Growth Strategy—Enhancing the LNG Value Chain

Other Initiatives
Tokyo Gas is advancing a wide range of initiatives other than those introduced thus far.
In this section, we explain four initiatives that contribute to enhancing the LNG value chain.

1“ENE-FARM”“ENE-FARM” residential fuel cell system is a type of dispersed
energy system that is installed at customers’ homes. This highly
efficient system uses city gas to generate electricity while also utilizing
the heat created through the generation process to heat water.
Moreover, “ENE-FARM” is an important strategic product in residential gas sales as customers using this system also consume greater
volumes of city gas.

“ENE-FARM” has continued to evolve since the first unit waslaunched in 2009. In April 2014, our “ENE-FARM” stock had risen to
approximately 30,000 units. The “Challenge 2020 Vision” calls for astock of 300,000 “ENE-FARM” units to be accumulated by fiscal
2020, and we will continue to refine these systems and promote sales
with the aim of achieving this goal.

“ENE-FARM” (Residential) Stock Plan

Advances to DateThousands units
400

300.0

300

May 2009

First unit sold

Apr. 2011

New “ENE-FARM” model launched, priced approximately¥700,000 less than previous offerings(MSRP: ¥2,630,000 plus tax)

Apr. 2013

New, more affordable “ENE-FARM” model launched(MSRP: ¥1,900,000 plus tax)

Apr. 2014

New “ENE-FARM” system for housing complexes launched

200
10002

9.6

17.2

29.4

2011

2012

2013

45.4
2014
(Plan)

2020(Plan)FY

Hydrogen Business

Recently, hydrogen vehicles have been garnering attention for theirlow environmental impact in comparison with conventional gasolinevehicles. These revolutionary new vehicles propel themselves byreacting hydrogen with oxygen in a fuel cell to run electric motors.
The city gas provided by Tokyo Gas consists primarily of methane(CH4). Therefore, we are able to extract hydrogen from this gas tocreate fuel for hydrogen vehicles.
The Company is constructing two hydrogen refueling stations, one
in the Nerima district of Tokyo and the other in Saitama City, Saitama
Prefecture. The promotion of hydrogen vehicles will require not only
the vehicles themselves to become more technologically advanced
and more affordable but also fuel hydrogen to become more affordable. The Company therefore aims to contribute to the spread ofhydrogen vehicles by helping provide a stable supply of affordable
fuel hydrogen.

21Tokyo Gas Annual Report 2014

Hydrogen refueling station

3

Smart Energy Networks

Tokyo Gas advocates the creation of “smart energy networks.” Thesenetworks are based on a concept of combining renewable energy
with cogeneration systems and controlling these in an optimal
manner through information and communications technology (ICT).
This process enables electricity and heat to be managed comprehensively throughout the network to reduce energy usage and CO2emissions. In cooperation with the government and our business

partners, we are advancing a number of projects to complete various
verification tests for these networks and realize practical use. Theseprojects include energy usage related ventures, such as a network
designed to optimize energy supply and demand management in thearea north of the east exit of Tamachi Station, in Tokyo, and a network utilizing untapped renewable energy in the Toyosu wharf area,also in Tokyo.

Smart Energy Network

Apartment Buildings

Hospitals• Photovoltaic Power Generation• Fuel Cell• Photovoltaic Power Generation• Gas Cogeneration• Energy Storage System

LNG Terminal

Biomass
Generation
Waste DisposalCenterOffice Buildings• Photovoltaic Power Generation• Gas Cogeneration• Energy Storage SystemInformation andCommunications
TechnologyWind Turbine Generation

Power Plant

4

Detached Houses

Commercial Facilities• Photovoltaic Power Generation• Fuel Cell

• Photovoltaic Power Generation• Gas Cogeneration• Energy Storage System

Overseas Energy Services BusinessAs part of the “Challenge 2020 Vision,” we aim to grow overseas
businesses to the extent that 25% of total consolidated net income
is generated by these businesses. Currently, we expect revenues toprimarily be generated in upstream areas, but we also plan to expand
our overseas energy services business going forward.

Gas usage is still low in Southeast Asia as countries like Thailand,
Malaysia, and Vietnam lack gas pipeline networks. Conversely, Japanese companies are increasingly relocating manufacturing sites to thesecountries. To take advantage of this trend, we are primarily approachingindustrial zones as we propose efficient ways of supplying energy,
mainly through consolidated subsidiary Energy Advance Co., Ltd.

Advances to DateMar. 2012: Memorandum of understanding with Petrovietnam Gas, of Vietnam, signed(examples of collaboration include information exchange pertaining to energy services)
Dec. 2012: 100% stake in Ecogen Brasil Soluções Energéticas S.A., a Brazilian provider of energy
services for commercial and industrial facilities, acquired through a joint venture establishedbetween Mitsui & Co., Ltd., and Energy AdvanceMar. 2014: Energy services business joint venture established in Malaysia

Tokyo Gas Annual Report 201422