Beyond Next Energy Launches Service to Support Post-FIT Power Sales Revenue Projections from 2032 Onwards

Overview Beyond Next Energy Inc. (Minato-ku, Tokyo, Representative Director: Koichi Yamaguchi, hereinafter “BNE”), a company strong in consulting and insight provision related to electric power and renewable energy, has launched a service to support power producers in estimating power sales revenue post-FIT from 2032 onwards. Background The Feed-in Tariff (FIT) scheme, which requires power companies to purchase electricity generated from renewable energy sources such as solar and wind power at a fixed price for 20 years, was introduced in 2012. In the early stages of the FIT scheme, the purchase price was set high at 40 yen/kWh, which rapidly expanded solar power generation in Japan. However, the term will expire sequentially from 2032, 20 years later, and the fixed-price purchase by power companies will end (referred to as “post-FIT”). It is estimated that approximately 7 GW of post-FIT projects, mainly solar power, will emerge in 2032-2033 alone. Options for power producers owning FIT renewable energy power plants When the fixed-price purchase by power companies ends, power producers owning FIT renewable energy power plants have the following options: * Continue selling power as is, selling to the JEPX wholesale power market or to retail electricity providers, or providing environmental value through corporate PPAs to end consumers. * After making additional investments (repowering or installing storage batteries), selling to the JEPX wholesale power market (including arbitrage), participating in the supply-demand adjustment market and capacity market, selling to retail electricity providers, or providing environmental value through corporate PPAs to end consumers, etc. * Selling to other companies. * Decommissioning the power plant. Utility of “30-minute interval” forecast values for post-FIT power sales revenue estimation When deciding which of the above options to take, it is necessary to estimate power sales revenue after the FIT period ends, and for this, future wholesale power market price forecasts are required. Our company provides these “future wholesale power market price forecasts” in “30-minute intervals.” If the purpose is solely to estimate future power sales revenue, market price forecasts that are not in 30-minute intervals (e.g., monthly averages) can also be used. However, for example, when considering the installation of additional storage batteries, “30-minute interval” wholesale power market price forecasts are essential for estimating arbitrage revenue in the JEPX wholesale power market. Furthermore, when negotiating and discussing sales to retail electricity providers or providing environmental value through corporate PPAs to end consumers, it becomes possible to negotiate and determine prices based on evidence. Contents of our “Post-FIT Power Sales Revenue Projection Support Service” We offer the following services for estimating post-FIT power sales revenue. We await inquiries from interested power producers. ① Provision of long-term power market price forecasts (30-minute intervals) spanning over a dozen years after the FIT period ends (principally until 2050; consultation required if beyond) (covering 9 areas nationwide, excluding Okinawa) (Price) 1.2 million yen (excluding tax) per area ② Future power sales revenue projections for individual power plants using the above price forecasts (including arbitrage revenue, revenue from supply-demand adjustment market, and capacity market when storage batteries are installed) (principally until 2050; consultation required if beyond) (Price) Consult based on customer needs End Method for long-term wholesale power market price forecasting We predict future power market prices using the “merit order model,” which is the mechanism for determining power market prices. However, instead of a simple merit order (Note) that lines up power sources from cheapest marginal cost, we adopt a model closer to reality that treats base power sources difficult to adjust output (e.g., nuclear power) and the minimum output of thermal power necessary for frequency maintenance as must-run power sources, and also considers inter-area grid connection inflow/outflow. We will provide 30-minute interval market price forecasts reflecting the long-term power demand forecast shown by the Organization for Cross-regional Coordination of Transmission Operators (OCCTO), the operational status of power sources in each area, and future CO2 emission reduction costs. The forecast data will be updated annually. This service prides itself on providing forecast data that is not merely estimated from past trends but calculated using the same mechanism as actual price determination, based on evidence-backed demand forecasts, power source outlooks, and marginal price assumptions, making it persuasive data for creating future power sales revenue forecasts. Note: Merit Order Model: A model that lines up power plants from the cheapest marginal cost (cost to generate an additional 1 kWh) and operates them sequentially according to demand. For example, wind and solar power have zero fuel costs, so their marginal costs are low, and they operate preferentially. As demand increases, thermal power plants with higher fuel costs, such as coal-fired and LNG-fired, are sequentially operated. Market price forecast by “realistic merit order” (Conceptual diagram) Inquiries