata's planned timeframe of several hundred years may not be so far off. One does, though, have to respect his Big Hairy Audacious Goals (BHAG).
In addition to the abundant source of geothermal energy in this particular region, one reason Numata may have chosen to start near Oguni in Kumamoto Prefecture, which is adjacent to several geothermal power plants, is that the local people - including many hot spring owners - have essentially already bought into the concept of harvesting energy from the same natural resource that provides hot mineral water to their inns and homes. Initially, there was widespread fear and opposition to such development, but previous projects have proven to be safe and have provided numerous financial benefits to the surrounding community. More (geothermal) power to them!
Link to Japanese Source: https://news.yahoo.co.jp/articles/f8c9d724a5fe3e54dc2a9136df141cf0b0746b47
#geothermalenergy #geothermalpower #ShojiNumata #GyomuSupa #MachiOkoshiEnergy #地熱資源 #地熱発電所 #沼田昭二 #町おこしエネルギー #業務スーパー
In one of those strange instances of serendipity, after reading this newsletter, I heard that Gyomu Supa was also involved in providing Japanese students with scholarships to study abroad:
https://news.yahoo.co.jp/articles/2766f02df5beae9724ca3d09ee9213efae012178
I love it when these coincidences happen!
Great article anywhere alternative energy can be used is a good choice. So good to see you are still writing. Always good info !!