Contents

Suenaga : First, could you explain the business outline of Shizen Energy and how it was established?‍

Hasegawa : As the company name suggests, we are building renewable energy power plants, such as solar, wind, small hydro power, and biomass power plants in Japan and around the world. Going forward, in addition to power generation, we will store electricity, and energy tech that digitally controls electricity, and to customers who want to promote decarbonization by integrating these. Beyond that, our business is to realize a decarbonized society.‍

Suenaga : Shizen Energy was established in 2011, but what was the background of your sense of challenge and thought to tackle environmental issues? ‍

Hasegawa : It's a personal story, but I spent the first 6 years in a rich environment surrounded by mountains and rivers in Tochigi Prefecture. We enjoyed our lives as natural children, playing in the river, picking wild plants in the mountains and eating them together. However, when I was 6 years old, I moved to Tokyo, and I was strongly shocked by the dirty air environment where National Route 17, Ring 7, and the Metropolitan Expressway intersect.

Probably because of that, I began to strongly feel as an adult that in order to be myself, I needed to live in nature. Then, I began to immerse myself in surfing, skiing, and snowboarding, which are common hobbies with Mr. Suenaga. Since my start as a member of society was an environment of hard work, putting myself in nature has become an even more important factor in order to balance my own humanity.‍

Suenaga : In the past, the ski season began in December, and spring skiing was also held in Honshu until around Golden Week at high altitudes. I feel with my skin that this period is getting shorter and shorter.‍

Hasegawa : I came into contact with “Inconvenient Truth (Inconvenient Truth)” by Mr. Al Gore, who was the vice president of the United States, around 2006. Therefore, I have become keenly aware of what has happened since the industrial revolution, and what has happened in the shadow of convenience and affluent lifestyle.

Environmental issues include rising sea levels and falling snow, and I thought that at this rate, I would not be able to continue spending time in the mountains and at sea, which is essential for my life. I began to be interested in myself because I wanted to maintain an environment I loved and an environment that was important to me.

Hasegawa : While I was aware of the problem as my own, a relative of the same generation suddenly passed away, and I left the company because I wanted to live a way of life that I was satisfied with while I didn't know when my life would end.

Just then, Isono, who is currently the co-representative, joined a wind power company as an internship. I've been friends with him since he was a student, and we've been surfing together, and when I heard about wind power, I thought it might be an important job. Actually, Kawato, who is also the co-representative, worked for that company.

Thus, I was lucky enough to meet that company, and I decided to tackle the issue that most environmental problems are caused by how energy is produced, which I learned from “An Inconvenient Truth.”‍

Suenaga : At that time, the issue of how to make electricity didn't get that much attention.‍

Hasegawa : Yes. If the natural flow of the sun moves and wind is generated from changes in temperature etc. can be changed into power for humans to live, I think only a simple core part could be seen because I am an amateur.

I thought that if I worked on wind power, I would be able to use this life more meaningfully, so I changed my work environment in 2007. Originally, when I was surfing, there was a wind generator at the seaside, and I was really curious about how this became a business. That was exactly the company's business, so I joined the company with interest.‍

Suenaga : From the viewpoint of environmental issues, wind power generation is eco-friendly, but for local people, it is nothing but a development act, and electricity is not used only in that region, so it may be difficult to gain understanding from local people.‍

Hasegawa : As you said, it was a very difficult period.

No matter how many times they held local briefings, they continued to be completely denied, so I began to think about whether it was the right approach for creating a sustainable world. The Great East Japan Earthquake occurred in 2011/3, when new power plants could not be built, and a hydrogen explosion occurred at the nuclear power plant the day after the earthquake.

The energy problem has an impact that makes the world uneasy all at once. Renewable energy isn't perfect, but it doesn't cause a catastrophic situation, and it's a better option within the current options, so I thought again at that time that we should work on it.

I realized that the reason we were unable to obtain local agreements or become partners was because absorbing profits from power plants built by investing capital from the city center in the city center was a one-sided effort from the local perspective. Instead, it was a fundamental thought in my previous job that we would not be able to increase renewable energy in a limited amount of land like Japan without designing a form where local people take the lead, such as creating an economic cycle together with local people.‍

Suenaga : Based on the Great East Japan Earthquake and the nuclear power plant issue that followed, Kawato and Isono shared their thoughts and led to the establishment of Shizen Energy Inc.‍

Hasegawa : Yes, that's how it happened.

Suenaga : Since then, the business has expanded, but can you tell us about the circumstances and what led to the shift to a policy of accepting investment from investors and aiming for an IPO?‍

Hasegawa : Until we formed a capital and business alliance with Tokyo Gas in 2017, we hardly accepted capital from other companies, and the first full-scale funding was raised from VGI in February 2022.

Until then, we have been recycling profits generated from our own business. The reason why the issue of global warming is occurring is because I felt that the conventional capitalist way of thinking of responding to investors by pursuing only profit is greatly related. There is a feeling that the global warming issue we are working on as a global issue is the result of pursuing profits from a short-term perspective, and that is why we were very cautious about receiving capital from other companies. In order to continue to have the idea of creating our own future, we have not accepted capital from other companies.

Suenaga : Thanks to capitalism, civilization and technology have developed this much, and I feel the benefits, but at the same time, I think the current situation is that the uneven parts have grown.

However, the idea that investors will go bankrupt in the near future has emerged, as seen in the principles of responsible investment, etc. in capitalist markets.

Investors are gradually increasing in capitalist markets who are aware that it is desirable for their business to grow sustainably over the long term, and that it is natural to consider the impact of that business on the environment and society. I think investors who place such emphasis on ESG, SDGs, and social impact are a good fit for natural energy.‍

Hasegawa : Exactly that kind of change was felt by us. At the same time, 10 years have passed since our establishment, and when we looked back on the past 10 years from our purpose of “connecting the blue earth to the future,” we may have had a certain impact, but I had a big feeling that in order to have an impact on solving problems on a global scale, I had a big feeling that we must accelerate our business even more in order to have an impact on solving problems on a global scale.

We concluded that the bottleneck that prevented us from accelerating our business was financial strength. I wanted to break through that, but that doesn't mean that any kind of funding is fine. Over the past 2 years or so, I began to think that I would like to find investors who share my ambitions, and actively utilize those funds to achieve business acceleration. I think this is the biggest change in natural energy.‍

Suenaga : Originally, I thought that seeking the speed required in the capital market, that is, speed in pursuit of profit, was not very suitable for natural power, but on the other hand, the speed to catch up with environmental issues and solve problems is extremely important, and scale is necessary for that, and I think investors who understand the ambition to solve natural power issues have emerged within the capital market.‍

Hasegawa : Exactly. However, even though investors' values have changed, we cannot ignore a fixed time frame in the sense that we must meet their expectations, and we think it would be a failure for us if we were too carried away by it and took a short-term perspective. Therefore, I think the most important thing from now on is to never lose sight of the value of creating a sustainable future, and to take on the challenge of growing steadily.‍

Suenaga : Of course, it is an important point for us investors to place emphasis on exit and return, but I would like to keep in mind the importance of other places, and we would like to grow and watch over them together while constantly interacting.‍

Hasegawa : Yes. I hope we can grow together.

Suenaga : This time, we have successfully raised funds from VGI, SIGMAXYZ Investment (hereinafter called SIGMAXYZ), and the Caisse de dépôt et placement du Québec (hereinafter called CDPQ), and I would like you to tell us about the background of choosing these members and the roles you expect them to play.‍

Hasegawa : SIGMAXYZ, a consulting company, has also had the longest relationship as a company. In 2020, in Obuse town, Nagano Prefecture, we collaborated with the town and SIGMAXYZ to examine environmentally friendly autonomous distributed next-generation infrastructure. Under such circumstances, I strongly felt that it was a company where we could share our ambitions.

Also, from now on, in addition to how to generate energy centered on the region, I think it is necessary to think about future infrastructure, including mobility and transportation. There is also a relationship where we can support the decarbonization of these new industries, so we wanted our investors to join us.

VGI is a government fund, but what we are doing is building infrastructure, and I think this is a national-level issue. Even in the sense of contributing to global sustainability as a company originating in Japan, I thought it would be ideal for investors who can back up from a national perspective to join.

Meanwhile, investors joined VGI and CDPQ because they felt that they could think about our business and the world together from a social and long-term perspective.

Also, since the energy business faces awareness and issues on a global scale, I believe it is necessary to have a firm grasp of what is happening in the world. This has not changed since it was founded, and a joint venture (JUWI Shizen Energy Inc. and JUWI Shizen Energy Operation Inc.) was established with a German company called JUWI  in the second year after starting the business, and the knowledge of Europe, which is an advanced country in renewable energy, has been incorporated. CDPQ has been investing around the world since early on in the context of sustainability. From this point of view, there was a feeling that if they joined our team, we could continue to work while having a global perspective, so they joined us as investors.

Suenaga : Earlier, it was mentioned that the first full-scale funding was raised from VGI in February 2022. Were there any concerns or doubts about raising funds from outside?‍

Hasegawa : What dispelled that was VGI's attitude as a company and the attitude of its employees. For example, even when it comes to making decisions, in order to support the growth phase of a venture where new movements are active without slowing down the sense of speed, a small number of partners who are deeply involved in that company are using a method of making intensive judgments. Other than that, I felt that a great deal of organizational thought was also being given, such as how to have an incentive system.

While speaking, I was able to understand very well the process that led to VGI's current attitude, so I strongly felt the benefits of having them join rather than anxiety about entering as an investor.‍

Suenaga :Thank you very much.‍

Hasegawa : I started talking directly and in depth with Mr. Suenaga at the stage where we were talking about specific procurement in this case. I was interested in hearing from Kawado (who is in charge of finance) the story that he is a lawyer and does surfing.

When I actually met him, my first impression was that he was very frank and seemed to be in the Shizen Electric Power Group. When I hear about the position of partner in a government fund, I tend to have a rigid image, but it was surprising in a good sense that while talking about various things before they decided to invest, I felt that it was a relationship where they could be natural with each other.‍

Suenaga: Thank you, I'm happy.

Suenaga: There is also talk about whether your company should be viewed as a startup, but we see it as a startup with a large business scale, and I don't think it's easy for a Japanese startup to receive investment from overseas investors, especially large pension funds, and there aren't many precedents.

However, it went well this time, and it was widely covered in the Nikkei Shimbun. I'm sure many people are concerned about why it went well, but please let us know.‍

Hasegawa: CDPQ is strengthening investments around the world in the context of sustainability. They also had a desire to increase investment in Asia, particularly in Japan, and they said that purpose, that is, what kind of thoughts they have in doing business, is extremely important. Of course, even if you have that thought, if you don't have a track record, you won't be persuasive, but it was highly praised by CDPQ for being an organization that has both thoughts and achievements.

Suenaga : I also think the purpose of Shizen Energy is amazing. When you say “We take action for the blue planet,” the message of turning a grand story into your own affairs comes in quickly in an easy-to-understand manner. I think it's easy to share values even when explaining to outsiders, and I think it's a good purpose for people within the company to think about what they should do autonomously.‍

Hasegawa : As for purpose, it has a lot to do with the values of our founders, but as a company, I thought from the beginning that we couldn't worry about the results in front of us without “what for.” Therefore, as soon as the company was established, “for what” was put together by the 3 founders. At the beginning, it was a slightly different term than today, “change the world from energy.”

“For what” helps each and every crew (employee) stand strong, and we didn't intend to create an organization with top-down control in the first place. It's not a matter of hobby or preference, and I thought from actual experience that in order to solve global problems, a way of moving without autonomy, just doing what the top said would be difficult to have an impact.

Aren't you strongest when you're serious about yourself? I thought it would be better for everyone in the organization to think so, so I thought from the first day that we had to have a strong purpose in order to achieve that.

Since then, overseas business development began in 2018, and the organization has gone international in earnest. Therefore, I wanted to use purpose as a word at the center of various organizations and change it to something that is easy for everyone to understand, so I first thought about it in English. That is “We take action for the blue planet.” I think “take action” is particularly important, and while always asking ourselves what we should do, we try to move towards the “Blue Planet,” or in other words, a sustainable future. It was made in 2018 and released the following year.

I believe that a clear purpose is essential in order to create such an organization around the world where it is autonomous and decentralized and where you take the lead.‍

Suenaga : You can clearly see that it was made in English. Also, Japanese, which is not too much in line with English, is also very good.‍

Hasegawa :Thank you very much. Exactly that is a troubling point, and when “We take action for the blue planet” is literally translated, it becomes an expression such as “let's continue to act for a sustainable blue earth.” We discussed many times whether it was an emotional word, and settled on “We take action for the blue planet” rather than a literal translation.

Suenaga : I feel that the purpose of Japanese also reminds me of taking action. What about Values?‍

Hasegawa : Up to now, a total of people from about 30 countries have worked, and now crews with diverse backgrounds from around 20 countries are working. Since clear guidelines are very important in such an environment, we all discussed the original 19 values based on actual experience and aggregated them into 4 values.

“Enjoy the planet”‍

Hasegawa : The first one is “Enjoy the Planet, let's enjoy the Earth.” Previously, it was a value that was ranked 4th, but it was upgraded steadily, and it came to the top. Earth is a very broad definition, but I wanted to make it a culture where I can cherish it, which may be my hometown, or maybe my favorite mountains, seas, or hot springs. I think it's traditional common sense that you should do it in private and do your work at work, but I think that being able to seriously work on things that are important for yourself is a state where you can put the most effort, so I chose “Enjoy the planet” as the first value.

“Challenge - Get out of your comfort zone. You can be the change ”‍

Hasegawa : At the time of establishment, 99% of people told us that it would be better for ventures to stop working on the energy industry or infrastructure business; it was just about self-bankruptcy. But unless we challenge for the future we seek or the future we think we should have, nothing other than the common sense we have now will be born, right? I think moving through the sky on airplanes, which are now commonplace, and moving at high speed by bullet train were also objects that were said to be “impossible” back then. In English” Get Out of Your Comfort Zone. It is expressed as “you can be the change.” The world I know is safe, but it is precisely because I have taken on challenges in areas where I feel worried, uneasy, and scared beyond that, that I have continued to create renewable energy all over the world even in ventures until today. I have made this feeling second value because I want to remember it as the organization gets bigger.

“Trust _ Inspire others by aiming for the excellence” “Integrity_Commit to impact the long-term future”‍

Hasegawa : Trust said in Japanese, “ Inspire others by aiming for the excellence.” Trust is built only on relationships where people respect each other. The desire to respect each other and do a job where we can increase the number of colleagues was born as an actual experience of working in diverse organizations. Integrity can also mean humility in Japanese, but I don't think that's necessarily the case. We thought about what would be the most sincere effort for the future we were aiming for, and since we centered on that, we decided to “Commit to impact the long-term future.” Challenge, trust, and honesty all have in common, and it is a strong feeling that has been struggling from the time the 3 people founded the company until today, when it has reached a scale of 300 people. I don't forget that and I want to share it with everyone.‍

Suenaga : I also felt that this is important when I communicated with the members of the Shizen Energy Crew. At the same time as transparency, each person conveys that they are thinking and moving in their own way. I feel that the fact that such an organization has been created is a soil that is compatible with diverse nationalities and backgrounds.

Suenaga : The other day, an all-meeting was held in Kisarazu city where company-wide employees who had not been able to do so for a while due to the COVID-19 pandemic gathered, but how many people participated in total?‍

Hasegawa : There are about 260 people, which is about 80% of the employees. On the day of the event, Kurkku Fields, a sustainable farm & park in Kisarazu, was rented out, and it was a place for all crew members to experience Shizen Energy culture throughout the day, celebrating the Shizen Energy Group's achievements over the past year, presenting future business strategies, and performing by crews gathered from around the world. ‍

Suenaga : They displayed it like a school festival, and I felt that the quality of each one was very high, and there were many people doing what they really liked.‍

Hasegawa : Thank you very much, Mr. Suenaga, for participating. I think it was great to be able to feel that Mr. Suenaga is not a smart investor, but that he is one of our peers who support us. Holding an all-meeting is also expensive because crews gather from all over the world. However, in the past few years, even though our business has spread all over the world, we have not been able to gather even once due to the COVID-19 pandemic. It was precisely because we gathered like this this time that we were able to reaffirm that what is at the center of us is “We take action for the blue planet.” After the all-meeting, they scattered all over the world again, and I have a strong feeling that we were able to become one as a team. I'm really glad I did it.

Suenaga : Funding is progressing, and the organization is expanding. If you have any issues as your business expands, I'd love to hear from you.‍

Hasegawa : It's the balance of management as an organization. Although it is autonomous, power will escape if it is not in a state of coordination, so while going back and forth between 100% decentralization and centralization, we search for a good balance as an organization. In that sense, I think the fact that we had to establish a system as an organization by depositing funds from external investors is a healthy external pressure.‍

Suenaga : As a way of thinking about raising funds and subsequent IPOs, I think it's basically like an increase in external colleagues. In order to respond sincerely, including that, I think it is important to be accountable. It's not a good idea to create an organization like Kintaro candy for an IPO, and I think it would be nice if you could aim for an organization that can be explained to investors in the capital market while including good points of diversification unique to your company. Lastly, I would like you to tell us about your future prospects and goals.‍

Hasegawa : Starting with the desire to solve problems on a global scale, the organization has spread to 8 countries. I would like to use the funds raised this time to speed up the resolution of problems around the world based on energy. Among them, the field of energy tech, which controls volatile renewable energy, is a relatively new area for us. In order to increase renewable energy, it is necessary to promote energy technology, so I would like to further strengthen this as well. After all, it is “people” that make these things happen, so I would like people who can think about this future together from 8 billion people around the world to gather, and I would like to use the part where there is not a small amount of capital to invest in and develop people. Numerically speaking, our business started with the nuclear power plant issue, and until now we have been proceeding with the business to generate renewable energy for 1 nuclear power plant, but from now on, we would like to take on the challenge of generating approximately 10 GW of electricity from renewable energy, which is equivalent to 10 nuclear power plants around the world by 2030.‍

Suenaga : If you do that, the impact of renewable energy on the amount of electricity generated will also be quite large. ‍

Hasegawa : Yes. Also, in terms of energy tech mentioned earlier, an existence called a VPP (virtual power plant) that bundles scattered power storage/power generation equipment and functions like a single power plant becomes important. Digital control is also required to achieve this, and we would like to proceed with in-house development and realize this as well.‍

Suenaga : It's a huge challenge. ‍

Hasegawa : I think this is a pretty big challenge, so thank you for your continued support.‍

Suenaga : Thank you very much for your support.