Renewable Energy Investment Portfolio

We will provide funding and support for the development of a hybrid energy storage system designed to offer a battery hub with leasing functionality for external users, as well as its future commercialization. This project is being carried out by NR-Power Lab Co., Ltd. ("NR-Power Lab"), a joint venture between NGK Insulators, LTD. and Ricoh Co., Ltd.

We have invested in DAX LLC in collaboration with Fuyo General Lease and ASTMAX. This project involves installing grid-scale BESS with a rated output of 50 MW and a rated capacity of 100 MWh. Construction is scheduled to begin in 2023, with operations scheduled to begin in 2025. Transactions will be conducted in the wholesale power markets, supply and demand adjustment markets, and capacity markets based on AI forecasts once operations have begun.

We co-invested in two utility-scale energy projects in the United States managed by InfraRed Capital Partners.

Aquila Capital Investmentgesellschaft (ACI), the asset management subsidiary of Aquila Capital Holding GmbH of which we have 40% ownership, has entered a strategic partnership with Commerzbank. ACI will leverage Commerzbank's global network to expand its asset under management and explore new growth opportunities through collaboration. In return, Commerzbank will benefit from ACI's expertise in the sustainable investment, providing its clients with a wealth of sustainable investment opportunities under its mission to promote the energy transition. As part of this strategic alliance, Commerzbank acquires a 74.9% stake in ACI. Aquila Group reaffirms its long-term commitment to the company and will continue to play a leading role in shaping its future growth.

We have acquired a 3.3% stake in Hornsea One, one of the world's largest operating offshore wind projects. Hornsea One is part of the Ørsted's Hornsea offshore wind project series located off the northeastern coast of England. The project installs 174 turbines in a vast area of approximately 407 square kilometers and has a combined total capacity of 1.2 GW. It has a proven operational track record under the administration of Ørsted, a leading offshore wind operator, and is expected to offer long-term, sustainable cash flow.

We jointly invested in an onshore wind project located in Scotland with Capital Dynamics and other investors. The consortium has acquired a 100 percent equity stake in this 50MW ready-to-build project from a German developer. The project is expected to reach commercial operations in 2025/26 and have a long-term PPA with a reputable power purchaser.

Through an SPC in which we invest, we entered into a power supply contract with Toshiba Energy Systems & Solutions under the FIP (Feed-in Premium) scheme with regard to the solar power plant we co-developed with CO2O. We will continue to acquire and operate solar power plants under the FIP scheme to contribute to carbon neutrality.

This partnership with Solariant will drive our strategic investment in the U.S. solar power and other clean energy projects. We expect to initially focus on developing an approximately 1 GWp solar power and 2.5 GWh BESS projects located across the southeastern and southwestern regions of the United States. We will continue to grow our footprint in the U.S. renewable energy market.

We contribute our solar power projects as assets under management to the privately placed core fund that specializes in investment in brownfield solar power projects formed by Daiwa Real Estate Asset Management Co. Ltd. By incorporating external capital through use of funds, we promote capital recycling and aim to create circulation of capital that leads to further expansion of investment while improving capital efficiency.

In cooperation with our strategic partner Green Thermal (GT), we have invested in and developed the third midsized biomass power plant that uses local, unutilized, general wood materials as fuel. This is the first biomass power plant in Yamanashi prefecture.

With an aim to further expand investment in the battery storage sector, we invested in Exergy Power Systems, a startup from University of Tokyo.

We started providing mezzanine financing for renewable energy project finance in collaboration with Shinsei Bank and Shinsei Trust & Banking. Merging Shinsei Bank's expertise in project finance and our know-how in renewable energy investment, we aim to offer choices other than senior loans and equities to finance renewable energy businesses and to promote environmentally friendly power generation.

This is the first privately placed solar power fund structured by Daiwa Securities Group, incorporating 3 brownfield solar power projects located in Hokkaido, developed by us. As an example of a “locally produced, locally consumed” fund, we secured equity and debt financing mainly from investors and financial institutions in Hokkaido. The debt financing has been done through Daiwa Green Finance Program (Daiwa GFP), beneficiary rights/ABL with green evaluation from a third-party organization.

This is a midsized geothermal development project in Ebino city, Miyazaki pref. We are going to accelerate our initiatives in geothermal fields both in Japan and overseas through the experiences and insights obtained through this project.

Japan Energy Fund (JEF), an overseas-specialized decarbonized energy fund, was established by Enechange and Looop, two venture firms in the energy fields recognized as fast-growing and innovative. We invested in the fund as a limited partner. JEF aims to realize a sustainable society through "promoting overseas investment in decarbonized energy by Japanese companies." There are two main axes in the fund's initiative: "JEF Renewables" and "JEF Ventures." The former invests in renewable energy businesses in emerging countries. The latter invests in energy-based start-ups in European and North American countries, where technology and energy markets are more advanced, and aim to support those growing firms expand in Japanese market and market their technologies worldwide.

With an aim to further expand our business and to provide the growing demands from the Japanese investors with investment opportunities in renewable energy fields, we entered into a strategic partnership with Aquila Capital Holding GmbH (Aquila Capital) and acquired a 40% of stake in the company.

This is a project to explore further investment opportunities in the offshore solar power field, where the market is expected to scale, through an investment in Swimsol GmbH (Swimsol) that has accumulated knowledge and achievements in the respected field.

This is a midsized geothermal development project in Hakodate city, Hokkaido, which is also our first investment in geothermal power. We are going to accelerate our initiatives in geothermal fields both in Japan and overseas through the experiences and insights obtained through this project.

Biomass Fuel (BF) is our strategic partner in the biomass sector. We support BF's aim to expand the business in the wood pellet industry through capital contribution to Biomass Fuel Vietnam (BFV), a subsidiary of BF in Vietnam.

We have invested in and developed the second midsized biomass power plant that uses local wood materials as fuel in cooperation with our strategic partner Green Thermal (GT). This is the first biomass power plant in Wakayama prefecture.

Yonezawa Minami biomass power plant is our first investment in biomass power. Unutilized, general wood materials for fuel are delivered mainly from Yamagata, Fukushima and Miyagi prefectures. The power plant has been developed with our strategic business partner, Green Thermal (GT).

Green Thermal (GT) is a leading company in the fields of midsized biomass power plant business that locally sources its wood-based fuels in Japan. It has strong advantages not only in the development of biomass power plants but also in the management and operation of the plants including the procurement of domestic timber, leveraging key executives' rich experience and deep know-how in the forestry industry.