erex Co., Ltd.

Adoption of Project under the Joint Crediting Mechanism for FY2022

～Full-Scale Commercial Biomass Power Generation Business

in Hau Giang Province, Vietnam～

As announced in the press release titled “Notice of Investment and Participation in Biomass Power Generation Business in Vietnam” dated October 1, 2021, erex Co., Ltd. (headquartered in Chuo-Ward, Tokyo; hereinafter referred to as “the Company”), Son My Renewable Energy Joint Stock Company (headquartered in Binh Thuan, Vietnam; hereinafter referred to as “SON MY”), and Power Engineering Consulting Joint Stock Company (headquartered in Ho Chi Minh City, Vietnam; hereinafter referred to as “PECC2”) have been promoting biomass power generation business in Hau Giang Province, Vietnam. The Company is now pleased to announce that this business has been adopted for the “Facility Subsidy Business under the Joint Crediting Mechanism (JCM) (*1) Financial Support Business” (hereinafter referred to as “the Business”), and that the subsidy granting was determined on September 8, 2022.

Note

1. Outline

In line with its 2030 vision, “To become a pioneer in the new era of electric power with renewable energy at its core”, the Company is growing its business based on renewable energy in Japan. In addition, as one of the priority initiatives of its mid-term business plan, “Creating new innovation for de-carbonization”, based on both de-carbonization and stable energy supply, the Company is promoting large-scale fuel developments in Vietnam, and power generation businesses in Vietnam, Cambodia (construction of hydroelectric power plants) and other Asian countries.

In Vietnam, a country with a population of 100 million level, remarkable economic developments, and an abundance of unutilized biomass resources, this biomass power generation business will use rice husks, which are generated in large quantities by local rice mills, as the main fuel for local production for local consumption. The Business will also be the first (*2) full-scale commercial biomass power generation in Vietnam.
By generating power using rice husks grown and harvested locally as fuel, the Company believes that it can increase the ratio of renewable energy and contribute to job creation in Vietnam.

The Company is also considering construction of further biomass power plants and commercialization of biomass fuels in Vietnam, a country that is expected to grow in the future, and will promote the expansion of its biomass business.

Demand for electric power remains strong in Asian countries, and there will continue to be a high need for power generation businesses. The Company believes that, through its biomass power generation business, it can contribute to the creation of local employment in agriculture, afforestation, fuel transportation, and power plant operation, as well as to the improvement of the income of these workers.

The Company will continue to contribute to the prevention of global warming and the realization of a de-carbonized society by aggressively promoting businesses that utilize renewable energy, centering on its biomass business, both in Japan and overseas.

2. Outline of Hau Giang Biomass Power Plant

3. Upcoming Schedule

4. Future Outlook
The impact of the Business on the Company’s financial results for the current fiscal year (ending March 31, 2023) is minimal at this time.

Conceptual Drawing at Completion

*1 “Subsidy for Carbon Dioxide Emission Reduction Business from FY2022 to FY2024 (Facility Subsidy Business in the Joint Crediting Mechanism Financial Assistance Business)” that the Ministry of the Environment and its executive body, the Global Environment Centre Foundation (GEC) solicited applications for. This business is to implement businesses to reduce greenhouse gas emissions in developing countries, etc. by utilizing excellent de-carbonization technologies, etc., and to measure, report, and verify (MRV) the results. The objective is to reduce greenhouse gas emissions in developing countries, etc. and to contribute to the achievement of greenhouse gas emission reduction targets in Japan and partner countries through JCM. The subsidy is provided up to 50% of the initial investment cost for excellent de-carbonization technologies. The Business is being implemented in collaboration with the Vietnamese and Japanese governments.

*2 Small-scale biomass boilers and biomass power generation for the purpose of supplying electric power and steam to in-house factories such as sugar mills, rice mills, and paper mills already exist in Vietnam. Some of them are selling surplus electric power. On the other hand, this biomass power plant will be the first biomass power plant to generate electric power solely for the purpose of selling electric power.