Research & Development: A Key to the Future
Tokyo Gas has consistently emphasized technology development and the harnessing of newtechnology to develop business. As deregulation intensifies competition, we will focus ondeveloping technologies that raise the speed and profitability of our operations, differentiate us
from other companies, and contribute to business model innovation.

Key R&D Objectives and Development Themes
Tokyo Gas is concentrating on the following three key R&D objectives.
■ R&D Expenses By Objective
Total R&D Expenditures (Consolidated): ¥11.7 billion(Year ended March 31, 2003)

3. Creating profitable new businesses and improving
customer satisfaction
Deploy proprietary technologies to create profitable new
businesses, and develop technologies to expand the ability tosupply high-value-added services that meet customers’ needs.
Tokyo Gas Co., Ltd.

20

1. Encouraging natural gas use

25%
40%

Improve the safety and dependability of gas appliancesand further raise the superiority of city gas by developing
technologies that increase efficiency while reducing
space requirements and costs.

35%

2. Strengthening the natural gas business base
Improve existing production and distribution infrastructure and lower thecost of maintenance. Develop technologies required to create a more
efficient production, storage, transmission and supply system in order toexpand the Company’s natural gas business base.

Annual Report 2003

Business Model Innovation through Technology Development
Tokyo Gas is working to commercialize hydrogen energy and fuel cells, with the expected launch of a residential fuel cell cogeneration system in fiscal
2004. In addition, Tokyo Gas is deploying its technologies to contribute to the expansion of the hydrogen infrastructure in ways such as leveraging its city gas
infrastructure in the Tokyo metropolitan area. Using its experience in natural gas vehicles and its highly efficient technology to produce hydrogen from citygas, Tokyo Gas is also working to develop a new business model focused on these efforts.

Hydrogen Filling Station

Cogeneration System for Residential Use

The Senju Hydrogen Station,
the first fixed hydrogen filling
station in the metropolitan
Tokyo area, was constructed
as a joint venture between
Tokyo Gas and Nippon Sanso
Corporation as part of theJapan Hydrogen & Fuel Cell
Demonstration (JHFC) Project.
Once operations begin, thestation will conduct demonstrations of hydrogen production and supply
technology and its operating know-how. It will also collect data on factors
such as environmental impact, energy efficiency, safety and economicfeasibility. This data will support the establishment of standards andregulations, validate the social suitability of hydrogen energy and fuel cells,
and provide feedback that Tokyo Gas can use in developing technology andcreating a new businessmodel. Fuel cell vehicles andhydrogen filling stations werealso the focus of attention at
the 22nd World Gas
Conference held in Tokyo.

The polymer electrolyte fuel cell (PEFC)
stationary cogeneration system for residential
use features highly efficient power generation,
minimal environmental impact and high overall
energy efficiency. Using its proprietary
technology, Tokyo Gas is pushing ahead withthe development of a fuel processor for thePEFC system. Our initiatives, such as
conducting field tests at actual homes, will
promote the widespread use of this system.

Methane Hydrate
The seabeds around Japan are estimated to hold reserves ofmethane hydrate – methane and water frozen into asherbet-like consistency under high pressure – equivalent toJapan’s natural gas consumption for a hundred years. For acountry like Japan, which is almost totally reliant on
imported energy resources, this is an extremely attractive
source of energy. Tokyo Gas is continuing research into
options for using methane hydrate as a future source ofnatural gas.