Takara Life Infrastructure Fund : Announcement of the conclusion of a specified wholesale supply contract by the solar power plant lessee and the electricity producer

Notification of the conclusion of the specified wholesale supply contract by the tenants of the solar power plant and electricity producers

Takara Life Infrastructure Fund, Inc. (the “Fund”) hereby announces that a wholesale specified supply agreement (the “Wholesale Specified Agreement”) has been entered into by and between UPDATER Inc. (“UPDATER”) and Katsuura Okitsu Solar GK (“Katsuura Okitsu Solar” ), the lessee and power producer of the Fund’s LS Chiba Katsuura power plant (the “Power Plant”) The details are as follows.

1. Overview of the specified wholesale contract

(1) Diagram of Specified Wholesale Agreement

(2) Reason for entering into the specified wholesale contract

By providing electric power, UPDATER advances initiatives aimed at revitalizing local communities in recognition of the new common practice in society to focus on electricity generated and consumed. Accordingly, UPDATER has established a renewable energy company called Minna Denryoku to facilitate regional cooperation through electricity. The completion of the specified wholesale agreement between UPDATER and Katsuura Okitsu Solar, the lessee and power generator of the power plant, will enable Katsuura Okitsu Solar to focus on contributing to society by advancing decarbonization efforts and the adoption of renewable energy as a power generator promotes by supplying electricity* through Minna Denryoku to private and corporate customers who are conscious of using energy with a smaller ecological footprint. The Fund intends to cooperate on all fronts because it believes that the above initiative contributes to its fundamental policy of creating value through the use of natural energy, creating jobs in the community, promoting social and economic development, combat global warming and contribute to improving energy self-sufficiency.

The Fund believes that as a result of entering into the specified wholesale agreement, the following three points

will result in maximizing the fund’s policy and value to investors.

Note: The power generated at the plant is initially purchased by TEPCO Power Grid, Inc. (“TEPCO Power Grid”), a general electric power transmission and distribution company, under a fixed feed-in-tariff (FIT) arrangement whereby renewable energy is purchased at a fixed price is bought. TEPCO Power Grid then provides Minna Denryoku with wholesale supplies under a specified wholesale supply agreement with UPDATER. The acquisition costs under the FIT system are covered by the surcharges for renewable energy levied nationwide by electricity consumers, hence the unique advantage that this electricity is CO2-free2 Emissions purchased through the FIT scheme belong to all consumers, not the specific consumer to whom the electricity was delivered.

1. Contribution to the uptake of renewable energies

Providing electric power to consumers who integrate environmental considerations into their business operations and strive to promote a zero-carbon society and use green energy sources will help improve energy self-sufficiency.

1. Promotion of regional cooperation through the provision of electrical energy

Awareness of the new common practice of focusing on electricity generated and consumed by delivering electricity to Minna Denryoku to encourage regional collaboration through electricity will drive initiatives aimed at revitalizing local communities.

1. Maximizing value for investors by leveraging asset characteristics

In the rental agreement with Katsuura Okitsu Solar, the fund agreed on a rental arrangement that combines both a guaranteed minimum rent and a performance-related rent. With the recent completion of the specified wholesale contract for the power plant, Katsuura Okitsu Solar will collect an agreed premium rate* from Minna Denryoku according to the amount of electricity sold only when the consumers of the electricity have been matched with the electricity via UPDATER plant, plant. It should be noted that pursuant to the Power Plant Lease Agreement between the Fund and Katsuura Okitsu Solar, the agreed premium rate charged by UPDATER is essentially split fifty-fifty between the Fund and Katsuura Okitsu Solar and the Fund divides it into the Calculation includes performance-based rent.

Note: The Agreed Premium Rate is the amount (plus the applicable amounts of excise tax and local excise tax) obtained by multiplying the amount of electricity generated in the delivered power plant by the Agreed Premium Unit Cost (¥/kWh) via General Power Transmission and Distribution Company wholesale to Minna Denryoku and then sold to Minna Denryoku consumers. Amounts less than one yen are rounded down. However, if there is a change in the calculation of avoidable costs in accordance with Article 29(ii) of the Act on Special Measures in the Procurement of Electricity from Renewable Energy Sources by Electricity Supply Companies, UPDATER may change the agreed premium unit price after consultation with Katsuura Okitsu Solar. Avoidable costs are the costs, calculated according to the method established by regulation of the Ministry of Economy, Trade and Industry, that would be incurred to generate or procure electricity in an amount equal to the amount of electricity from renewable energy sources used for it by Electricity supply company has been procured on the basis of a specific contract if this electricity supply company has generated or procured the electricity itself. This amount is deducted from the cost of purchasing electricity from renewable energy sources under the FIT scheme. It can also happen that the agreed premium tariff is abolished or changed in the first year (or when the contract is extended). The same applies in the following.

The Fund believes that these activities contribute to the following three of the 17 United Nations Sustainable Development Goals, or SDGs for short.

1. Affordable and clean energy
2. Responsible production and consumption
3. climate protection

In May 2019, the fund launched a sustainability policy for initiatives aimed at realizing its core policy and realizing a sustainable society. It will continue to address environmental issues and contribute to local communities.

(3) Details of the specified wholesale agreement

Note 1: LS is an acronym for Leben Solar, the name of the suite of solar power plants acquired by the Fund. The same applies in the following.

Note 2: The term of the specified wholesale contract is one year from the date on which the specified wholesale supply begins. Unless either party notifies the other party four months prior to the expiration of the Term, or unless otherwise provided in the Specified Wholesale Agreement, the Term of the Specified Wholesale Agreement is automatically extended for an additional year with the same terms and conditions.

2. Operating Results Projections

The impact on the fund’s operating results from the completion of the specified wholesale agreement between Katsuura Okitsu Solar and UPDATER will be minor. No changes were made to the operating profit projections for the years ended May 31, 2022 (December 1, 2021 to May 31, 2022), November 30, 2022 (June 1, 2022 to November 30, 2022) and May 31, 2023 (December 1, 2022 to May 31, 2023).

*Fund website: https://tif9281.co.jp/