DIGITAL GRID Corporation

Business Details

An electric power trading business targeting power sources other than renewable energy on the Digital Grid Platform (DGP). Demand-side customers can trade directly with power generators through DGP without initial costs, specialized knowledge, or a retail electricity business license. The Group does not bear market fluctuation risk and generates revenue through DGP fees based on transaction volume. Its competitive advantages lie in low-cost fees, flexibility in contract structures, and highly transparent disclosure of cost structures. The Company continues to pursue business expansion initiatives, including expanding partner collaboration, strengthening customer success measures, and offering tailor-made electricity proposals designed to mitigate price surge risk.

Recent Overview

Sales increased 2.9% year-on-year, but segment profit decreased 1.0%, resulting in a decline in profit margin

For the cumulative third quarter of FY2026 (ending July 2026) (August 2025 to April 2026), segment sales were ¥4,357 million (up 2.9% year-on-year), while segment profit slightly declined to ¥2,859 million (down 1.0% year-on-year). DGP fee revenue decreased from ¥3,393 million in the same period of the prior year to ¥2,898 million, while other revenue related to electricity settlement with general electricity transmission and distribution utilities, etc. increased substantially from ¥748 million to ¥1,316 million, supporting overall sales. The Company continues to expand partner collaboration, strengthen customer success measures, and offer tailor-made electricity proposals designed to mitigate price surge risk. One of the main factors behind the upward revision of the full-year earnings forecast (sales of ¥6,595 million, operating profit of ¥2,836 million) is that revenue recognition in the Electric Power Platform Business exceeded the initial budget.

Key Products

Growth Drivers

• Growing demand among companies for decarbonization management and electricity cost management driven by GX policy promotion
• Expanding acceptance of market-linked procurement among demand-side customers amid increasing JEPX price volatility
• Reduction in customer acquisition costs and increased business opportunities through expanded collaboration with partner companies (agencies)
• Maintaining low-cost fees and strong price competitiveness through in-house development of AI supply-demand management systems
• Improved customer lifetime value through the launch of an inside sales team and strengthened customer success measures
• Responding to hedging needs and improving retention rates through diversification of procurement options, including the use of futures trading

Risks

• Decline in per-transaction unit price of DGP fees due to intensifying competition (DGP fee revenue has been trending downward year-on-year)
• Risk of contract cancellation due to annual contract renewal, as electricity contracts are generally single-year agreements
• Risk of increased electricity procurement costs and customer attrition among demand-side customers during JEPX market price surges
• Impact on business results from large-scale electricity settlements (imbalances) with general electricity transmission and distribution utilities (settlement gains increased substantially in the current period, boosting revenue, but this is highly volatile)
• Imbalance risk arising from the limitations of AI supply-demand forecasting accuracy (settlement at penalty-based unit prices)
• Business continuity risk due to the departure of core engineers and specialized electricity personnel and difficulty in hiring replacements

Business Details

A business targeting the trading of renewable energy power sources on the Digital Grid Platform (DGP). Through the corporate PPA matching platform "RE Bridge," the FIT non-fossil certificate proxy procurement service "Eco no Hashi," and supply-demand management functions (DGP) following PPA contract execution, the Company provides one-stop renewable energy trading services to both power generators and demand-side customers. The segment covers all renewable energy trading methods except on-site PPA, capturing a broad range of corporate decarbonization management needs.

Recent Overview

Recorded the highest growth among all segments, with sales up 54.6% and profit up 113.5%

During the cumulative third quarter of FY2026 (ending July 2026) (August 2025 to April 2026), segment sales were ¥493 million (up 54.6% year-on-year) and segment profit was ¥254 million (up 113.5% year-on-year), achieving substantial growth in both sales and profit. Contributing factors included follow-up support toward the commencement of operations for contracted projects, strengthened GPA sales activities through RE Bridge, and increased intermediary handling volume of FIT non-fossil certificates through Eco no Hashi. The 7th matching event was held, with a focus on increasing contracted capacity. This segment is cited, along with the Electric Power Platform Business, as one of the factors behind the upward revision of the full-year earnings forecast (sales of ¥6,595 million, up 5.0% from the previous forecast).

Key Products

Growth Drivers

• Growing corporate needs for decarbonization management and renewable energy procurement driven by government GX policy
• Expansion of non-FIT power sources following the termination of the FIT program and growing needs among power generators to develop sales channels amid the transition to the FIP program
• Accumulation of corporate PPA projects through RE Bridge (registered facility capacity exceeding 2GW)
• Expansion of intermediary handling volume of FIT non-fossil certificates through Eco no Hashi (cumulative volume exceeding 2 billion kWh)
• Accumulation of long-term stock revenue as contracted projects commence operations (contract terms centered around approximately 20 years)

Risks

• Downward pressure on per-transaction unit prices due to intensifying competition
• Imbalance risk arising from the variability of renewable energy power generation output (penalty settlements due to discrepancies between planned and actual supply-demand figures)
• Fluctuations in profit and loss from electricity settlements with general electricity transmission and distribution utilities (uncertainty in revenue arising from sources other than customer contracts: a loss of ¥69 million was recorded in the cumulative third quarter)
• Costs associated with responding to frequent revisions to electricity-related regulations, including changes to the FIT/FIP program
• Risk of delays in the commencement of operations for corporate PPA projects (requiring follow-up support for contracted projects)

Business Details

The "Others" segment is centered on the Balancing Power Business (Aggregation Service), which controls and operates grid-connected storage batteries, and also handles the development, ownership, and operation of grid-connected storage batteries through the consolidated subsidiary Digital Grid Asset Management Co., Ltd. During the cumulative third quarter of FY2026 (ending July 2026), improved revenue from the Balancing Power Business's Aggregation Service drove the segment as a whole, achieving a turnaround to profitability from a loss in the same period of the prior year.

Recent Overview

Achieved a turnaround to profitability in the cumulative third quarter due to improved revenue from the Balancing Power Business

During the cumulative third quarter of FY2026 (ending July 2026), improved revenue from the Balancing Power Business (Aggregation Service) drove the segment as a whole, with segment sales of ¥257 million (up 8.7% year-on-year) and segment profit of ¥20 million (compared to a segment loss of ¥175 million in the same period of the prior year), achieving a turnaround to profitability. This marks an exit from the loss-making state that had continued through the early-investment phase up to the same period of the prior year, indicating progress in monetizing the Balancing Power Business. Note that, starting this period, disclosure of the "Decarbonization Education Business" has been removed from the segment notes, and the segment composition has shifted to one centered on the "Balancing Power Business."

Key Products

Growth Drivers

• Increasing demand for balancing power (storage batteries) driven by the expansion of renewable energy adoption
• Expansion of the grid-connected storage battery market driven by GX policy (investment strategy of the Ministry of Economy, Trade and Industry)
• Accumulation of a pipeline of self-owned and self-operated grid-connected storage batteries through Digital Grid Asset Management
• Accumulation of operational track record across multiple aggregation services in the Balancing Power Business

Risks

• Revenue from grid-connected storage batteries is affected by price trends in the wholesale electricity market, balancing market, and capacity market
• J-Credit and other spot trading has a strongly one-off nature and lacks stability in sales
• The Decarbonization Education Business (GX navi) is scheduled to end its service in July 2026, and the related sales will disappear
• Capital expenditure burden associated with battery ownership (batteries, grid connection costs, land, etc.) may impact financial results
• Property, plant and equipment increased substantially compared to the end of the previous consolidated fiscal year (from ¥107 million to ¥1,276 million), raising the risk of increased depreciation burden as battery-related investment expands