Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

SECOND PARTY OPINION
ELECTRIC POWER DEVELOPMENT CO., LTD.
(J-POWER)
GREEN BOND ELIGIBILITY FOR PRE-ISSUANCE
Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: December 8, 2021
Ref. Nr.: PRJN-311207-2021-AST-JPN-01

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Contents
Executive Summary

3

Ⅰ. Introduction

5

Ⅱ.

Scope and Objectives

9

Ⅲ.

Responsibilities of the Management of J-POWER and DNV

10Ⅳ.

Basis of DNV’s Opinion

10

Ⅴ.

Work Undertaken

11

Ⅵ.

Findings and DNV’s Opinion

12

Schedule-1 Green Bond Nominated Projects

18

Schedule-2. Green Bond Eligibility Assessment Protocol

20

GBP-1 Use of proceeds

20

GBP-2 Process for Project Evaluation and Selection

21

GBP-3 Management of proceeds

22GBP-4 Reporting

23

Revision History
Rev. No.

Date of Issue0

December 8, 2021

Remarks
InitialDisclaimer
Our assessment relies on the premise that the data and information provided by Issuer to us as part of our review procedures have been provided in good faith. Because of
the selected nature (sampling) and other inherent limitation of both procedures and systems of internal control, there remains the unavoidable risk that errors or
irregularities, possibly significant, may not have been detected. Limited depth of evidence gathering including inquiry and analytical procedures and limited sampling at
lower levels in the organization were applied as per scope of work. DNV expressly disclaims any liability or co-responsibility for any decision a person or an entity may makebased on this Statement.

Statement of Competence and Independence
DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2011 - Conformity Assessment Requirements forbodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including documented policies andprocedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the DNV Codeof Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This engagement work was carried out by an independent
team of sustainability assurance professionals. DNV was not involved in the preparation of statements or data included in the Framework except for this Statement. DNV
maintains complete impartiality toward stakeholders interviewed during the assessment process.

1 DNV Code of Conduct is available from DNV website (www.DNV.com)

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Executive Summary
Electric Power Development Co., Ltd. (hereinafter, “J-POWER”, “J-POWER Group” or “Issuer”)
formulated J-POWER ”BLUE MISSION 2050” (hereinafter, “BLUE MISSION 2050”) in February
2021 for its efforts to realize the a carbon-neutral and hydrogen society to resolve the climatechange issues, and has published its action plan and road map for realization of a carbonneutral by 2050. In addition, J-POWER accelerates the development of the CO2-free powersources as one of the actions in its mid-term management plan from FY2021 to FY2023, andplans to allocate investment funds to renewable energies on a priority basis to promote newdevelopment on a scale of 1,500MW by FY2025, compared to FY 2017.
For the achievement of goals, J-POWER plans to issue Green Bonds for the utilization to theprojects related to the development, construction, operation, and renovation of renewableenergy.
Based on the agreement with J-POWER, DNV Business Assurance Japan Co., Ltd. (hereinafter,“DNV”) evaluated the "J-POWER Green Bond Framework" (hereinafter, "Framework") and theeligibility of the green bond to be issued under the Framework by applying GBP and Green
Bond Guidelines (hereinafter, “GBGLs”) and referring to the technical standard in Climate
Bonds Standards Version 3.0 where applicable. The following is the outline of the assessment
results for the four core elements defined in GBP and GBGLs.
1. Use of Proceeds:
The Framework defines eligible criteria for the use of proceeds as “renewable energy”,
which is in line with the eligible Green Project categories described in GBP and GBGLs. The
proceeds from this Green Bond are planned to be funded to the development,
construction, operation, renovation of onshore wind power generation, any of or both of
new investment in other related expenditures and refinancing. These projects are
expected to bring clear environmental benefits and will contribute to the promotion of “JPOWER Group Environmental Vision”, "J-POWER Group Corporate Targets " and"Sustainable Development Goals (SDGs)" of the United Nations
2. Process for Project Evaluation and Selection:
The nominated projects of the Green Bond are complied with the development goals
related to the renewable energy in “BLUE MISSION 2050” and the mid-term management
plan. For the evaluation and selection of the green projects, the department in charge of
renewable energy selects the green projects to be nominated, and the finance department
confirms the conformity of the projects. These processes are consistent with the CBS, GBP
and GBGLs.
3. Management of Proceeds:
DNV confirmed that J-POWER plans to allocate the proceeds for financing (newinvestment) and refinancing of the eligible projects in a timely manner after the funds areraised. DNV also confirmed that the allocation status will be managed by the financedepartment per project in accordance with the accounting control procedures of J-POWER.
In addition, it has been confirmed that the total amount of eligible projects will be
managed using the internal management system and the dedicated ledgers so as not toPage 3 of 24

Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

be less than the proceeds. The proceeds will be managed as cash or cash equivalents until
they are fully allocated. These are aligned with the GBP and GBGLs.
4. Reporting:
J-POWER will disclose the report on the allocation status of the proceeds and theenvironmental benefits in "J-POWER Group Integrated Report” or its website until theproceeds are fully allocated. The annual reports include the allocated amount, thebalance of the unallocated amount and the estimated amount (or percentage) to beallocated as refinancing out of the total amount of proceeds allocated. For theenvironmental benefits, J-POWER will disclose the installed capacity (MW) for eachcategory of renewable energy to be allocated, the annual CO2 emission reduction (tCO2/y). In addition, J-POWER plans to release the documents related to the Framework
and bond issuance on its website, etc. These are aligned with GBP and GBGLs.

From the relevant documents and information provided by J-POWER including its
Framework, DNV has confirmed that the Green Bond will meet the relevant criteria andwill be properly planned and implemented.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Ⅰ. Introductioni.

About the Issuer
The J-POWER Group has contributed to the stable supply of electric power nationwide
since it was established in 1952 by the government. After the J-POWER Group was
privatized in 2004, it has expanded the field of business such as the development of
renewable energy and aims for sustainable growth based on “coexistence of energy
and the environment”.

ii.

ESG Initiatives of the Issuer
The J-POWER Group is advancing its efforts to increase its corporate value from theperspective of environment, social and governance under its corporate philosophy of“We will meet people’s needs for energy without fail, and play our part for thesustainable development of Japan and the rest of the world”. For the significant policy
related to ESG, such as the sustainability basic policy or the identification of material
issues, the J-POWER Group established the structure to make its decision at Board of
Directors through the discussion in Executive Committee. The J-POWER Group
formulated “BLUE MISSION 2050” in February 2021 as its efforts to realize a carbonneutral and hydrogen society, and release the action plan and the roadmap to achievecarbon-neutral by 2050. In addition, the J-POWER Group also formulated the midterm management plan from FY2021 to FY2023 in April 2021, and set forth toaccelerate the development of CO2-free power sources as one of the actions.

iii. About Environmental Initiatives of the J-POWER GroupThe J-POWER Group recognizes the climate change and the environmental issues at
local communities as significant issues in “J-POWER Group Environmental Vision”, andis aiming for the realization of a carbon-neutral and the coexistence with local
communities. In addition, the J-POWER Group sets to expand the renewable energy
as the mid-term “Corporate Targets” to be tackled by the whole group of the action
programs defined in “J-POWER Group Environmental Vision”. Specifically, J-POWER
has set goals for hydroelectric power generation, onshore and offshore wind power
generation, and geothermal power generation. Moreover, J-POWER participated in thedevelopment of a solar power generation project in the U.S. in 2020, as well as has
been working to develop a wide variety of new renewable energy sources. J-POWER
plans to allocate investment funds to renewable energies on a priority basis andpromote new development on a scale of 1,500MW by FY2025, compared to FY2017.
As part of these efforts, J-POWER issued the "1st J-POWER Green Bond" with the useof proceeds for projects related to the renewable energy (wind power generation) in
January 2021. Now, J-POWER is planning to issue the 2nd J-POWER Green Bond. The
J-POWER Group also conducts the scenario analysis in line with recommendations
made by the TCFD (Task Force on Climate-related Financial Disclosure).
Details are disclosed to the public in the following and other documents.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Basic Policy on Sustainability
https://www.jpower.co.jp/sustainability/concept/policy.html
Sustainability Promotion Structures
https://www.jpower.co.jp/sustainability/concept/system.html
J-POWER Group Environmental Basic Policy
https://www.jpower.co.jp/sustainability/environment/pdf/2021/21-01.pdf
J-POWER Group Corporate targets (Revised in August 2021)
https://www.jpower.co.jp/sustainability/environment/pdf/2021/21-02.pdf
J-POWER Group Environmental Action Guidelines in FY2021
https://www.jpower.co.jp/sustainability/environment/pdf/2021/21-03.pdf

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

iv. Issuer’s Initiatives for SDGs
J-POWER aims to contribute to the Sustainable Development Goals (SDGs) set by theUnited Nations with its efforts to the value creation process through the J-POWERGroup's business activities. The business activities of J-POWER Group are for theefforts to contribute directly or indirectly to the SDGs shown in the following table＊.
The Green Bond issued this time will contribute to the SDGs, particularly Goal 7 andGoal 13 of the following table.
“J-POWER Group Integrated Report 2021”
https://www.jpower.co.jp/ir/ann51000.html
J-POWER Group Initiatives
Social Issues

SDGs
Goal 1No Poverty

Goal 7

Affordable and Clean Energy

・ Stable power supply
・ Energy Security
・ Building wide-area power networks inJapan・ Climate change
・ Atmospheric pollution and other local
environment issues

Goal 8Decent Work andEconomic

Growth⇓Business Domain
・Electric Power Business・Overseas Business・Electric Power Peripheral Business・

Other businesses (biomass fuelGoal 9Goal 12

Industry,

Innovation

andInfrastructure
Responsible Consumption and
Production

production, etc.)＊Development of technology for zero
emission of fossil power sources

Goal 13

Climate Action＊ The relevance to SDGs is complementary to the issuance of green bonds, with reference to Green,
Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals
established by ICMA, which sets out the Green Bond Principles. It would not intend directly
related to the funding purposes.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinionv.

About the Green Bond Framework
J-POWER positions the issuance of green bond (hereinafter “BOND”) as financing that
contributes to acceleration of the development of CO2-free power sources, etc. in themedium-term management plan. J-POWER updated "J-POWER Green Bond
Framework" along with the revision of GBP in 2021 and the publication of "BLUEMISSION 2050". This Framework is formulated based on widely recognized standards
at home and abroad, including GBP and GBGLs. The funds raised by BOND will beallocated to green projects in accordance with the following eligible Green Project
categories. Framework will be disclosed in J-POWER’s web site.
• Renewable energy(Onshore wind power generation, expenditures for development, construction,
operation, refurbishment and other related projects)

Issuer Name: Electric Power Development Co., Ltd.
Framework Name: J-POWER Green Bond Framework
Name of external review organization: DNV Business Assurance Japan Co., Ltd.
Report date: December 8, 2021

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Ⅱ.

Scope and Objectives

J-POWER has commissioned DNV to conduct a pre-issuance assessment of the "J-POWER
Green Bond". The objective of the pre-issuance assessment of DNV is to conduct anassessment to confirm that J-POWER Green Bond meets the criteria such as GBP, GBGLs,
related technical standards of CBS, which will be described later, and other related standards
or guidelines (see the table in (3) below), and to provide a second party opinion on theeligibility of this Green Bond.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second-party opinion for J-POWER.
In this paper, no assurance is provided regarding the financial performance of the BOND, thevalue of any investment in the BOND, or the long-term environmental benefits of thetransaction.

(1) Scope of review
The review assessed the following elements and confirmed their alignment with four core elements in GBP.
☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

Reporting(2) Role(s) of review provider☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☒Other (please specify): Providing review as a green bond issuance supporter (External Review
Division)(3) Standards/guidelines to be applied
No.

Standards/Guidelines

1.

Green Bond Principles

2.

Green Bond Guidelines

3.

4.
5.

Scheme owner
International Capital Market
Association (ICMA), 2021
Ministry of the Environment
Government of Japan, 2020

Climate Bonds Standard v 3.0(Sector Criteria: onshore wind power
generation 1.2v)
Green and Social Bonds: A High-Level
Mapping to the Sustainable Development
Goals
Handbook Harmonized Framework for
Impact Reporting

Applied level*1*2
Apply
Apply

Climate Bonds Initiative, 2019

Refer (applicabletechnical criteria)International Capital Market
Association (ICMA), 2020

Refer

International Capital Market
Association (ICMA), 2021

Refer

*1 Apply: Eligibility for all four core common elements to each principle or guideline was assessed.
*2Refer: Based on the green project and implementation plans, relevant contents were partially considered.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Ⅲ.

Responsibilities of the Management of J-POWER and DNV

The management of J-POWER has provided the information and data used by DNV during
the delivery of this review. Our statement represents an independent opinion and is intended
to inform J-POWER management and other interested stakeholders in the Bond as towhether the established criteria have been met, based on the information provided to us. In
our work, we have relied on the information and the facts presented to us by J-POWER. DNV
is not responsible for any aspect of the projects or assets referred to in this opinion andcannot be held liable if estimates, findings, opinions, or conclusions are incorrect. Thus, DNV
shall not be held liable if any of the information or data provided by J-POWER management
and used as a basis for this assessment were not correct or complete.

Ⅳ.

Basis of DNV’s Opinion

To provide as much flexibility as possible for J-POWER, DNV has adapted our green bondassessment methodology, which incorporates the requirements of GBP and GBGLs, to create
J-POWER specific Green Bond Eligibility Assessment Protocol (hereinafter “DNV’s Protocol”).
Please refer to Schedule-2. The Protocol is applicable to Green Bonds under the GBP and
GBGLs.
DNV's Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion.
The overarching principle behind the criteria is that a green bond should “enable capitalraising and investment for new and existing projects with environmental benefits”.
As per our Protocol, the criteria against which the Bond has been reviewed are grouped
under the four Principles:•

Principle One: Use of Proceeds: The Use of Proceeds criteria are guided by therequirement that an issuer of a green bond must use the funds raised to financeeligible activities. The eligible activities should produce clear environmental benefits.

•

Principle Two: Process for Project Evaluation and Selection: The ProjectEvaluation and Selection criteria are guided by the requirements that an issuer of agreen bond should outline the process it follows when determining eligibility of aninvestment using Green Bond proceeds and outline any impact objectives it willconsider.

•Principle Three: Management of Proceeds: The Management of Proceeds criteria
are guided by the requirements that a green bond should be tracked within theissuing organization, that separate portfolios should be created when necessary andthat a declaration of how unallocated funds will be handled should be made.

•Principle Four: Reporting: The Reporting criteria are guided by the recommendationthat at least annual reporting to the bond investors should be made of the use ofbond proceeds and that quantitative and/or qualitative performance indicators should
be used, where feasible.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Ⅴ.

Work Undertaken

Our work constituted a high-level review of the available information, based on theunderstanding that this information was provided to us by J-POWER in good faith. We havenot performed an audit or other tests to check the veracity of the information provided to us.
The work undertaken to form our opinion included:i. Pre-Issuance Assessment of Green Bond•

Creation of a J-POWER specific Protocol, adapted to the purpose of the Bond, as
described above and in Schedule-2 to this Assessment.

•

Assessment of documentary evidence provided by J-POWER on the Bond andsupplemented by a high-level desktop research. These checks refer to current
assessment best practices and standards methodology.

•

Discussions with J-POWER management, and review of relevant documentation andevidence related to the criteria of the Protocol.

•

Documentation of findings against each element of the criteria.

ii. Post-Issuance Assessment of Green Bond (*not included in this report)•

Assessment of evidential documents provided by J-POWER after issuance of the
BOND, and supplemental assessment by desk review from a higher perspective.

•

Interview with key personnel of J-POWER, and review of the relevant documentation.

•

Field research and inspection (if necessary).

•

Review of the nominated projects and assets at the time of the post-issuance
verification (update of the details mentioned in Schedule-1).

•

Document creation of post-issuance assessment result.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Ⅵ.

Findings and DNV’s Opinion

DNV’s findings and opinions are listed below:(1)

Use of Proceeds

DNV has confirmed that all of the net proceeds from J-POWER Green Bond, excluding
expenses, are planned to allocate to new investment and refinancing in the construction,
installation, operation and maintenance of one or more of the following green nominatedprojects that meet the following typical eligible project categories as identified in the GBP
and GBGLs.
"Renewable energy business (onshore wind power generation)"
Specifically, DNV has confirmed that the proceeds will be allocated to the development,
construction, operation and renovation of onshore wind power generation of therenewable energy projects. The nominated projects at present are listed in "Schedule-1
Green Bond Nominated Projects". All of the nominated projects were confirmed to meet
the applicable CBS sector technical standards (Onshore Wind Power, Version 1.2).
All proceeds will be used for either new investment or refinancing, or both, depending on
the status of the projects. These projects are expected to bring clear environmental
benefits and contribute to the promotion of the "J-POWER Group Environmental Vision"and "Corporate Goals" as well as the "Sustainable Development Goals (SDGs)" of theUnited Nations.
Use of Proceeds categories as per GBP☒

Renewable energy☐

Energy efficiency (energy saving)☐

Pollution prevention and control☐

Sustainable management of living natural
resources☐

Terrestrial and aquatic biodiversity☐

Clean transportationconservation☐

Sustainable water management☐

Climate change adaptation☐

Eco-efficient products, production☐

Green buildings with regional, national or

technologies and processes

internationally recognized standards andcertifications☐

Other (please specify):☐

It is undecided at the time of bond issuance, but is expected to be line with the GBP classificationor other eligible areas not listed in the GBP at this time.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion(2)

Process for Project Evaluation and Selection

Through the review, DNV found that the two nominated projects (onshore wind power
generation) described in Schedule-1 conformed to the goals related to the renewableenergy which contributed to CO2 emission reductions set in “BLUE MISSION 2050” and"J-POWER Group Environmental Vision" of the issuer. For the project evaluation andselection, DNV confirmed that the projects were approved through the proper internal
process that the department in charge of renewable energy selects the projects to be
nominated, and the finance department confirmed the conformity.
To select the projects, the issuer confirms that the projects are in line with the eligible
criteria shown in " Section II Scope and Objectives (3) Applicable or Referenced Criteria",
and that they are selected based on compliance with environmental laws, ordinances andregulations including implementation of the environmental impact assessments, as wellas its approach to water environment conservation and biodiversity preservation, which
contribute to mitigate the environmental and social risks.
Evaluation and Selection☒

Conforms to the issuer’s achievement of☒Documented process to determine that projects

environmental contribution goals☒

fit within defined categories

The project is eligible for use of proceeds☒

Documented process to identify and manage

by green bond and transparency ispotential ESG risks associated with the project

ensured.
☒The project is evaluated and selected based☐

Other (please specify):

on the published standard summary

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject to☒In-house assessment

external advice or verification☐

Other (please specify):

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion(3)

Management of Proceeds

DNV confirmed how J-POWER will track and manage the proceeds from bond issuance toredemption period. DNV confirmed that J-POWER plans to allocate the proceeds tofinancing (new investment and financing) and refinancing to the eligible projects in atimely manner after raising funds.
It was confirmed that the finance department will manage the proceeds allocation status
for each project based on the accounting control procedures of J-POWER. It was also
confirmed that the total amount of green eligible projects will be managed using aninternal management system and dedicated ledgers so that the total amount will not fall
below. The proceeds will be managed in cash or cash equivalents until they are allocated.
Tracking of proceeds:☒

Some or all of the proceeds by green bonds that are planned to be allocated are systematicallydistinguished or tracked by the issuer.

☐

Disclosure of intended types of temporary investment instruments for unallocated proceeds☐

Other (please specify):

Additional disclosure:
Allocations to future investments only☒☒

Allocation to individual disbursements☐

Allocation to a portfolio of disbursements☐

Disclosure of portfolio balance of☐

Other (please specify):☐

Allocations to both existing and future
investments

unallocated proceeds

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion(4)

Reporting

DNV has confirmed that J-POWER would report to stakeholders the specific information
required by the GBP and GBGLs annually on the issuer’s integrated report or website.
These include report on the allocation status and environmental benefits described below
until the proceeds are fully allocated. For the environmental benefits reporting, J-POWER
plans to disclose the items to be described on a renewable energy type-by-type basis,
within considering its confidentiality and to the extent of reasonably practicable.
J-POWER plans to disclose the environmental benefits using the following indexes after
projects are in commercial operation. The progress of the projects will be disclosed
separately from the environmental benefits after the projects being allocated forplanning or construction. If a significant change in the project appears, issuer will
disclose it in a timely manner.
The main report items are expected as follows.
< Allocation status >•••Allocated amount
Unallocated amount balance of proceeds
Allocated amount as refinancing out of total amount allocated for each proceeds< Environmental Benefits >••Installed capacity for each category of renewable energy (MW)Annual CO2 emission reduction for each category of renewable energy (t-CO2/y)Page 15 of 24

Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):☐

GB refinanced share of total investment

Information reported:☒

Allocated amounts☐

Other (please specify): Installed capacity of renewable energy sources for which proceeds wereallocated (MW)Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Impact reporting (Environmental Benefits):☐

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐☒

Other ESG indicators (please specify): Installed capacity of renewable energy sources for which

エネルギー削減量

proceeds were allocated (MW)Means of Disclosure☐

Information published in financial report☐

Information published in sustainability report☐

Information published in ad hoc documents☒

Other (please specify): J-POWER Group
Integrated Report and J-POWER website☐

Reporting reviewed (if yes, please specify which parts of the reporting are subject to external
review)

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Green Bond Eligibility for Pre-issuance Second Party Opinion

Assessment Conclusion
On the basis of the information provided by J-POWER and the work undertaken, it is DNV’sopinion that the J-POWER green bond meets the criteria established in the Protocol and that
it is aligned with the stated definition or purpose of green bond within the GBP and GBGLs,
which is to “enable capital-raising and investment for new and existing projects withenvironmental benefits”.

DNV Business Assurance Japan K.K.
8 December 2021

Koichiro Tanabe

Naoki Maeda

Technical Reviewer

Managing Director

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Masato Kanedome

Tsuyoshi Katori

Project Leader

Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-depth industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We
continuously invest in research and collaborative innovation to provide customers and society with operational andtechnological foresight.
With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.

Disclaimer
Responsibilities of the Management of the Issuer and the Second-Party Opinion Providers, DNV: The management ofIssuer has provided the information and data used by DNV during the delivery of this review. Our statement represents
an independent opinion and is intended to inform the Issuer management and other interested stakeholders in the Bond
as to whether the established criteria have been met, based on the information provided to us. In our work we haverelied on the information and the facts presented to us by the Issuer. DNV is not responsible for any aspect of thenominated assets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions areincorrect. Thus, DNV shall not be held liable if any of the information or data provided by the Issuer’s management andused as a basis for this assessment were not correct or complete

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Schedule-1 Green Bond Nominated Projects
No.

Green ProjectGreen project1

Category

Sub Category1Nominated Project*1

Funded Amount(Plan)

Location: Iwate Pref.
Capacity: 44.6MW

Kuzumaki No.2 Wind Farm
Renewable Energy

10.0～20.0 billion JPY*2

Onshore Wind Power

2

Kaminokuni No.2

Remarks

Commercial Ope: December 2020
Location: Hokkaido
Capacity: 41.5MW
Commercial Ope: FY2023*1: The one or more of projects will be selected from the projects listed in Schedule-1, and the Green Bonds will be allocated to the nominated projects. The type of
projects nominated for allocation will be disclosed in the annual report.
*2: The proceeds after deducting expenses will be allocated to eligible projects. The final amount to be allocated depends on the amount raised and may be within or
outside the range currently stated.

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Schedule-1 Reference Materials Examples of Nominated Projects and Map of J-POWER Wind Power Generation(Including projects subject to green bond allocation *Not a guarantee of allocation)*

Kuzumaki No.2 Wind Farm (Iwate Pref. 44.6MW 2MW✕16 units, 2.1MW×6 units)「Wind power project mapping」 Japanese version
https://www.jpower.co.jp/bs/renewable_energy/wind/map.html「Date set of Wind Power project」 Japanese version
https://www.jpower.co.jp/bs/renewable_energy/wind/data.html* Nagasaki-Shikamachi Wind Farm: J-POWER investment ratio 70%

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Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Schedule-2. Green Bond Eligibility Assessment Protocol

The followingGBP-1 ~ GBP-4 are DNV's Green Bond Eligibility Assessment Protocol created for J-POWER based on the requirements of Green Bond
(GBP).
The confirmed documents in the Work Undertaken includes internal documents of the issuer and are provided by the issuer as evidence of eligibility
judgement for DNV.

GBP-1 Use of proceeds
Ref.

Criteria

Requirements/Contents

Work Undertaken

1aType ofbond

The bond must fall in one of the following categories, as definedby the Green Bond Principles:•Green Use of Proceeds Bond•
Green Use of Proceeds Revenue Bond•
Green Project Bond•
Other

• Interviews withstakeholders• Document review

The BOND falls into the category below:•
Green Use of Proceeds Bond

1b

Project
Categories

The cornerstone of a Green Bond is the utilization of the proceedsof the bond which should be appropriately described in the legal
documentation for the security.

• Interviews withstakeholders• Document review

It was confirmed through the legal documents
related to the BOND document, etc. that the all
the net proceeds would be allocated tofinancing (new investment) or refinancing for
projects related to construction/installation,
operation and maintenance for renewableenergy.

•1c

Environment
al benefits

All designated Green Project categories should provide clear
environmentally sustainable benefits, which, where feasible, will
be quantified or assessed by the issuer.

Page 20 of 24• Interviews withstakeholders• Document review

DNV Findings

It was confirmed that the green project would
contribute to CO2 emission reduction, and thatthe environmental benefits are quantitatively
evaluated as the amount of CO2 emission
reduction and reported annually.

Electric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Ref.

Criteria

Requirements/Contents

Work Undertaken

DNV Findings

1dRefinancing
share

In the event that a proportion of the proceeds may be used forrefinancing, it is recommended that issuers provide an estimateof the share of financing vs. re-financing, and where appropriate,
also clarify which investments or project portfolios may be
refinanced.

• Interviews withstakeholders

The issuer plans to use the proceeds for either
or both of new investment and refinancing. It
was confirmed that issuer planned to clarify theapproximate amount (or percentage of the
portion) of the proceeds for refinancing throughthe annual report.

• Document review

GBP-2 Process for Project Evaluation and Selection
Ref.

Criteria

Requirements/Contents

Work Undertaken

2aInvestment-decision
process

The issuer of a Green Bond should outline the decision-making
process it follows to determine the eligibility of projects using
Green Bond proceeds. This includes, without limitation:• A process to determine how the projects fit within the eligible
Green Projects categories identified in the Green Bond Principles;• The criteria making the projects eligible for using the Green
Bond proceeds; and• The environmental green objectives

・Interviews withstakeholders

・Document review

Issuer’s
environmentalgovernanceframework

In addition to information disclosed by an issuer on its Green Bond
process, criteria and assurances, Green Bond investors may also
take into consideration the quality of the issuer’s overall
framework and performance regarding environmental
sustainability.

•

Interviews withstakeholders•

Document review

2bPage 21 of 24

DNV Findings
DNV confirmed through the document review andthe interview with the personnel of the Issuer thatthe internal processes to determine the eligibilityof the project that use the proceeds from the
BOND were clearly described in the Framework.

It was confirmed that the green projects
implemented by the Issuer are in line with theissuer's management philosophy, medium- tolong-term management plan, and environmental
policy, and when the projects are implemented,
compliance with environment-related laws,
ordinances and regulations, consideration for thesurrounding environment, etc. were considered.
In addition, DNV confirmed that the green
projects brought the clear environmental benefitsElectric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Ref.

Criteria

Requirements/Contents

Work Undertaken

DNV Findingssuch as CO2 reduction, through the review of
documents such as the Framework and theinterview with the personnel of the Issuer.

GBP-3 Management of proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b

3c

Tracking
procedure-2

Temporaryholdings

Requirements/Contents

Work Undertaken

The net proceeds of Green Bonds should be credited to a subaccount, moved to a sub- portfolio or otherwise tracked by theissuer in an appropriate manner and attested to by a formalinternal process that will be linked to the issuer’s lending andinvestment operations for Green Projects.

•

Interviews withstakeholders•

Document review

So long as the Green Bonds are outstanding, the balance of the
tracked proceeds should be periodically reduced by amounts
matching eligible green investments or loan disbursements madeduring that period.

•

Interviews withstakeholders•

Document review

Pending such investments or disbursements to eligible Green
Projects, the issuer should make known to investors the intended
types of temporary investment instruments for the balance of
unallocated proceeds.

•

Interviews withstakeholders•

Document review

Page 22 of 24

DNV Findings
It was confirmed through document review andinterview with the personnel of the Issuer thatthe net proceeds could be tracked by the Issuer's
accounting regulation and internal accounting
system. In addition, DNV verified the system
practically used and the related documents, andconfirmed that the management status of theproceeds was proved based on this.
DNV confirmed through document review andinterview with the personnel of the Issuer that
the Issuer planned to review the balance of green
bonds on a regular basis (at least quarterly)
during the period from bond issuance toredemption of green bonds.
DNV has confirmed through document review
and interview with the personnel of the Issuer
that the balance of unallocated amount wassequentially recognized by the confirmation
process through the issuer's internalElectric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Ref.

Criteria

Requirements/Contents

Work Undertaken

DNV Findings
management system, etc. DNV also confirmed
through the Framework and the evaluation thatthe balance of unallocated proceeds wasmanaged in cash or cash equivalents. In addition,
it was confirmed that the balance of unallocatedproceeds would be disclosed through update
report (annual reporting).

GBP-4 Reporting
Ref.

Criteria

4aPeriodical
reporting

Requirements/Contents

Work Undertaken

In addition to reporting on the use of proceeds and the temporary
investment of unallocated proceeds, issuers should provide at least
annually a list of projects to which Green Bond proceeds havebeen allocated including- when possible with regards to confidentiality and/or competitive
considerations- a brief description of the projects and the amounts disbursed, as
well as the expected environmentally sustainable impact.

•

Interviews withstakeholders•

Document review

Page 23 of 24

DNV Findings
DNV confirmed through document review andinterview with the personnel of the Issuer that
the Issuer would report the BOND annually(update report) and disclose the allocation statusof the proceeds and information on the eligible
projects which the proceeds were allocated andthe environmental benefits, until the proceeds
were fully allocated. For the balance and therefinanced part of the unallocated proceeds, DNV
confirmed that the Issuer would disclose theestimated (or percentage). DNV also confirmedthat the Issuer would disclose the environmental
benefits with any of or all of the followingElectric Power Development Co., Ltd. (J-POWER) Green Bond Eligibility for Pre-issuance Second Party Opinion

Ref.

Criteria

Requirements/Contents

Work Undertaken

DNV Findings
indexes, within considering its confidentiality andto the extent of reasonably practicable.
•Installed capacity for each category of
renewable energy (MW)•Annual CO2 emission reduction for eachcategory of renewable energy (t-CO2/y)Page 24 of 24