Kansai Electric Power Group Overview

SpecialFeature

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Value Creation Story

Medium-term Management PlanBusiness Overview

Foundation to Support Value Creation

Financial and Corporate Information

Establishment of Innovation Development Division

Shaping the Vital Platform for the Future

Introduction
In July 2023, the Company established the Innovation Development Division, a dedicatedorganization to drive innovation across the Kansai Electric Power Group. The division aims tosupport divisions and group companies that undertake creation of new businesses andinnovation, exploring and predicting business opportunities and threats based on future socialand technological trends. By making innovation happen, the division will play an important rolein generating future profits and achieving sustainable growth.

Background
Since its establishment in 2019, the Innovation Lab at the Office of Corporate Planning has beenat the forefront in building a value creation process to realize innovation, which involves activeplanning, promotion of business development, and other activities related to innovation
designed to create various types of value.
Meanwhile, parallel to this, we recognize that the environment surrounding our Group haschanged significantly in the ways described below.
External environment: Increased uncertainty in the business environment (frequent occurrence ofcomplex and discontinuous changes derived from the COVID-19
pandemic, emergence of innovative technologies such as GPT-4)●Internal environment: Establishment of the new Kansai Electric Power Group Management
Philosophy Purpose & Values (March 2021), with “Innovation” positioned as
one of the Values (Fig. 1).
Due to these circumstances, for our Group to achieve sustainable growth and fulfill ourmanagement philosophy, we believe it is important to continue to undertake innovation that willlead to future value creation and to constantly evolve our value creation process. From thisperspective, we have decided to renew our value creation process to realize innovation. Alongwith this, as part of the optimal allocation and reinforcement of functions and capital, theInnovation Development Division has been established.
●

経営理念

Purpose & Values

存在意義
Purpose

大切にする価値観
Values「あたりまえ」を守り、創る
Serving and Shaping the Vital Platform for a Sustainable Society

公正Fairness

誠実

Integrity

共感Inclusion

挑戦Innovation

私たちは、安全を守り抜くことを前提に、
「公正」
「 誠実」
「 共感」「 挑戦」を大切にして行動しますWith dedication to safety and security, we will act upon the values of Fairness,
Integrity, Inclusion and Innovation

Fig. 1 Kansai Electric Power Group Management Philosophy

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Kansai Electric Power Group Overview

Value Creation Story

Establishment of Innovation Development Division

Medium-term Management Plan

① Coping with uncertainty: Evolution to a future-oriented value creation process
In order to fulfill the Kansai Electric Power Group’s management philosophy of “Serving andShaping the Vital Platform for a Sustainable Society” and coping with the increasingly uncertain
business environment, we will proceed with value creation through the following process toprovide value to customers and society for many years to come.
New value creation process (Fig. 2)
A Research on the future: Forecast the future by identifying changes based on the medium- tolong-term trends in policies and systems, economy, society, and technology, examining how
these changes will affect future needs in society and with customers, as well as business
opportunities and threats the changes may pose to our Group.
B Business creation: Based on the insight gained in A, explore market opportunities, generatebusiness ideas, and verify hypotheses. During the course of hypothesis verification, develop
new technologies and acquire knowledge.
C Business development: As a result of B, invest an adequate amount of capital in projects thatare to be commercialized at proper timing, and proceed with business development andverification in collaboration with related divisions and group companies as appropriate or, if
necessary, transform existing businesses.

Futureorientedvalue
creationprocess

Enhancementof eachprocess

Preparation ahead of time

Prompt commercialization

Research on the future

Business creation

Business development

Conduct extensive research andexamine business opportunities
and threats in a future-orientedmanner.

Explore market opportunities,generate business ideas, verify
hypotheses, and developtechnology.

Subsequent to capital investment,
promote business development
and verification in collaboration
with related divisions and groupcompanies.

Process (A)Creation ofintelligence function

Foundation to Support Value Creation

Financial and Corporate Information

Shaping the Vital Platform for the FuturePrimary objectives

Uncovering

Business Overview

Process (B)Enhancement of technology
development function
Securing intellectual property rights
Expanding activities related to humancapital and organizations with a cultureof innovation and inclusion

Commencementof businessIn order to accurately promote value creation in line with the process described on the left, wehave consolidated and reinforced our functions and capital, leading to the establishment of theInnovation Development Division. Seizing the most relevant business opportunities to create
new businesses and transforming our business in preparation for threats, mainly throughactivities at the Innovation Development Division, will enable us to take prompt action andappropriately deal with medium- to long-term opportunities and threats.

② Enhancement of functions leading to value creation
As the Innovation Development Division promotes and drives the value creation process as
described in ①, taking the opportunity of its establishment, the function of each process has
been enhanced as follows.
i. Process (A): Creation of intelligence function*
Creating an intelligence function in the Innovation Development Division enables us toexplore and examine business opportunities and threats to the Kansai Electric Power Groupthrough more future-oriented research in broader areas, thus facilitating quick action (Fig. 2).
ii. Process (B): Enhancement of technology development function
This process helps us become more attentive to and acquire technologies and intellectual
property rights, sources of business competitiveness. Specifically, we will put together thetechnology development function and related capital previously allocated in the former Officeof Research and Development and incorporate them into this process, thereby boosting ourinventiveness and creativity in terms of both technology and business. In addition, we will
invest technical human capital in the exploration of market opportunities and businesscreation, pushing forward the development of technologies that will form the core of ourbusiness. Going forward, we will also play an active role in the standardization of technology,
including energy-related systems, proactively securing intellectual property rights.
In recent years, the Group has invested in startup companies entering the aerospace-related
business and taking on the challenge of practical application of nuclear fusion technology (Fig. 3).
We will continue to pursue proactive measures like this that lead to future value creation.

Fig. 2 Future-oriented value creation process and function enhancement*The function to explore and examine business opportunities and threats for the Kansai Electric Power Group through more
future-oriented research in broader areas, facilitating action.

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Kansai Electric Power Group Overview

Value Creation Story

Establishment of Innovation Development Division

Medium-term Management PlanBusiness Overview

Foundation to Support Value Creation

Financial and Corporate Information

Shaping the Vital Platform for the Future
2. Open innovation initiatives
Increase in investment through CVC (K4 Ventures GK) and collaboration with startup
companies
Recruiting and utilizing human capital for dual/concurrent jobs
Co-creation of businesses that solve local issues together with local communities and external
partners●●●

Innovation with aerospace-related businesses

Attempting to realize fusion energy

Fig. 3 Examples of initiatives for future value creation③ Expanding activities related to human capital/organizations with a culture ofinnovation and inclusion
The Kansai Electric Power Group Management Philosophy upholds “Innovation” and “Inclusion”
as items in its Values, and we believe that in order to create innovation, it is important that humancapital/organizations with different advantages empathize and cooperate with each other to takeon challenges in innovation. Based on this belief, the Group has developed various initiatives toencourage collaboration between human capital and organizations, and this has led to value
creation. These initiatives took shape as the Hydrogen Business Strategy Division (established inMay 2021) and entry into the hyper-scale data center business (May 2023).
Going forward, we will continue to implement various measures leveraging diversity in ourhuman capital and organizations, thereby achieving innovation and value creation (Fig. 2).

As a new initiative for open innovation, we would like to propose to those outside the Company
who “sympathize” with our business of solving social issues to become business co-creation
partners with us.
The Group has been engaged in the refurbished PC sales business, which contributes to theemployment of people with disabilities and resource recycling, and the travel platform business,
which revitalizes regional communities by matching travelers with local residents. Through ourbusiness, which provides value for solving social issues, we have gained “sympathy” from localcommunities and external partners for our approach and the value we provide.
Furthermore, beyond the boundary of the Group business, as members of local communities,
we are actively participating in business creation activities aimed at solving issues faced bycommunities.
Through these activities, we will broaden the circle of “sympathy” and combine the strengths
and resources of the Group with those of localities and external partners to make further
contributions in solving social issues.

Future initiatives
1. Initiatives at the Kansai Electric Power Group
Advancing human capital diversity in conjunction with reorganization: 50 staff members joinfrom the former Office of Research and Development
Promoting mid-career recruitment (mid-career hiring)
Utilizing the in-house dual-job holding (dual work) system
Encouraging collaboration among related divisions as a driver for new business development
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Kansai Electric Power Group Overview

Value Creation Story

Establishment of Innovation Development Division

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Shaping the Vital Platform for the Future■ New businesses: Rising to the challenge
In the face of increasing social issues, with Energy, Transmission & Distribution, Information & Telecommunications, and Life/Business Solution positioned as our core businesses, we will continue to create
new value in areas around these sectors as well as where they overlap.

CyrusOne KEP, Inc.

Pont des Tech Inc.

Gekidan iino Godo Kaisha

Established as a fifty-fifty joint venture with CyrusOne, a U.S.
data center developer and operator. CyrusOne KEP, Inc. willdevelop and operate hyper-scale data centers (HSDCs)*1 withinvestments of more than one trillion yen over the next 10 years
or so, aiming for a total storage capacity*2 of 900 MW.
Utilizing both companies’ strengths: the Kansai Electric PowerGroup, which has developed its variety of businesses such asenergy, real estate, information and telecommunications, andCyrusOne, which has accumulated advanced expertise in sales,
design, development, and operation of HSDC business, thisventure company will provide cloud service providers with theworld’s highest quality digital infrastructure services, facilitating
improvement in social and digital infrastructures.

Pont des Tech purchases used computers from companies
and upgrades their hard disks to solid-state drives, adds
memory, and cleans them. It also sells high-quality computersthat are affordable and safe to use. This is our first entry into
the refurbished PC sales business.
In cooperation with special subsidiaries for people withdisabilities, the Group will work to broaden employment
options for people with disabilities to play an active role in its
refurbished PC business, thereby expanding it.

Through iino, a 5 km/h mobility service created by theInnovation Lab, Gekidan iino Godo Kaisha aims to develop
business at the intersection between Mobility and Culture/
Entertainment. By creating a space that can be experienced
only at 5 km per hour and providing content specifically forthat situation, the aim is to realize transportation that is both
entertaining and comfortable, as well as convenient, thereby
contributing to making the places you are moving throughmore entertaining.

*1: E xtremely large data centers that are designed for mega cloud service providers toprocess a massive amount of data

*2: Indicator that represents the size of data centersJanuary 2023
New autonomous mobility “type-S712” tested in Sannomiya, Kobe

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Kansai Electric Power Group Overview

Value Creation Story

Establishment of Innovation Development Division

Medium-term Management Plan

Business Overview

Financial and Corporate Information

Shaping the Vital Platform for the Future

Kaiko Yukinoya Godo Kaisha

TRAPOL Godo Kaisha

In the food domain, the Group started its first “land-based
aquaculture business,” which contributes to the SDGs byhelping solve social issues such as burdens on the marine
environment and the fishing labor environment. Aquaculture
facilities that consume electricity are expected to play a role in
the effective use of energy resources by, for example,
converting surplus energy into food products. Through theproduction and sale of “Yukiebi,” or whiteleg shrimp, which is
chemical- and additive-free and edible raw, its outstanding
freshness and taste comparable to prawn, the company will
work toward realizing its philosophy of “delivering valuable
marine products to customers to serve and shape the Vital
Platform for sustainable food.”

Established in October 2019 through the KandenEntrepreneurship Challenge System. This company provides
life-changing travel services that connect travelers with localresidents (local friends), allowing travelers to experience theenergy of interacting with other people. The company aims toserve and shape the Vital Platform that amplifies the energy ofpeople who enthusiastically seize the day through travel.
The operator of TRAPOL, a matching platform thatconnects travelers and local residents (local friends),
contributes to solving regional issues such as the increasing
number of “connected minds” (people associated with aparticular region for various reasons) by developing content
that emphasizes the positive qualities of “people” in a region.

Kansai Electric Power Group Integrated Report 2023

Foundation to Support Value Creation

39

Kansai Electric Power Group Overview

Value Creation Story

Establishment of Innovation Development Division

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Shaping the Vital Platform for the Future

Message from the Executive in Charge of Innovation

Kazumitsu Takanishi
General Manager ofInnovation Development Division

In July 2023, as part of organizational reforms, the Innovation Development Division wasestablished. With this organizational change, our goal is to accelerate innovation centeredaround the Office of Corporate Planning’s Innovation Lab and Data Center Business Promotion
Project Team by integrating the former Office of Research and Development into them, andstrengthening resources and optimizing where functions are allocated.
By making it a division, i.e., a department with responsibility for an important mission, we
have made clear our approach of valuing innovation and having it lead innovation in theGroup.
Looking back over the Group’s history, you can see how the Group has achieved growththrough innovation. Some examples include constructing Kurobegawa No. 4 Power Station;
being the first in Japan to generate commercial nuclear power and the first power company tointroduce a mega solar power station in Japan; and entering the information andtelecommunications business and the real estate business. For the last few years, we havecontinued to take on various challenges with innovation, such as expanding the distributed
energy business, tackling zero-carbon thermal power generation, and entering the hyper-scaledata center business. Going forward, we intend to speed up these efforts further. In addition,
the R&D Center, which has now been integrated into the Innovation Development Division,
had pursued various new technologies and many of its results had made a remarkable
contribution to the Group's growth. While inheriting the legacy of the institute, we will
promote strengthening our technical development aggressively.

Kansai Electric Power Group Integrated Report 2023

In order to create further innovation, we know it is indispensable to have the right humanresources, and we will implement various measures in this area. The Innovation Development
Division is about twice the size of its predecessor, the Innovation Lab, with more than 100members. Even so, we plan to continue to actively recruit external personnel and enhance ourhuman capital. More than 1,000 people have undergone innovation personnel training, and I
think that an innovation-oriented organizational culture is steadily taking hold. To turn thismomentum into action, we will actively press ahead with the human resource system, which
promotes in-house applications for different roles and fields as well as those wanting second
jobs, thereby gathering together personnel with a will to innovate.
Open innovation, which includes collaborations with startups, is also vital. We have set
aside a maximum 11 billion yen to use for investments in startups, and our plan is to support
business transformation and development of new businesses and services at different
departments and group companies.
Through activities like these, the Innovation Development Division—an embodiment of
the Company’s spirit of taking on challenges—will take a leap forward, but they will also havea positive impact on the entire Group.
I will also encourage new ideas and candid discussions, and make sure an organizational
culture of trying new things takes root, keeping a careful eye on activities by departments,group companies, and employees as they work toward innovation.

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