Special Feature

I would like to take this opportunity to thank all unitholders for the continued support you have shown this Investment Corporation.
We generally benefited from favorable weather conditions in the 17th fiscal period, and solar radiation was favorable. In particular, electricity production in the fiscal period was about 2.7% above the projection, partly because electricity production in July far exceeded forecasts. This increased rental revenue received, which is linked to the production of electricity, contributed positively to both operating revenue and operating income. Consequently, revenue and income outperformed projections.
In addition, we steadily worked to expand our portfolio in the 17th fiscal period. During the fiscal period, the Investment Corporation acquired the CS Tsukuba-shi Takamihara Power Plant in Ibaraki Prefecture. This increased the number of assets held to 35 and increased panel output to 247.5 MW.
In this operating environment, distributions per unit were 417 yen above the initial forecast. We will continue to work to strengthen our operating platform and improve the quality of our assets, giving the highest priority to ensuring stable returns.

While the Investment Corporation will continue to combine core external and internal growth strategies, it will clearly incorporate the transformation of the profit model in view of the Post-FIT phase into these strategies from the 18th fiscal period, thus accelerating the development of its portfolio to achieve both stability and growth potential.
Regarding external growth, we will make maximum use of the development capability and pipelines of the Canadian Solar Group, our sponsor. At the same time, we will select investment opportunities, including third-party projects, to achieve disciplined expansion. Above all, amidst the ongoing transition from the Feed-in Tariff (FIT) system, it is expected that non-FIT projects based on the Feed-in Premium (FIP) and Corporate Power Purchase Agreement (CPPA, meaning power purchase agreements with companies) systems will expand due to companies’ growing need to decarbonize. We therefore position them as important investment opportunities in the Post-FIT phase.
An initiative representative of this policy is the Investment Corporation’s acquisition of the CS Tsukuba-shi Takamihara Power Plant in the fiscal period under review, adding our first FIP project that has a signed CPPA (FIP + CPPA) to our portfolio. We expect it to be a stable revenue source given the long-term CPPA. Moreover, this initiative is in line with “looking for new revenue opportunities in view of the Post-FIT phase” in VISION 2030.
Regarding internal growth, we will further clarify our prioritization of measures, seeking to establish a revenue structure that is less susceptible to the impact of output control, while maintaining initiatives such as enhancing preventive maintenance and oversight systems and improving facilities. Specifically, in addition to limiting wasted capacity in the production of electricity by minimizing downtime and quickly restoring operations, we will also evaluate and implement measures such as the future parallel installation of battery storage systems, equipment upgrades (repowering) and asset replacement while carefully assessing their return on investment and contribution to distributions.

The Investment Corporation seeks to address issues in society through the development of renewable energy, while delivering stable returns to unitholders. In particular, it places importance on promoting decarbonization, achieving a stable supply of electricity and coexisting with local communities.

1. Promoting decarbonization
By investing in and operating solar power plants, the Investment Corporation continues to supply electricity derived from renewable energy sources and contribute to reducing CO2 emissions in Japan. Moving forward, we will refine the way we calculate and disclose the CO2 reduction effects of our portfolio so that they are easier to understand. We will also step up our initiatives to promote environmental value in response to the growing decarbonization needs of consumers.

2. Stable supply of electricity
With the increase in the renewable energy ratio, the impact of constraints on the electrical grid, including output control, is a key operational issue. The Investment Corporation continues to minimize downtime and reduce wasted capacity in the production of electricity through initiatives such as adapting to online output control, enhancing oversight systems, and ensuring thorough preventive maintenance.
In addition, in the 17th fiscal period, the Investment Corporation acquired its first power plant operating under an FIP system that has a signed CPPA (long-term power purchase agreement with a company). This was done in view of our entry into the Post-FIT phase. This has diversified our profit models as we move from the consideration phase to the implementation phase. In the future, we will explore the potential of more flexible operations in line with the supply and demand situation and grid conditions, including the use of storage batteries, by carefully assessing the return on investment.

3. Coexisting with local communities
Because power plants are part of the infrastructure of society that operate locally for the long term, we value careful operations. This includes the careful consideration of safety, nature, and disaster control. We strive to build trust with local communities by implementing O&M in cooperation with local companies, providing information to local residents, engaging in dialogue with them, improving the safety of facilities, and enhancing disaster response capabilities.
We believe that these initiatives will not only contribute to society, but will also improve unitholder value through risk reduction and the stabilization of earnings. Going forward, we will meet our responsibilities as a sustainable infrastructure investment corporation with the aim of achieving both social and economic value.