Remarks of the Second Half of FY2025 Regular Press Conference2026/02/18
JERA Co., Inc. (“JERA”) held a regular press conference on February 18, 2026, led by Hisahide Okuda, President, Director, CEO, and COO.
The press conference was conducted in Japanese, and the following is an English translation of the remarks.
Agenda
Part 1: Advancing Decarbonization for a Society Grounded in Green Transformation (GX)
Part 2: Ensuring Thermal Power Resilience — A Business with Significant and Multifaceted Value
■ Hisahide Okuda, President, CEO and COO, Director
I would like to speak on the following three points today:
○Even Amid Surging Global Power Demand, the Shift Toward Decarbonization Continue to Progress
○Advancing Decarbonization for a Society Grounded in Green Transformation (GX)
○Ensuring Thermal Power Resilience — A Business with Significant and Multifaceted Value
Introduction
P2：Even Amid Surging Global Power Demand, the Shift Toward Decarbonization Continues to Progress
First, I would like to share three points regarding our view of the current energy landscape.
The first is decarbonization. Recently, media reports have increasingly suggested that global decarbonization is losing momentum. However, from our perspective as an energy company, we believe such interpretations may be somewhat superficial. It is true that the United States has applied a sharp brake to offshore wind development. At the same time, however, solar and onshore wind power are continuing to expand even without policy support. In addition, the United States is investing public funds and placing strong emphasis on next-generation nuclear technologies, including small modular reactors (SMRs). Therefore, this does not mean that progress toward decarbonization has stalled; rather, in my view, it reflects a strategy of actively nurturing decarbonization industries in which each country holds competitive strengths, in line with its own regional characteristics. In China as well, it should be recognized that the country has already established production systems with overwhelming international competitiveness, leveraging state capital across a wide range of fields—from solar power and onshore and offshore wind to batteries, and most recently, green hydrogen.
Against this global backdrop, if Japan remains stagnant, there is a possibility that ten years from now other countries will possess highly competitive cleaner energy supply infrastructures, while Japan could still be reliant on conventional supply systems. To avoid such an outcome, we believe it is essential to continue making steady progress toward decarbonization, while adjusting the pace as necessary.
The second point concerns power supply tightness. The United States is a notable example, and many countries project that electricity demand will increase due to data center growth. In Japan, however, data center demand has not yet directly translated into rising electricity demand. That said, developments now taking place in the United States should be fully assumed to occur in Japan as well, and we believe it is important for us to prepare steadily for that eventuality.
The third point concerns the global landscape. A newly emerging dimension is the growing global emphasis on economic security. In the energy sector as well, policies are quietly shifting toward prioritizing national interests. Japan, which lacks natural resources and has limited renewable energy potential, is in an overwhelmingly disadvantageous position. We therefore recognize the importance of formulating strategies that clearly take this reality into account.
We have set a strategy to allocate management resources with priority to three strategic business domains: LNG, renewable energy, and hydrogen and ammonia. At the same time, management capital will be adjusted in an agile manner in response to project progress and changes in the business environment. At present, we are prioritizing allocation to LNG. However, we are not removing renewable energy or hydrogen and ammonia from our growth areas; rather, we intend to steadily advance these strategies while adjusting the pace as needed.
Part 1: Advancing Decarbonization for a Society Grounded in Green Transformation (GX)
P4: Advancing Japan’s First Low-Carbon Ammonia Value Chain
First, as the initial step toward decarbonizing thermal power generation, we are introducing ammonia. In 2024, at the Hekinan Thermal Power Station in Aichi Prefecture, a large-scale demonstration test successfully achieved a 20% fuel substitution from coal to ammonia. In addition, last December we received certification under Japan’s price-gap support scheme, and preparations for establishing an ammonia value chain by FY2029 are progressing steadily.
At the Hekinan site, construction of the four very large ammonia storage tanks are underway. At the same time, work on ammonia transport pipelines and the jetty for unloading ammonia carrier vessels is also proceeding smoothly, and the project is on track to be fully ready for commercial operation in FY2029.
We are also participating in the Blue Point blue ammonia production project in the United States, in partnership with CF Industries, one of the world’s largest ammonia manufacturers. This project will be used to supply ammonia for the fuel substitution at Hekinan. In addition, we have already in agreements with Nippon Yusen and Mitsui O.S.K. Lines regarding ammonia carriers. With a total of four vessels—two from each company—transporting approximately 500,000 tons of ammonia annually to Hekinan Thermal Power Station, the necessary transport framework is steadily being put in place. Furthermore, we have begun sales activities so that this supply can be utilized not only at Hekinan but also by manufacturers across the Chubu region.
P5: Advancing Japan’s Early-Stage Offshore Wind Industry and Ensuring its Integration in Society
Next, I will discuss regarding our domestic offshore wind business. We were selected as the winning bidder for the Round 2 offshore wind project off the coasts of Oga, Katagami, and Akita cities in Akita Prefecture, as well as for the Round 3 offshore wind project off the southern Sea of Japan along the coast of Aomori Prefecture.
The Akita project will be a large-scale offshore wind farm with a generation capacity of 315 MW, and construction has already begun in preparation for its scheduled start of operations in June 2028. Work is currently underway on onshore transmission infrastructure and base port development. Construction of the base port is expected to continue until next summer, after which major offshore wind equipment will begin arriving from overseas during the second half of the next fiscal year. We have already signed turbine supply agreements with Vestas and foundation construction contracts with Kajima Corporation, and overall project development is progressing steadily. For the Aomori project, seabed surveys were completed last summer, and multiple statutory council meetings have already been held. We also recently obtained certification of the public occupancy plan, and preparations are now moving forward in earnest toward the start of construction. At the same time, ensuring that decarbonization becomes embedded in society remains a major challenge for Japan as a whole.
P6：Creating Value in Decarbonization with GX Embedded in the Society
I believe there is a growing recognition that decarbonization inevitably involves a certain level of cost. As long as decarbonization is viewed purely as a cost, it will be difficult for it to be embedded in society. The key, in my view, is whether society can recognize decarbonization as a new form of value—and be willing to pay a reasonable premium for it. That will ultimately determine whether decarbonization becomes firmly established.
With this in mind, we are advancing initiatives from two perspectives to embed decarbonization into society.
The first is creating a system in which pricing reflects value. We are working to promote decarbonization together with the creation of higher value-added industries. Specifically, to turn regional strengths into economic value, we are promoting projects near offshore wind sites that enhance the value and profitability of local agriculture, forestry, and fisheries. Through these efforts, we aim to establish mechanisms that encourage such local stakeholders to purchase electricity with an offshore-wind premium.
The second perspective is to add value to the industry. In industrial regions adjacent to our hydrogen and ammonia supply source can also utilize our hydrogen and ammonia. We are pursuing initiatives that use new hydrogen and ammonia supply chains to upgrade industrial value creation. Through these efforts, we aim to build a social framework in which premium-value energy is actively chosen and purchased.
We also emphasize the importance of building a society that truly resonates with these values. This means creating mechanisms that can shift public awareness and social mindsets, including among general public. If we fail to act on decarbonization now, the costs we face in the future will be significant—in other words, overall social costs will rise. That is why society needs to begin taking action today and move toward a shared understanding that paying a reasonable premium for decarbonization is both natural and necessary. We will continue working to support this shift. Specifically, we are pursuing two initiatives. First, starting next season, we plan to launch new initiatives through the Central League sponsored by JERA. Second, through the Social Value Co-Creation Forum, which we established last year, we will continue promoting discussions on social issues—including participation by younger generations—to help increase the number of people who share these values.
P7：Enhancing the Value of Community-Based Businesses Through Decarbonization
First, let me discuss initiatives that combine decarbonization with higher value-added industry. We are envisioning a model centered on regions surrounding offshore wind project sites. Our focus is on local industries such as sake brewing, fisheries, and agriculture. We aim to create market environments in which products from these industries can be sold at higher prices, while also supporting efforts that improve their profitability.
For example, in the fisheries sector, this could include developing aquaculture facilities that enable more stable revenue. In agriculture, premium rice is already being produced, and we plan to work with producers to advance automation and digital transformation so that production can be increased. By encouraging these industries to use premium offshore wind power, we hope to build a system in which local businesses can raise profitability while adopting clean energy. To support this goal, we have signed a memorandum of understanding with Yanmar Holdings and SMBC Group on a regional initiative to shape the future of the agriculture, forestry, and fisheries industry.
Next, we are exploring ways to embed cleaner energy into industrial value chains, beginning with ammonia. One approach is to promote its use as marine fuel, while also encouraging industrial complexes to shift their energy sources to hydrogen or ammonia and adopt these fuels in their production processes. We have also signed a partnership agreement with Mie Prefecture and Yokkaichi City aimed at achieving carbon neutrality at the Yokkaichi industrial complex.
In Yokkaichi City, a major semiconductor cluster is expected to develop in the mountainous area just a few kilometers from the complex. We would like to explore whether it is possible to create a more advanced supply chain that links the production of intermediate energy materials within the complex with semiconductor manufacturing, and within that framework, promote the use of hydrogen and ammonia as premium fuels.
P8：Creating Spaces to Experience the Value of Decarbonization
Next, I would like to discuss another key pillar: mechanisms that encourage a shift in social values. Through our sponsorship in Central League, we have worked together with the league’s six teams and their fans on activities that contribute to the local communities and society. Starting with the 2026 season, we plan to launch a new project focused on co-creating decarbonization initiatives. We will announce further details as soon as preparations are complete.
In addition, through the activities of the Social Value Co-Creation Forum, we have created a platform where companies, individuals, academics, and artists can come together to engage in open and vigorous discussions on social issues. High school and university students also participate. By encouraging young people to take an interest in social challenges early in life—and by giving them opportunities to see adults seriously debating solutions—we hope to foster a sense of engagement and ownership in addressing these issues.
We believe that people who develop this awareness will choose to support such initiatives and be willing to pay a meaningful premium to companies that are committed to solving social challenges. By cultivating this kind of talent, we aim to help drive a broader shift in societal values.
Part 2: Ensuring Thermal Power Resilience — A Business with Significant and Multifaceted Value
P10: Maximizing the Utilization of Thermal Power as Its Importance Increases (Overview)
I will now discuss our efforts to maintain the operational functions of our thermal power generation business. Thermal power generation is expected to fulfill two key roles: first, to reliably respond to the current increases in electricity demand, and second, to provide balancing capability to handle the variability that comes with the increased introduction of renewable energy.
At the same time, the operating environment has become extremely challenging. Worldwide, demand for gas turbines has grown due to rising power needs driven by the increase in data center while there is a severe shortage of energy equipment and construction personnel. Under these conditions, if construction is rushed, prices rise sharply. This kind of cycle is occurring globally. Moreover, it is not just gas turbines — prices for high-voltage cables and transformers have also increased.
In this environment, Japan has taken the lead compared with other countries in deploying thermal power for balancing. With increased balancing needs, the number of start-ups and shutdowns at thermal power plants has risen rapidly, which has also caused a significant increase in equipment troubles and unplanned outages. When trouble occurs, the affected equipment must be repaired — but at the time repairs are needed, personnel are unavailable, materials are not on hand, and trying to secure personnel and materials leads to high costs. Furthermore, rising geopolitical risks inevitably create concerns around fuel procurement. This means power generation is facing an unprecedentedly difficult situation.
As a company whose core business is power generation, we intend to take all feasible measures. Aside from replacements, our first priority is to thoroughly maintain the soundness of our existing thermal power stations. Because we cannot build new plants quickly, we must maintain the integrity of existing plants and use them fully. To do this, we need measures to keep thermal generating equipment from breaking down in the first place. We also need systems that allow us to respond rapidly when equipment does fail. These are the two main approaches we intend to implement to maintain plant integrity.
Another key point is the role of LNG amid global fragmentation. In addition to responding to rising demand and providing flexible balancing capability, we must also secure energy security in light of geopolitical and security risks. We must therefore shift our LNG procurement strategy to one that combines all three aspects — response to growing demand, flexibility for balancing, and securely ensuring supplies — and progress this strategy going forward.
P11: Reducing the Operational Burden on Thermal Power Stations Through Battery Deployment
As part of efforts to prevent thermal generating units from failing, we are considering ways to reduce the operational burden rather than relying solely on thermal power for balancing. For example, we want to mitigate large seasonal swings by idling coal-fired units in spring and autumn. For short-term balancing needs, we would ideally like renewable energy operators to install batteries. Various discussions are underway, but in all cases regulatory changes, such as updates to the rules, will be required — and that process inevitably takes time. Before delays make it too late, as a new initiative we plan to deploy large numbers of batteries ourselves and operate them in tandem with thermal generating units.
In FY2024, coal-fired power plants recorded a total of 110 start and stop over the year, and gas-fired plants recorded 12,500 times. Compared with 2014, the increase in start and stop is clear. Under such operating conditions, failures are almost to be expected, and we must work to curb them.
Basically, while installing batteries and using coal-fired plants for balancing will help, these measures alone are not sufficient. Therefore, as a new measure we have begun studying combined operation of thermal power plants and energy storage systems. By storing energy in batteries when demand is low and discharging from them during peak periods, we aim to reduce the balancing burden on thermal plants and help prevent thermal generating units from being shut down or damaged. Battery installation sites have not yet been determined, and battery costs remain high, so we need to carefully assess what scale of battery deployment will provide the best economic efficiency while maintaining a stable supply.
P12: Strategically Securing Spare Parts and Enabling Rapid Recovery From Unplanned Outages
Next, we will implement two measures to enable rapid repairs when equipment fails.
The first concerns equipment risk assessment. As digital power plant (DPP) implementation advances at our power stations and the number of start and stops increases, we have been accumulating data showing which components are more prone to failure. By increasing inventories of these high-risk parts, we can replace them quickly when problems occur.
The second is to ensure early and timely procurement. In the first place, certain equipment and materials are becoming difficult to obtain. In particular, large transformers and high-voltage cables have become hard to secure. We therefore plan to purchase such items in advance. In addition, some components are manufactured using specialized materials that require processing, and we have found that it can take considerable time to obtain those materials. Even if we do not stock the finished parts themselves, by procuring these specialized materials ahead of time we can quickly process them into replacement components and install them when a failure occurs.
Because these initiatives will be quite large-scale, we do not believe we can accomplish them alone. We intend to promote these efforts through horizontal collaboration with power companies both in Japan and overseas. At the same time, we will also advance such initiatives through vertical collaboration with manufacturers. Going forward, we plan to continue examining these approaches and move toward concrete implementation.
P13: Strengthening a Stable and Flexible LNG Portfolio
Finally, I would like to talk about LNG procurement.
As mentioned earlier, in addition to responding to growing demand and handling supply-demand balancing, we must also ensure energy security. With this in mind, we have already begun shifting our approach to our LNG procurement portfolio. Last year, we decided to secure 5.5 million tonnes of new LNG from the United States, and this year we decided to procure 3 million tonnes from Qatar.
In addition to diversifying supply regions, we secured U.S. LNG with destination flexibility, which makes it very easy to use for balancing purposes. The 3 million tonnes from Qatar, on the other hand, should be understood as having very different characteristics from U.S. LNG — it is extremely reliable in emergency situations. When all nuclear power plants in Japan were shut down after the Great East Japan Earthquake in March 2011, Qatar provided crucial support. This strong emergency reliability is a key advantage of Qatari LNG, and as economic security risks continue to rise, securing LNG from Qatar is highly significant.
For this reason, a memorandum of understanding on emergency LNG supply has been signed between Japan’s Ministry of Economy, Trade and Industry and Qatar Energy. By incorporating these two sources into our LNG procurement portfolio, we believe we can strengthen our ability to respond to demand growth, manage supply-demand balancing, and ensure energy security. We intend to continue our procurement activities based on this strategy going forward.
That concludes my remarks.