Special Feature

In the 15th fiscal period, actual energy output on a full-year basis was 98.27% against our projections. This was due to unstable weather in October and November, which offset comparatively smooth power generation in the July to September period of the first half amid favorable weather conditions. As a result operating revenue was 22 million yen less than initially forecast, amounting to 4,455 million yen. In terms of operating expenses, construction costs were lower than forecast, and a degree of progress was made controlling outsourcing expenses. This led to operating income of 1,686 million yen, 42 million yen less than initial projections. In non-operating incomes and expenses, we recorded insurance income. Mainly as a result of this, ordinary income was 1,453 million yen, 67 million yen more than initially forecast. Since this resulted in net income of 1,452 million yen, 67 million yen more than forecast, profit distributions per unit increased by 235 yen from the initial forecast to 3,301 yen. This included the effect of the repurchase and cancellation of our own investment units (123 yen) implemented during the fiscal period. Distributions in excess of earnings of 9 yen were recorded due to inconsistencies between taxation and accounting relating to the amortization period of construction costs for certain power plants, and the total distributions per unit was set at 3,310 yen, 244 yen more than the initial forecast.

In FY2024, the Japanese Government is expected to announce its energy basic plan, which is reviewed every three years, and in December 2024, the 7th Basic Energy Plan (draft) was disclosed as an intermediate step. The draft indicated the direction of aiming at designating renewable energy as the main power source and maintaining a balanced energy mix, from the viewpoint of achieving both stable energy supply and decarbonization. Revised FY2040 energy mix targets were also announced. Specifically, the draft indicated that renewable energy will account for approximately 40-50% of total power generation, commanding the largest share of the power mix, surpassing thermal power. In addition, the FY2040 target for total power generation is 1.1-1.2 tn kWh, much higher than the FY2030 target 934.0 bn kWh) announced at the time of the 6th Basic Energy Plan three years ago. Looking at actual data for FY2023, the ratio of renewables to total energy mix was 22.9%, with solar power generation of 96.5 bn kWh against renewable energy power generation of 225.3 bn kWh. However, the FY2040 targets are renewable energy power generation of 440.0-600.0 bn kWh, of which 242.0-348.0 bn is solar power generation. In other words, solar power is expected to generate approximately 2-3 times the actual amount of electricity generated in FY2023.
In view of the above plan, CSIF recognizes the importance of the role played by renewable energy, especially solar power, in government policy. CSIF’s policy is to aim to achieve growth by increasing its asset size in the future and by implementing portfolio management strategies for the future in accordance with the Mid- to Long-term Strategy announced last year. Through this, CSIF believes it can also contribute to the growth of renewable energy in Japan.

As first steps under the Mid-to-Long-Term Strategy announced in August 2024, CSIF repurchased its own investment units totaling approximately 1,000 million yen and used funds on hand to acquire CS Sakura-shi Power Plant (320 million yen) based on the new cash flow management policy. Our understanding of the specific effects of these initiatives is that earnings per unit (EPU) increased by 2.6% as a result of the repurchase of our own investment units and by 0.5% as a result of the new asset acquisition, and that the initiatives enabled a contribution to unitholders though distribution growth.
CSIF’s policy going forward is to continue aiming for DPU growth through strategic cash flow management based on market conditions and the business environment as a short -term measure. At the same time, as set out in the Mid-to-Long-Term Strategy, CSIF is aiming for growth into the future and will focus on both external and internal growth strategies, in order to achieve ongoing business expansion in the post FIT era and endure as a listed REIT.

As announced in the Mid-to-Long-Term Strategy in August 2024, starting from the 15th fiscal period, CSIF changed its distribution policy, as a general principle only carrying out profit distributions as of initial forecasts, without continuously implementing distributions in excess of earnings. However, CSIF will make some distributions in excess of earnings, in order to be able to maintain total distributions at the initially forecast level in cases such as when the final amount of profit distributions has decreased from initial forecasts. The amount of profit distributions for the 16th fiscal period has decreased from the forecast made the previous fiscal period (3,181 yen) due to one-off expenses, chiefly financial expenses arising on the asset acquisition announced in January 2025. CSIF will, therefore, maintain total distributions at the initially forecast level by including distributions in excess of earnings of 283 yen. For the 16th, 17th and 18th fiscal periods, we forecast that earnings per unit (EPU) levels will be 2,998 yen, 3,227 yen and 3,309 yen respectively; however, total distributions for the 16th fiscal period, including distributions in excess of earnings, will be maintained at the level initially forecast the previous fiscal period i.e. 3,181 yen. In this way, CSIF’s policy is to continue providing returns to unitholders by aiming for growth in earnings per unit (EPU), which is an indicator of effective earning power.