Shikoku Electric Power Incorporated : Annual Report - (annual e 02)

‌Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Business Environment

• Expansion of market size through promotion of electrification and digitalization

• Expectations for achieving both carbon neutrality and maintaining stable supply

Strengths of Shikoku Electric Power Group

• Ownership and operation of a scale of power sources essential for stable supply in the Shikoku area

• Formulation and promotion of a transition roadmap toward decarbonization

Policy on Initiatives

Continuous enhancement of competitiveness through renewal of power sources / promotion of low carbonization and decarbonization

Exploration of new initiatives to meet the needs for low carbonization and decarbonization in the power generation sector

In Japan, which imports most of its energy, it is important that the country's energy policy achieves a good balance among S (Safety) + 3E (Energy Security, Economic Efficiency, Environment). In recent years, there has been a heightened awareness of the need to balance stable electric power supply with securing decarbonization power sources, due to factors such as the necessity to address energy security in light of geopolitical risks, concerns about domestic supply capacity shortages resulting from the decommissioning of aging thermal power plants, and the outlook for medium- to longterm increases in electricity demand driven by the advancement of DX and GX.

In response to these circumstances, the government, in the 7th Strategic Energy Plan (Cabinet decision on February 18, 2025), presented an outlook for the 2040 power generation mix: approximately 40 to 50% renewable energy, about 20% nuclear power, and around 30 to 40% thermal power. As a

responsible business supporting energy supply, we are considering the optimal power generation mix from a medium-to long-term perspective, taking into account government policies, to ensure stable electricity supply and realize GX.

Specifically, for the Ikata Power Station Unit 3 (nuclear power), which is positioned as a core power source, we will make effective use of it based on continued safe and stable operation, while for renewable energy, we will actively pursue maximum utilization of existing hydroelectric power plants and the development of new power sources. In addition, thermal power plants play an important role in providing supply capacity to meet electricity demand and adjustment capability to complement fluctuations in renewable energy output.

Therefore, while monitoring advances in decarbonization technologies and economic efficiency, we will promote low-carbon and decarbonization and renew our power sources.

Usage policies

Utilization policy for each power source

Shikoku Electric Power Group INTEGRATED REPORT 2025 37

Becoming a Force that Lights Up the Region Value Creation through Business Activities

P.37 Electric Power Business

P.37 Power Generation Business

Becoming a Force that Lights Up the Region Value Creation through Business Activities

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

At the Ikata Power Station, in order to maintain safe and stable operations, we conduct 24-hour monitoring and patrols of equipment at all times, and once every 13 months, we stop operations to conduct legally mandated periodic inspections. In March 2025, a long-term facility management plan, which outlines the aging management and maintenance plan through December 2034, was approved by the Nuclear

The dry storage facility uses a system in which spent fuel is sealed in robust metal containers called "dry casks" and cooled

With a view to the future replacement of aging existing thermal power generation facilities, we are proceeding with plans to construct Sakaide Power Plant Unit 5, which will use the latest high-efficiency LNG combined cycle system with low CO2 emissions.

This project is based on utilizing the long-term decarbonization power source auction, and aims to achieve

LNG carrier moored at the Sakaide LNG Terminal

Regulation Authority, and operation toward over 30 years of service has begun. We will continue to responsibly carry out planned operation management and maintenance.

With the transition to a single-unit operation for Unit 3, the frequency of periodic inspections and construction work has decreased. Even under these circumstances, to secure both the quantity and quality of workers and to maintain and pass on technical skills, we conducted on-site demonstrations of online maintenance, in which part of the equipment is isolated and inspected while the plant is in operation. With online maintenance, inspection work that was previously concentrated during periodic inspection periods can now be performed while the plant is operating, allowing for a more balanced workload and improved safety through thorough preparation and better working environments. For the on-site demonstration experiment, we evaluated that the nuclear safety risks were sufficiently low, and, after preparing alternative measures according to the level of risk, conducted inspection work on emergency diesel generators and circuit breakers for high-pressure injection pump loads.

Emergency diesel generator used for online maintenance demonstration

by natural air convection. Because water or electricity is not used for cooling, safety is enhanced, and the dry casks can be transported directly to the reprocessing plant without repackaging the spent fuel into transport-only containers, serving both storage and transport functions.

Within the Ikata Power Station site

Ikata Power Station

Electric power

generation

Move the fuel assemblies used in electric power generation

In the spent fuel pit (pool), cooling

Storage (wet) is performed by circulating water with pumps

Heat removal and purification

Pump

Fuel assembly Control rod

Spent fuel

Reactor vessel

Some of the spent fuel that has been sufficiently cooled by wet storage is transferred to dry storage

Storage (dry)

Newly installed

Transport to the reprocessing plant

Nuclear fuel cycle facility [Rokkasho Village, Aomori Prefecture]

Fuel fabrication

Reprocessing

Reprocessing plant

carbon neutrality by 2050 (P.28), with facility plans that can accommodate future hydrogen co-firing.

*COG: Coke Oven Gas

Panoramic view of Sakaide LNG Thermal Power Plant (Kagawa Prefecture)

In recent years, owing to the substantial increase in solar-power generation, the significance of pumped-storage power plants

- which perform the functions of storage and supply-demand adjustment - has grown. At our pumped-storage facility, the Hongawa Power Plant (Units 1 & 2, with a combined maximum output of 615 MW), operations have shifted from the traditional pattern of pumping water at night in preparation for daytime peak generation, to a new approach of pumping during the daytime when surplus solar-power output is available, and generating during the evening onward when demand increases. As a result, operating hours in fiscal 2024 approximately doubled compared with ten years ago.

efficiency, and to flexibly respond to the operating status of power sources. Looking ahead, we are also examining procurement portfolios in anticipation of increased demand due to the construction of Sakaide Unit 5 and working to build supply chains for next-generation fuels such as ammonia and hydrogen.

At thermal power plants, plant staff carefully conduct daily inspections and patrols, paying close attention to the operation and maintenance of equipment to ensure stable operation.

As a new initiative aimed at advancing the operation and maintenance of electric power generation, we have introduced a system that analyzes the vast amount of operational data accumulated at power plants using AI, learns normal patterns, and automatically detects and issues early warnings of abnormal signs. There are actual cases where early detection of abnormal signs has contributed to preventing supply-demand losses, helping to maintain stable supply capacity and adjustment capability.

Under such high-utilization conditions, appropriate equipment maintenance becomes critically important. We are working to ensure proper inspection and replacement cycles by continuously collecting and analyzing equipment data.

Hongawa Electric Power Generation Plant (Kochi Prefecture)

‌Becoming a Force that Lights Up the Region Value Creation through Business Activities

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Business Environment

• Progress in population decline and energy conservation

• Growing industrial demand such as data centers

• Growing demand for non-fossil electricity due to advances in decarbonization

Strengths of Shikoku Electric Power Group

• Customer base centered in the Shikoku region

• Expertise and know-how in the energy field, including the electric power business and decarbonization solutions

Policy on Initiatives

Expand sales scale by acquiring new demand reflecting future increases in demand and providing value-added services

Improve profitability through securing and utilizing decarbonized and cost-competitive power sources

Through the membership-based web service "Yonden Concierge," we offer and expand various campaigns and point services, providing added value.

In addition, considering the increase in output control of solar power generation and other sources mainly during daytime hours in the light load periods namely spring and autumn, we have launched a rate plan (Hiru-Toku e Plan) for customers who have installed EcoCute (heat pump water heater) that heat water during the daytime. We are working to promote the spread of electrified homes and the effective use of renewable energy.

Overview of unit rates for the "Hiru-Toku e Plan"

Nighttime

6:

Daytime

15:00

9:00

Nighttime

Daytime

0:00

For customers above a certain scale, we assign dedicated representatives who deepen relationships through face-to-face sales, proposing rate plans and providing energy consulting (⭢ P.43) tailored to their needs. For customers for whom individual support by dedicated representatives is difficult, we conduct proposal-based sales through partner companies with a strong sales base in the Shikoku region and through direct mail.

To meet customers' decarbonization and low-carbon needs, we offer CO2-free options to a wide range of customers, regardless of usage scale or area.

For sales outside the Shikoku area, we are working to acquire new customers by utilizing partner companies and

Business Environment

• Increasing public interest in securing stable supply

• Expectations for large-scale introduction of renewable energy toward achieving carbon neutrality

• Business operations based on the revenue cap system

Strengths of Shikoku Electric Power Group

• Strong sense of mission to support stable supply

• Trust from local communities

• Advanced technical capabilities in building, operating, and maintaining transmission & distribution networks

Policy on Initiatives

To remain a trusted presence in local communities by ensuring even greater neutrality and fairness, continuing to foster a corporate culture that prioritizes stable supply and safety

Steady implementation of business plans under the revenue cap system, including operations and maintenance necessary for stable supply and planned renewal of aging equipment

Next generation power transmission and distribution networks for large scale integration of renewables

At Shikoku Electric Power Transmission & Distribution Co., Inc., as the renewal of facilities constructed during the period of rapid economic growth increases, the company formulates facility renewal plans that take into account the amount of facility risk (failure probability × failure impact) and construction capacity, and steadily proceeds with renewals to maintain stable supply.

We are also strengthening equipment measures and collaboration with related organizations to prepare for various natural disasters. When a forest fire occurred around Imabari City, Ehime Prefecture in March 2025, we received support from other general Transmission and Distribution Business operators, mobilizing 110 power supply vehicles and about 1,000 personnel to establish a robust

By utilizing available capacity on transmission lines and other infrastructure, we are promoting non-firm connections that accept renewable energy without increasing equipment, and in April 2025, we will begin operating a grid congestion management system to ensure both the prioritized use of renewable energy and stable grid operation even when congestion occurs. We are also working to reduce the amount of output control for solar power generation and other sources by promoting the online integration of solar power generation facilities, which enables fine adjustment of generation volume, and by encouraging demand shifts to light load periods and hours through peak shift discounts and other measures.

18:00

00 18:00

6:00

participating in bidding projects, while considering the power source procurement situation.

system to prepare for widespread power outages.

Bases set up in the parking lots of AEON Mall, with which we have a

[Before online capability]

Control period per day: 8 hours

Contact by phone or email the day before

Need for on-site shutdown and operation

[After online capability]

Same-day, Internet-based automatic control

Control period per day:

3.8 hours (average)

PCS with output control functions

Allows for detailed remote control

Image of the effects of online integration of solar

The unit rate for daytime hours in spring and autumn is set at a lower price.

disaster cooperation agreement

power generation facilities

‌Becoming a Force that Lights Up the Region Value Creation through Business Activities

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Business Environment

• Rising labor and material costs

• Increasing difficulty in securing/maintaining construction capacity and permeation of work style reforms

• Expanding investment in decarbonization-related power source fields

• Expanding opportunities to win orders outside the Shikoku region

Strengths of Shikoku Electric Power Group

• Know-how in development, design, construction, and work of power facilities

• Proven track record in design and construction inside and outside Shikoku region

Policy on Initiatives

Enhancement of business foundation for sustainable management Expansion of orders in growth fields

Business Environment

• Policy promotion of decarbonization and increasing societal awareness and demand for decarbonized power supply

• Emergence of diverse players and technologies in line with diversifying customer needs

Strengths of Shikoku Electric Power Group

• Know-how in development, construction, and operation of renewable energy facilities and others

• Technical expertise and proposal capabilities in all aspects of energy

Policy on Initiatives

Strengthening efforts to meet expanding and increasingly sophisticated decarbonized power supply needs in both development and sales

Developing and promoting new services that address diverse customer needs, and expanding business into fields where growth is expected

2,000

1,200

740

350

450

30

40

80

50

30

40

50

150

170

Our Group is focusing on new renewable energy development to build supply capacity that meets customers' decarbonization power supply needs.

In the new Medium-Term Management Plan 2030, we have set a target of developing 1,200 MW of new renewable energy domestically and internationally by 2035, and 2,000 MW by 2050, and will work toward achieving these goals by

(MW)

2,000

1,500

1,000

500

0

March 31, 2024

March 31, 2025

March 31, 2035

March 31, 2050

Tokushima Factory of SHIKOKU CHEMICALS Co., Ltd. through

Shikoku Electric Power. Installation on water reduces temperature, thereby increasing electric power generation efficiency, and our Group's technological capabilities contribute to regional decarbonization and improved profitability.

Company. This is the first installation on wind turbine towers in

Japan, and going forward, we will verify workability and surface anti-fouling functions against volcanic ash and dust adhesion.

collaborating with other operators. Domestic

Overseas

By capturing diverse customer needs, including decarbonization, and leveraging our Group's broad technical capabilities, we provide a variety of energy solutions services, such as solar PPA, storage batteries and EV charging services, VPP/DR, and comprehensive energy services covering everything from design, construction, and maintenance of customer-used facilities.

utilizing stored electricity to control the factory's maximum power demand (peak cut), we will also contribute to reducing customers' electricity costs.

Image of storage battery system installation

Mega Power 2700A, manufactured by PowerX, Inc. Number of units: 2; Storage capacity (rated): 4.9 MWh; PCS output (rated): 2 MW

As securing adjustment capacity for stable power supply becomes a critical issue, we will operate a storage battery system that optimally controls charging and discharging, and utilize it as adjustment capacity in the market to stabilize power supply and demand and effectively use renewable energy. Furthermore, by

In November 2025, we began providing charging and operation management services for route EV buses to IYOTETSU Bus Co., Ltd. This service promotes vehicle electrification and regional public transportation decarbonization by solving issues related to EV bus operation through reducing energy costs for charging, formulating optimal charging plans in consideration of operation schedules, and digitizing driving and charging data.

‌Becoming a Force that Lights Up the Region Value Creation through Business Activities

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Business Environment

• Growing electricity demand, especially in emerging economies

• Intensified competition leading to declining profitability

• Increased project investment sizes due to rising material and equipment costs and yen depreciation (resulting in higher risk exposure)

Strengths of Shikoku Electric Power Group

• Extensive technical expertise and know-how across a wide range of fields, with a focus on the electric power business

• Ability to make prompt decision and build strong partnerships

Policy on Initiatives

Enhance profitability in IPP business

Expand earnings by entering new business areas

Business Environment

• Rapid spread of AI and remarkable advancements in related technologies

• Acceleration of a "data driven society" through explosive data volume growth and advancement of data processing technologies

Strengths of Shikoku Electric Power Group

• Customer base, facilities, brand, etc. in existing businesses

• Synergy effect with the electric power business

Policy on Initiatives

Maintenance and expansion of profit scale by further expanding the customer base built so far Initiatives in expansion area and new business fields for further growth

In the New Medium-Term Management Plan 2030, the International Business is positioned as an "expanding business" where we leverage the strengths of our core Electric Power Business and which we focus on as a growth driver of the Group. Up to now, our overseas electric power generation (IPP) businesses have steadily increased the number of projects through diversification of power sources and expansion of business partners, and we are approaching the profit target of Medium-Term Management Plan 2025. Furthermore, moving forward, in order to achieve our profit target of 8 billion yen in fiscal year 2030, we aim to further expand our earnings by improving the profitability of our IPP business through entry into new regions with growth potential and participation from the early stages of development, as well as by broadening our business domains through entry into infrastructure businesses outside of power generation, leveraging the expertise of our Group.

Achievement outlook

FY2024 results

FY2025 target

Ordinary profit target

FY2030 target

4.0 billion yen 3.8 billion yen 8.0 billion yen

Kazakhstan

Central Asia

Uzbekistan

Tashkent

Kazakhstan

Kungrad

Uzbekistan

Turkmenistan

Kyrgyzstan

Tajikistan

Tajikistan

Samarkand

Turkmenistan

This is our first participation project in Central Asia. This project aligns with Uzbekistan's national policy, where increasing renewable energy sources is a challenge due to rising electricity demand and continued high dependence on thermal power generation. The generated electricity is planned to be sold to the state-owned transmission company.

STNet Co., Ltd. provides Pikara Hikari FTTH (fiber-to-the-home) services and Pikara Mobile smartphone services under the "Pikara" brand name. By bundling these services with Group products such as Shikoku Electric Power's electricity, we are working to strengthen the customer base across the Group.

Regarding Pikara Hikari Network, we have efficiently expanded business mainly in urban areas of Shikoku with high population density, and the number of contracts has steadily increased. Going forward, with an eye on the declining population in Shikoku, we aim to further expand profits by enhancing the added value of services, such as by expanding the service area for the 10 Gbps plan based on the growing demand for high-speed communication.

Trend in the number of Pikara Hikari Network subscribers

(thousands of contracts)

The Powerico data center operated by STNet Co., Ltd. is located in Takamatsu City, Kagawa Prefecture, which has the advantage of few natural disasters and high reliability (Tier 4, the highest level under JDCC standards). As the value of data as an information asset increases, we have contracts with customers such as financial institutions and local governments seeking high security and risk diversification in the event of large-scale disasters. In addition, by providing a variety of services, such as options that allow the use of electricity derived from renewable energy, we are enhancing the added value of the data center.

In recent years, due to the development of generative AI technology and advanced simulation technology, the demand for GPU (Graphics Processing Unit) servers capable of processing large volumes of data at high speed has rapidly expanded, and we have started providing services to meet these needs.

Customer attributes in the data center business (end of FY2024)

(1) By head office location (2) By industry

400

383

Others 4% Chukyo area

6%

Manufacturing 17%

This project involves the construction and operation of a state-of-the-art, high-efficiency gas-fired power plant and seawater desalination facilities in Qatar, a country advancing CO2 reduction as a signatory to the Paris Agreement. We plan to establish a Project Company jointly with local government-affiliated electric power

350

300

250

200

Kansai area

8%

Shikoku 31%

Tokyo metropolitan area

51%

Local government organizations 13%

Others 21%

IT 33%

Financial institutions 16%

373

356

337

318

companies and sell electricity and water under a long-term

contract for 25 years from the commencement of facility operation.

2020

2021

2022

2023 2024 (end of fiscal year)

*Attributes of end-user customers for both (1) and (2)