Risk of Fluctuations in Power Generation and Revenue Due to Electricity Sales Contracts, Weather Conditions and Disasters

「During the first half, the temporary shutdown of some power plants due to lightning and other factors resulted in a 9% year-on-year decline in electricity sales revenue (stock revenue) and a 17% decline in business profit.」

「In addition to power utilities implementing output curtailment more frequently than expected, increased regular maintenance costs resulted in segment revenue of ¥6,137 million, up 3.4% year on year, and segment profit of ¥1,725 million, down 11.4%.」

「Stock revenue from the clean energy business in the first quarter declined slightly year on year due to nationwide unsettled weather and output curtailment.」

「During the third quarter, Typhoons No. 15 and No. 19 made landfall with some of the strongest forces ever observed. However, the power generation facilities at the plants we own and manage sustained no damage and have continued to generate power steadily. Although the rainy season ended late this year and we were affected by these typhoons, actual power generation from the solar power business exceeded the forecast as of the end of the third quarter.」

「Although the rainy season ended late this year and we were also affected by typhoons, actual power generation from the solar power business in the first half remained in line with the forecast.」

「Solar power plants already in operation have demonstrated their resilience to natural disasters and are generating power steadily.」

「The power generated in September 2018 temporarily fell below the forecast due to the Hokkaido Eastern Iburi Earthquake that occurred that month. However, none of the power plants was damaged, and cumulative power generation for the current period exceeded the forecast.」

「At Ichigo Kure Yasuura-cho Nakahata ECO Power Plant, power generation was suspended for 17 days and other disruptions occurred due to local transportation networks being cut off by torrential rain, mainly in western Japan.」

「As of 28 February 2018, under the full-volume FIT scheme established pursuant to the Act on Special Measures Concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities, our electricity sales prices were guaranteed for 20 years under contracts with power utilities. However, if a power utility failed to purchase electricity in accordance with the relevant contract, this could affect our financial condition and operating results.」

「As of 28 February 2017, under the full-volume FIT scheme established pursuant to the Act on Special Measures Concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities, our electricity sales prices were guaranteed for 20 years under contracts with power utilities. However, if a power utility failed to purchase electricity in accordance with the relevant contract, this could affect our financial condition and operating results. In addition, power generation at the solar facilities in this business is significantly affected by weather conditions, and if the facilities were affected by a natural disaster, fire or other event, power generation could fall substantially due to damage to the facilities.」