Challenges
While Sumitomo Life Insurance Company had implemented physical PPAs for some of its owned properties, the effectiveness was limited due to constraints on procurement volume. Additionally, the company recognized the need to explore renewable energy solutions for its leased properties.
Resolution
By adopting a virtual PPA, Sumitomo Life Insurance Company secured non-fossil certificates through long-term bilateral contracts spanning 10 to 20 years. This approach eliminates the constraints of simultaneous supply and demand balancing of electricity and enables the effective use of renewable energy for electricity consumed in leased properties.
Problem
We were considering transitioning from FIT to FIP, but questions such as “How to establish the business?” “Is the revenue bound to increase?” remain unclear. We even started pondering if transitioning would indeed benefit the company.
Solution
Toshiba Energy Systems & Solutions Corporation purchased electricity we generated through the “pseudo-FIT” scheme at fixed prices and returned a portion of the excess electricity to the power generation business via an “Upside Share Option.” Both services alleviated our concern to transition to FIP.
About Sumitomo Life Insurance Company
" Contribute to ‘well-being for all’"
Being an indispensable insurance company group
Guided by its corporate purpose—“Contribute to the advancement of social and public welfare”—Sumitomo Life Insurance Company has upheld this philosophy since its founding in 1907. Through its life insurance business, the company has played a vital role in supporting the lives of countless customers and their families.
Sumitomo Life’s health-promotion insurance product, “Vitality”, introduces a new concept—not only preparing for risks but actively reducing them. Centered around this product, the company has formulated a vision for 2030: to become an indispensable insurance group that contributes to well-being. Through this initiative, Sumitomo Life is contributing to ‘well-being for all’
With sales offices located throughout Japan, Sumitomo Life Insurance Company operates with a workforce of approximately 40,000 employees. Through face-to-face consulting services, the company is dedicated to helping as many individuals as possible lead better lives—actively promoting well-being in their daily operations.
Genji Nakamura, Deputy General Manager, Real Estate Department, Sumitomo Life Insurance Company
Initiatives for GX (Green Transformation)
Sumitomo Life Insurance Company is actively working to reduce environmental impact and promote biodiversity, aiming to contribute to the realization of a carbon-neutral society.
Sumitomo Life Insurance Company believe that protecting the global environment is fundamental to creating a sustainable society. Guided by this principle, commits to reducing the environmental impact of business operations and promoting activities that respect biodiversity. Through these efforts, the company contributes to the transition toward decarbonized and carbon-neutral society.
To realize a carbon-neutral society, Sumitomo Life Insurance Company has set ambitious group-wide goals. By 2050, the company aims to achieve net-zero greenhouse gas (GHG) emissions across the entire group. As an interim target, it plans to reduce Scope 1, 2, and 3(*1) emissions by 50% compared to FY2019 levels by 2030 (group-wide), and to reduce emissions from its asset portfolio(*2) by 50% compared to FY2019 levels (Sumitomo Life standalone).
(Click to enlarge the image)
(*1)
Scope 1: Direct GHG emissions from fuel use within the Sumitomo Life Group
Scope 2: Indirect GHG emissions from the use of purchased electricity and heat
Scope 3: Other indirect GHG emissions from business activities not included in Scope 1 or 2.
Scope 3 includes categories targeted for reduction through proactive efforts by the Sumitomo Life Group and its employees:
Category 1: Purchased goods and services
Category 3: Fuel- and energy-related activities not included in Scope 1 or 2
Category 4: Transportation and distribution paid for by the Sumitomo Life Group
Category 5: Waste generated in operations
Category 6: Business travel
Category 7: Employee commuting
Category 12: Disposal of sold products
Categories 13 (Downstream leased assets) and 15 (Investments) are managed separately as emissions from the asset portfolio.
(*2)
Target Assets:
By 2050: All assets excluding government bonds
By 2030: Domestic and international listed equities, corporate bonds, loans, investment real estate, and infrastructure investments
Target Scope: Scope 1 and 2 emissions of investees
Evaluation Metric:
To eliminate the influence of asset scale, emissions are assessed using “intensity” — GHG emissions per unit of portfolio balance (i.e., total GHG emissions from the asset portfolio ÷ total portfolio balance).
As an institutional investor, Sumitomo Life Insurance Company participates in domestic and international initiatives such as Climate Action 100+, which advocate for corporate engagement to reduce greenhouse gas emissions. As a life insurance provider, the company recognizes the critical importance of reliably reducing its own Scope 1 and Scope 2 emissions.
In addition to managing real estate investments as part of our asset management strategy using entrusted insurance premiums, the Real Estate Department also oversees facility management for offices across Japan where our employees work. In 2021, we launched a dedicated task force to address ESG issues such as renewable energy procurement and building environmental certifications. Through proactive awareness efforts, we’ve seen a noticeable rise in environmental consciousness among individual employees.
Introducing Virtual PPA
One of the key advantages of virtual PPAs is the ability to engage in long-term bilateral contracts for non-fossil certificates only, without the constraints of simultaneous supply and demand balancing of electricity.
Since 2022, the Real Estate Department has been addressing ESG challenges by progressively introducing LED lighting to large-scale owned properties. For properties where LED upgrades were completed, the company transitioned to renewable energy through retail electricity providers. However, due to the annual renewal nature of these contracts, there was a risk of procurement instability when supply-demand balance shifted. Around 2023, the department began exploring ways to secure additional renewable energy from a long-term perspective.
Initially, off-site physical PPAs were introduced for some properties. However, because these were office buildings with low electricity usage on non-business days, the “simultaneous supply and demand balancing of electricity” requirement of physical PPAs limited their effectiveness. Additionally, many of the company’s properties are leased, requiring a different approach to renewable energy procurement.
The turning point came with the regulatory revision in April 2022, which enabled the use of virtual PPAs. These allow for long-term contracts (10–20 years) without the constraint of simultaneous supply and demand balancing of electricity. Transactions are limited to non-fossil certificates (environmental value), making it possible to effectively decarbonize electricity usage in leased properties. The ability to enter into bilateral agreements further enhanced the appeal of virtual PPAs.
In the early stages of considering virtual PPAs, there were few precedents, and sourcing contract partners while building internal understanding proved challenging. Through discussions that leveraged the expertise of external stakeholders—including Toshiba Energy Systems & Solutions—the company successfully paved the way for virtual PPA adoption.
The non-fossil certificates procured via virtual PPA are used to effectively convert electricity consumption in both owned and leased properties into renewable energy.
Agreement with Toshiba Energy Systems & Solutions
Reliability as a core player in Japan's Electric Power Infrastructure and fixed-price transactions with simple schemes were major decisive factors.
We first learned that Toshiba Energy Systems & Solutions offers virtual PPAs through their website. After downloading and reviewing their white paper, we were impressed by the possibility of fixed-price transactions and the fact that Toshiba acts as an aggregator. Partnering with a core player in Japan’s energy infrastructure—the Toshiba Group’s energy solutions company—provided a strong sense of reliability and trust.
Upon requesting a proposal, Toshiba offered a competitive fixed-price (with conditions), which simplified cost calculations and the overall scheme. This clarity made it easier to gain internal approval. At the time, we were struggling with future cost simulations under a contract for difference which is more common for virtual PPAs, and internal momentum had stalled. The timing was perfect—we felt we had found an ideal supplier and moved forward with the contract.
Although we requested numerous revisions to the draft agreement from a risk management perspective, Toshiba responded sincerely and promptly. They also provided timely documentation on JEPX regulations, which was extremely reassuring.
The non-fossil certificates procured through this virtual PPA are now being used to effectively decarbonize electricity consumption at small stores across Japan. Currently, we have both a fixed-price virtual PPA with Toshiba and a contract for difference model with another provider. Going forward, we plan to expand our use of virtual PPAs based on economic conditions and future outlooks.
Expectations for Toshiba Energy Systems & Solutions and Future Outlook
Building a better future together along with various stakeholders toward sustainable society
We hope that Toshiba Energy Systems & Solutions will continue to offer timely and innovative proposals that reflect changes in requirements for renewable energy procurement across various initiatives.
The renewable energy landscape is evolving rapidly. For example, the Climate Group, which promotes the international initiative RE100 for 100% renewable electricity, now recommends the “24/7 (twenty-four seven) Carbon-Free Coalition” to further accelerate decarbonization. Additionally, revisions to the GHG Protocol are introducing new concepts such as hourly matching for certificates—requirements that could have a significant impact on corporate energy strategies.
As land suitable for solar power development continues to become increasingly constrained, offshore wind—expected to play a central role in renewable energy expansion—is also facing challenges. In recent months, we’ve seen a growing number of unfavorable reports from both domestic and international sources, highlighting issues from various angles. From the perspective of electricity consumers, we anticipate that promoting renewable energy will become increasingly difficult in the years ahead.
Even so, we recognize the growing frequency of natural disasters likely caused by climate change. Advancing decarbonization is essential to strengthening the sustainability of our planet and society—the foundation of all activities. We believe that by sharing knowledge and collaborating across diverse stakeholder groups, we can move forward together toward a better future.
Company Profile
Company name
Sumitomo Life Insurance Company
Foundation
May 1907 (Meiji 40)
Representative
Director, Representative Executive Officer and President Yukinori Takada
Tokyo Head Office
2-2-1 Yaesu, Chuo-ku, Tokyo
Core Businesses
Life insurance business
・Underwriting insurance based on a life insurance business license
・Asset managementURL
