The Regular Press Conference for First Half of FY20262026/06/24

JERA Co., Inc. (“JERA”) held a regular press conference by Yukio Kani, Global CEO and Chair and Hisahide Okuda, President, Director, CEO and COO on Wednesday 24 June. 

Agenda
Part 1: Navigating a Changing Business Environment: Delivering JERA's Growth Strategy
Part 2: Organizational Transformation to Strengthen Competitiveness and Deliver JERA’s Growth Strategy
Part 3: Establishing a Resilient Power Supply-Demand Framework for an Era of Uncertainty

■　Yukio Kani Global CEO and Chair

I would like to begin by introducing JERA’s 11-year journey since its establishment, as well as three major strategic initiatives that will drive our future growth.

These three initiatives are: strengthening the LNG value chain, expanding energy supply for data centers, and advancing decarbonization efforts.

I will also explain the organizational transformation that will enable us to execute these three initiatives more effectively and with greater certainty.

Part 1. Navigating a Changing Business Environment: Delivering JERA's Growth Strategy

Page3: JERA’s Journey in Numbers

Since JERA’s establishment in April 2015, we believe we have delivered three significant sources of value to society.

First, we have built a power generation platform that supports Japan’s stable energy supply. Following the Great East Japan Earthquake in March 2011, strengthening the nation’s power generation capacity became an urgent priority. JERA has supported Japan’s electricity supply by constructing and commissioning approximately 7.3 GW of new thermal power capacity, while also extending the operational life of existing aging thermal power plants to ensure sufficient generating capacity.

Second, by integrating the LNG procurement operations of Tokyo Electric Power Company and Chubu Electric Power Company, JERA became one of the world’s largest LNG buyers. Leveraging this scale, we have further strengthened one of the world’s largest LNG value chains, spanning upstream investments, transportation and trading, receiving terminals, and power generation. Today, we procure LNG from 16 countries, and our annual LNG handling volume has reached approximately 35 to 40 million tonnes. Through these efforts, we have supported Japan’s electricity supply from the fuel procurement perspective.

And third, we have taken on the challenge of developing new energy solutions for a low carbon future. We successfully conducted a demonstration project achieving a 20% fuel ammonia substitution rate at a large-scale commercial coal-fired power plant. In addition, through the establishment of JERA Nex bp in partnership with the UK’s bp, we are striving to become one of the world’s leading players in the development, ownership, and operation of offshore wind projects.

Page 4: Diversifying and Strengthening the Business Portfolio to Deliver JERA’s Mission

Through these initiatives, JERA has significantly expanded both the scope and scale of its business, with LNG, renewable energy, and hydrogen/ammonia serving as its three strategic pillars.

As a result, our total assets have grown from approximately 4 trillion JPY in FY 2019 to around 10 trillion JPY in FY 2025. Annual Profit has also increased substantially, from 90 billion JPY in FY 2019 to 183.6 billion JPY in FY 2025.

Looking ahead, we plan to invest approximately 5 trillion JPY over the next decade. What is important, however, is that we do not view capital allocation as fixed. The business environment is changing rapidly, and we will continue to adjust our investment priorities with flexibility in response to those changes, ensuring sustainable growth and long-term value creation.

Page 5: Expanding Growth Opportunities in an Era of Uncertainty

Today, the energy industry is operating in an era of unprecedented uncertainty. Geopolitical risks are rising around the world, making the secure and stable procurement of energy more important than ever.

In Japan, forecasting LNG demand has become increasingly challenging. Not only is it difficult to determine the appropriate level of LNG supply that should be secured over the medium to long term, but, in the short term, the gap between peak demand periods in summer and winter and lower-demand periods in spring and autumn is largely fluctuating. As a result, both procurement and operational management have become more complex.

At the same time, rising material costs and higher interest rates are affecting the competitiveness of lower carbon solutions such as renewable energy, hydrogen, and ammonia.

Even in this environment, JERA remains firmly committed to its mission: to provide cutting-edge solutions to the world’s energy challenges. By staying true to this mission, we aim to achieve both the resolution of societal challenges and sustainable growth as a company.

To address this, we are responding with three key strategic initiatives.

First, we are diversifying our LNG supply sources and further strengthening our LNG value chain.

Second, we are expanding energy supply solutions to meet the growing demand from data centers driven by the widespread adoption of AI.

Third, we are taking a disciplined approach to the development of renewable energy, hydrogen, and ammonia.

Together, these initiatives will position JERA to navigate an increasingly complex energy landscape while creating long-term value for society and our stakeholders.

Page 6: Characteristics of LNG and JERA’s Strategic Response

Page 7: Initiatives to Strengthen the LNG Value Chain

Let me begin with LNG. LNG is a critical fuel that underpins the stable supply of electricity in Japan, but it also presents a significant challenge. Specifically, LNG demand increases during the peak electricity consumption seasons of summer and winter, while declining during the lower-demand periods of spring and autumn.

At the same time, once a long-term LNG contract is signed, a fixed volume of LNG is delivered to receiving terminals over a period of approximately 20 years. Since storage tank capacity is limited, this creates a fundamental mismatch between the volume of LNG consumed (demand) and the volume delivered (supply). Unless this mismatch is effectively managed, the stability of energy supply cannot be guaranteed.

JERA has been addressing this challenge by strengthening its LNG value chain. Our efforts can be broadly categorized into three areas.

First, upstream investments. We have acquired interests in shale gas assets in the U.S., enhancing the resilience of our LNG value chain. This approach is also expected to provide a hedging effect should U.S. natural gas prices remain elevated in the future. In addition, by participating in projects from the upstream stage, including in Australia, we are strengthening the long-term stability of our fuel procurement.

Second, securing long-term contracts and diversifying supply sources. Following long-term LNG procurement agreements signed in the U.S. last year, we have also secured long-term LNG supplies from Qatar and Malaysia. By building a diversified LNG portfolio that does not depend on any single country or region, we can maintain stable procurement even during times of geopolitical or market disruption.

Third, portfolio diversification.We are increasing the flexibility of our LNG operations by expanding LNG flows across our global portfolio. This enables us to optimize LNG cargoes globally and strengthen our ability to deliver the right volumes to Japan when they are needed most. To support this capability, we are investing in LNG carrier vessels, strategically utilizing receiving terminals, optimizing operations with overseas partners, and securing terminal capacity in Europe.

JERA’s objective is not simply to purchase LNG. Rather, we seek to integrate and optimize the entire value chain—from gas fields and liquefaction facilities to LNG transportation, procurement and sales, receiving terminals, and power generation.

By managing these elements as a single, integrated system, we enhance our ability to ensure a stable and reliable energy supply. Ultimately, this is an initiative that is directly linked to Japan’s energy security itself.

Page 8: Data Centers: Market Trends and JERA’s Approach

The second strategic initiative is energy supply for data centers, a sector that is set to play a transformative role in shaping the future of society.

Driven by the explosive adoption of AI, demand for data centers is expected to grow significantly on a global scale.

To meet this rapidly increasing demand for electricity, JERA is leveraging its power plant sites and its network of relationships with local governments and business partners to develop a model in which data centers are co-located near power generation facilities. In Japan, where grid connection can take considerable time, multiple operators have expressed strong interest in JERA’s model of supplying electricity directly from its power plants.

We have already signed a memorandum of understanding with the City of Yokohama to collaborate on attracting data center investment to the JERA thermal power plant site within the Port of Yokohama waterfront district.

Globally, we are also engaged in discussions with multiple partners across the U.S., Europe, and Asia regarding the development of new data centers at power plant sites and the provision of electricity to data center operators.

These initiatives represent far more than a new business opportunity for JERA. They are an effort to support the digital infrastructure and AI ecosystem of the future—not only in Japan but around the world—and to strengthen Japan’s industrial competitiveness in particular.

As new sources of electricity demand emerge, JERA will continue to fulfill its mission of providing cutting-edge solutions to the world’s energy issues.

Page 9: Renewable Energy: Building Decarbonization Solutions for the Long Term

Our third strategic initiative is our investment for decarbonization. Let me begin with renewable energy.

Today, the renewable energy sector is facing significant headwinds. Rising equipment and material costs, higher interest rates, and supply chain constraints are creating a challenging business environment. Some companies have even announced plans to scale back or withdraw from projects.

Despite these challenges, renewable energy remains an essential power source—not only for achieving decarbonization, but also for enhancing energy security and ensuring a stable energy supply. Most importantly, it preserves future options for the next generation.

JERA will not be swayed by short-term market fluctuations. Instead, we view renewable energy as a long-term solution and will continue to strengthen our organizational capabilities while maintaining strict investment discipline.

In offshore wind, we will advance projects both in Japan and internationally in a prudent and reliable manner through JERA Nex bp, which brings together global expertise and strong local capabilities in what we call a “glocal” operating model.

In solar power and battery storage, we will work closely with our group company, JERA Cross, to support our partners’ green transformation initiatives and help accelerate their decarbonization efforts.

We are also exploring new energy models that combine Japan’s existing thermal power assets with battery storage systems. These initiatives have the potential to improve the efficiency of thermal generation, extend the useful life of existing assets, and support a smoother transition toward a lower-carbon energy system.

Page 10: Initiatives to Strengthen the Hydrogen and Ammonia Value Chain

Hydrogen and ammonia are being developed in much the same way as LNG, with the goal of establishing a complete value chain.

On the upstream side, through investment in Blue Point, one of the world's largest blue ammonia production projects located in Louisiana, USA, we are securing upstream fuel ammonia interests and aiming to establish our first blue ammonia value chain by fiscal year 2029.

In transportation, we have signed long-term charter contracts for four fuel ammonia carriers and are developing a transportation network that connects production sites with demand centers.

On the downstream side, at the Hekinan Thermal Power Station, we successfully completed a demonstration test in June 2024 using a 20% fuel ammonia substitution ratio. In addition, construction of ammonia storage and handling facilities for commercial operations is progressing steadily.

Furthermore, on the demand side—which is key to building a robust value chain—we are pursuing a multi-purpose strategy that extends beyond power generation to include applications such as marine fuel and industrial manufacturing. By aggregating demand across multiple sectors, we aim to accelerate the expansion of the fuel ammonia market and strengthen the resilience of the supply chain.

Part 2: Organizational Transformation to Strengthen Competitiveness and Deliver JERA’s Growth Strategy

Page 12: Restructure the Diverse Business Portfolio for Greater Visibility into Roles and Contributions

Up to this point, I have explained the progress of JERA's growth strategy. I will now discuss the organizational transformation that will enable us to execute this strategy effectively and accelerate its delivery.

Over the past decade, JERA has grown significantly, and its business portfolio has become increasingly diversified. At the same time, each business has become more sophisticated, and the expertise required to operate them has evolved considerably.

To date, JERA has connected its diverse businesses through an integrated operating model, optimizing the entire value chain as a unified organization. This has been a key mechanism supporting the company’s growth.

However, as our businesses have become more diverse and specialized, it has become increasingly difficult for headquarters alone to make decisions across all areas of the business. In a market environment that is growing ever more complex, achieving timely and highly informed decision-making requires clearer accountability and a more explicit delegation of authority.

Page 13: Reshaping the Business Structure to Clarify Accountability and Define Growth Ambitions

To address these challenges, we are reorganizing our businesses into six distinct businesses, each grouped around similar functions and defined with clear responsibilities and boundaries.

Specifically, these six businesses are:

■LNG & Cleaner Fuels, which aims to be the global leader in LNG and cleaner fuels through upstream investment and transportation activities.

■Domestic Thermal Power Generation, which strives to achieve world-class operational excellence in thermal power generation in Japan.

■Overseas Thermal Power Generation, which deploys JERA Group’s solutions globally.

■JERA Nex, which aims to become a global leader in renewable energy.

■JERA Global Markets, a world-class energy trading and optimization platform responsible for market operations and supply-demand balancing, connecting upstream and downstream activities.

■Domestic Power & Gas Retail, the control tower that optimizes fuel and electricity markets in terms of both volume and price.

While each business will deepen its expertise and make decisions with clear accountability within its own domain, the corporate headquarters will serve as an integrated group function, supporting and coordinating the organization as a whole.From a value-chain perspective, the LNG & Cleaner Fuels business will be responsible for upstream investment, transportation, and procurement of LNG and ammonia. On the downstream side, power generation activities will be carried out through Domestic Thermal Power Generation, Overseas Thermal Power Generation, and renewable energy operations both in Japan and internationally through JERA Nex.

Connecting upstream fuel procurement with downstream power generation in Japan will be Domestic Power & Gas Retail. By leveraging insights into customers, markets, and regulatory frameworks, this business will serve as the value-chain controller, optimizing both volume and pricing across fuel and electricity markets.

In addition, JERA Global Markets will leverage its expertise in LNG, coal, electricity markets, and JERA’s asset portfolio to become one of the world’s leading utility-backed energy trader and optimizer, while contributing to Japan’s stable energy supply.

This organizational transformation is not simply about dividing the company into separate businesses. Rather, it is about enabling each business to sharpen its expertise and make agile, autonomous decisions. At the same time, fuel procurement, power generation, renewable energy, and market trading will remain closely integrated, allowing JERA to achieve both its social mission and sustainable profitability.

JERA’s greatest strength lies in its ability to operate an integrated value chain. This transformation is therefore an evolution—not a separation. By consolidating 20 businesses into six focused businesses, we will enhance the competitiveness of each business while strengthening the connections across the entire JERA Group.

Page 14：JERA Core Value

Finally, I would like to explain the mechanism that will unite these six businesses into one JERA.

As we increase the autonomy of each business, decision-making will naturally become faster. At the same time, a shared set of values—the Core Value—becomes increasingly important in guiding the daily decisions and actions of employees across the Group. In developing this Core Value, we engaged not only senior management but also employees throughout the company, including those working at our power stations, in extensive discussions.

Our Mission and Vision define the direction we aspire to pursue. Integrated value chain management is the mechanism through which JERA creates value. And the Core Value is what connects how each individual thinks and acts.

At the heart of our Core Value is the principle of “Ownership to Serve Our Tomorrows.” It reflects a strong commitment to take initiative and dedicate ourselves to building a better future for society. JERA is a company entrusted with operating critical infrastructure that supports the very foundation of society—energy. That is why it is essential for every employee to take responsibility for their role and act proactively in service of tomorrow’s society.

Our Core Value also encompasses the principles of Fairness, which reflects our commitment to integrity; Openness, which reflects our commitment to transparency and collaboration; Diversity, which recognizes and respects different perspectives and backgrounds; and Respect & Safety, which emphasizes mutual respect and an unwavering commitment to safety above all else.

While we are creating clear boundaries and accountability across our six businesses, we will maintain strong unity and collaboration throughout the Group through our Mission, Vision, integrated value chain management, and Core Value.

Clear accountability and authority, advanced collaboration, and shared values—through these three elements, JERA will continue to evolve into a faster, stronger, and more trusted corporate group, creating value for society while meeting the challenges of the future.

That concludes my presentation. Thank you for your attention.

■　Hisahide Okuda, President, Director, CEO & COO

I would like to speak about the theme of “Establishing a Resilient Power Supply-Demand Framework for an Era of Uncertainty.”

Part 3: Establishing a Resilient Power Supply-Demand Framework for an Era of Uncertainty

Page 16: Diversification of the Power Generation Mix and Fuel Procurement Sources Has Reduced Dependence on the Middle East

This slide summarizes our view of the current state of Japan’s electric power industry. In short, since the oil crisis of the 1970s, Japanese electric utilities have steadily diversified both their power generation mix and their fuel procurement sources. As a result, dependence on the Middle East is now very low. Therefore, from the perspective of maintaining supply-demand balance and ensuring a stable power supply, we believe that the industry as a whole has developed a high degree of resilience against disruptions such as the one we have recently experienced.

The pie chart on the left shows the situation in 1973, when the first oil shock occurred. At that time, more than 70% of Japan’s power generation was fueled by oil. Moreover, nearly 80% of that oil was imported from the Middle East. This was the starting point from which the industry began its transformation.

Following the two oil shocks, the industry worked to diversify both its energy sources and procurement regions. As a result, as shown in the pie chart on the right, today’s power generation mix is much more balanced, consisting of LNG, coal, renewable energy, and nuclear power. Furthermore, when we look at LNG, which is now Japan’s primary fossil fuel, only about 6% of imports pass through the Strait of Hormuz. Creating this structure has been a long-term effort across the entire industry. Even if an event such as the recent disruption occurs, as long as we can secure alternative supplies for that 6%, the stability of the power supply-demand balance can be maintained.

In other words, we do not expect the recent event to have any significant impact on the stable supply of electricity.

However, does this mean that all challenges have been resolved? The answer is no. The next slide illustrates why.

Page 17: Need for Strategic Responses to Address Persistently High Commodity Prices

While there is no significant concern regarding the stability of electricity supply and demand, LNG prices have risen, and this increase will be reflected in electricity rates from July onward. Unfortunately, because fuel prices are determined by the market and cannot be controlled by utilities, electricity prices will inevitably rise.

The chart at the bottom illustrates this situation. The top line shows JKM, the spot LNG price benchmark for Asia. The second line shows JLC, Japan’s average LNG procurement price, which reflects a blend of approximately 70% long-term contract volumes and 30% spot purchases. The bottom line shows GC Newcastle, the spot price of thermal coal.

As the chart clearly indicates, Asian LNG spot prices remain at elevated levels, and forward prices continue to reflect a similarly tight market. By contrast, long-term LNG contract prices—most of which are linked to crude oil prices—have also risen, but to a much lesser extent. Because these contracts incorporate oil-price linkages through predefined formulas, they provide greater stability than spot procurement. Coal prices have also increased, but the magnitude of the increase has been significantly smaller than that seen in the LNG market.

The primary challenge, therefore, is the rise in LNG spot prices. Even if the ceasefire agreement between the United States and Iran proves effective, industry reports indicate that repairing LNG production facilities damaged during the conflict will take several years. Until that capacity is restored, the global LNG market is likely to remain tight. In such an environment, even relatively small disruptions can trigger sharp increases in spot LNG prices.

We therefore believe it is essential to reduce our reliance on spot LNG procurement as much as possible.

This is particularly important because LNG spot prices have a direct impact on Japan’s wholesale electricity market prices.

Page 18: Reference: Electricity Spot Price Trends

The chart on the left shows the trend in average area prices in the Tokyo and Chubu electricity markets. The chart on the right shows the trend in maximum prices during peak demand hours in those same markets.

As you can see, both average prices and peak prices have risen significantly since March, when the Iran War occurred. In particular, the blue line on the right-hand chart, representing the Tokyo area during peak demand periods—especially the evening demand peak—shows prices occasionally exceeding 50 YEN /kWh.

This is not simply a reflection of higher energy spot prices. It also reflects growing psychological concerns among electricity retailers on the buying side of the market. Fearing that they may be unable to secure sufficient electricity unless they bid aggressively, retailers are placing higher-priced bids. As a result, spot prices, especially during peak and evening demand periods, have become increasingly volatile and prone to sharp spikes. Rising LNG spot prices are being transmitted directly into these electricity market prices.

Because this situation could have a significant impact on the Japanese economy, we concluded that proactive measures should be taken as early as possible.

To address this issue, we have rapidly developed a new electricity product designed to hedge against the risk of price spikes during peak and evening demand periods. This product will be offered through our subsidiary, JERA Global Markets, beginning on July 1. By purchasing this product, retail electricity providers will be able to mitigate a substantial portion of this price volatility.

As an aside, offering such a product will actually reduce JERA’s profits. Given the current market environment, we could earn more by simply selling electricity at prevailing market prices. Nevertheless, even if this results in lower profits for JERA this year, we believe it will contribute to greater stability for society as a whole. In the longer term, this should also help stabilize JERA’s earnings in future years. It is with this perspective that we have decided to launch this product on an emergency basis.

Page 19: Reducing Reliance on Spot LNG Procurement Is Key to Minimizing the Burden on Customers

As I mentioned earlier, the key issue is how to reduce reliance on high-cost spot LNG procurement. We made the same point at the Fourth Public-Private Liaison Meeting on Power and Gas Supply-Demand and Fuel Procurement held on March 10. Reducing spot LNG purchases is critical to alleviating the burden on both the public and our customers, and we therefore put forward three recommendations.

First, we proposed greater sharing of LNG inventory information and increased cooperation among market participants. Under normal circumstances, competition rules limit the sharing of inventory information. In an emergency, however, the government could play a coordinating role by maintaining visibility over inventory levels and facilitating the transfer of LNG from companies with surplus inventories to those facing shortages. This would help avoid unnecessary spot LNG purchases.

Second, we proposed more flexible operation of the generation fleet. Put simply, we recommended making full use of coal-fired generation during emergencies to avoid the need for additional LNG consumption. Today, coal-fired generation is partially curtailed during the spring and autumn periods to reduce environmental impacts. However, increasing coal-fired generation during emergencies would allow LNG inventories to be maintained at higher levels ahead of the summer and winter demand seasons, thereby reducing the need for spot LNG procurement during those periods. Third, we proposed making greater use of the signaling function of electricity market prices. By allowing market prices to reflect the severity of supply conditions, customers can better understand the situation and be encouraged to adopt reasonable energy-saving measures and other behavioral changes more accurately. This, in turn, would help reduce spot LNG procurement during the summer and winter demand seasons.

Of these three recommendations, the first two have already been implemented with swift support from the government.

I have deliberately used the phrase “full utilization of coal-fired generation.” Some may question whether this is consistent with JERA's commitment to JERA Zero Emissions 2050. Let me therefore provide some additional context.

Page 20: Reducing Customer Costs Though Use of Coal-Fired Generation in Response to Energy Market Conditions

Our position is that the key value of coal-fired power generation lies in its resilience against geopolitical risks. We believe it should be utilized differently during normal conditions and emergency conditions. By doing so, Japan can maintain an energy system that is robust in times of crisis.

That said, even under this approach, decarbonization remains an essential prerequisite. Specifically, we must continue progressing with the transition from coal to ammonia fuel substitution and the deployment of CCS (Carbon Capture and Storage). By advancing these decarbonization measures while maintaining coal-fired generation capacity, we can preserve the flexibility to use coal differently in normal times and emergencies.

During normal periods, particularly in spring and autumn, coal-fired generation output can be reduced to help lower CO₂ emissions. During emergencies, however, utilization rates can be increased, allowing us to avoid purchasing expensive spot LNG and thereby reduce the burden on customers. As a resource-poor nation, Japan should make effective use of its existing coal-fired assets in this manner.

The rough estimate shown at the bottom of the slide illustrates the magnitude of the impact. Admittedly, it is an extreme example, but if Japan were to eliminate all coal-fired generation today and rely solely on LNG to respond to a crisis such as the current one, the cost borne by consumers would be approximately ¥3 trillion greater than in a scenario where coal-fired plants remain available and are operated at full capacity during emergencies. I consider this difference to be highly significant.

For a country with limited domestic energy resources, it is important to utilize coal-fired generation strategically in this way, helping to reduce the burden on consumers during times of crisis. However, achieving this outcome requires more than just JERA’s efforts. As noted in the upper-right section of the slide, if we want the benefits of coal-fired generation during emergencies to be passed on to customers, there must be Power Purchase Agreements (PPAs) in place between JERA and electricity retailers in advance.

Without long-term contracts for coal-fired electricity, even if we generate power at a relatively low cost during an emergency, we would still be required to sell that electricity into the wholesale spot market. Because spot market prices are determined by the marginal cost of generation, the market price would effectively be set by electricity generated using spot LNG purchased at elevated prices.

As a result, even though coal-fired generation may be producing electricity at a lower cost, retailers purchasing power through the spot market would still have to pay prices reflecting expensive LNG. The benefit of lower-cost coal generation would therefore disappear from the customer’s perspective.

Where would that benefit go? In reality, it would simply become additional profit for JERA.

Frankly, this is not how we want to earn profits. Our objective is to utilize coal-fired generation during emergencies in a way that reduces the burden on customers. Rather than capturing those benefits ourselves, we would prefer to establish long-term arrangements under which electricity retailers purchase coal-fired power through PPAs, enabling the economic benefits to be passed through to end customers.

At present, JERA's coal-fired generation fleet is not yet covered by a sufficient volume of PPAs. We are therefore making urgent preparations and are considering relaunching coal-fired PPAs as early as this summer. When these products become available, we hope electricity retailers will actively purchase them. Doing so will ensure that the advantages of maintaining coal-fired generation capacity can be shared with customers.

This initiative will certainly reduce JERA’s profits in the current year. Nevertheless, we believe it is an important step toward building a more resilient society. Given the critical role of energy as an essential infrastructure service, we believe such actions are necessary to provide customers with a stable and affordable electricity supply. At the same time, while it may reduce earnings in the short term, it should help stabilize JERA’s profitability in future years. No one knows what market prices will look like next year. By entering into long-term PPAs, we can secure a more stable earnings base regardless of future market fluctuations.

For that reason, we are currently making preparations to launch these products on an expedited basis.

Page 21: Leading the Development of an Energy System Resilient to Geopolitical Risks, Guided by the Spirit of “Ownership to Serve Our Tomorrows”

As Mr. Kani explained earlier, we have established a new Core Value.

“Ownership to Serve Our Tomorrows”—the spirit of taking the initiative and dedicating ourselves to building a better future for society. Guided by this principle, we intend to take the lead in creating the energy supply and demand structure that society needs today—one that is resilient to geopolitical risks.

The reason is simple: we believe it is prudent to assume that geopolitical instability will remain a feature of the global landscape for a considerable period of time. The diagram below summarizes our view of what is required to build such a resilient energy system and the respective roles that power generators, electricity retailers, and customers must play. As I mentioned earlier, we will continue to develop and offer new products designed to stabilize electricity costs as much as possible. It is important that electricity retailers make active use of these products. Through this collaboration, we can build a stronger and more resilient energy supply-and-demand structure.

Looking further ahead, customers also have an important role to play. From a medium- to long-term perspective, investments in energy efficiency that enhance Japan’s national strength and industrial competitiveness will be essential. For households, this includes accelerating the adoption of LED lighting and energy-efficient air conditioners. I believe this is extremely important.

Take LED lighting as an example. Under current plans, all lighting is expected to be converted to LEDs by 2030. If we could accelerate that transition and achieve it now instead of gradually over the coming years, estimates by the Institute of Living Environment and Housing Research suggest that Japan could reduce annual electricity consumption by approximately 12 billion kWh.

The difference is simply whether we achieve the transition by 2030 or implement it immediately. If it were accomplished this year, electricity consumption would fall by roughly 12 billion kWh straight away.

To put that into perspective, 12 billion kWh is equivalent to the energy contained in approximately 30 LNG cargoes.

Importantly, there is no loss of utility. Replacing incandescent or fluorescent lighting with LEDs does not make homes or workplaces darker. In fact, lighting quality often improves, while substantial energy savings are achieved at the same time.

Such measures would not only strengthen Japan’s resilience against energy supply risks, but would also reduce electricity bills for customers. In addition, they would contribute to enhancing the competitiveness of Japanese industry.

These are the kinds of initiatives that we believe are necessary, and we intend to take a leadership role in promoting them going forward.

That concludes my remarks. Thank you.