Analytical Assumptions
The data in this article is based on trading results published by the Electric Power Reserve Exchange (EPRX). The primary focus is the first complete quarter available after the shift to day-ahead trading and a lower price cap (effective from the March 14, 2026 delivery date)—April–June 2026 (preliminary values). Because market structure changed discontinuously across this transition, FY2025 under the old system (April 2025 to March 2026) is shown only for contrast, and the two are never averaged together. The shortage rate is calculated as "(solicited volume − awarded volume) / solicited volume × 100." A higher shortage rate indicates that the supply of balancing capacity is insufficient for that product and area.
The Balancing Market has seven products: Primary Reserve (Online), Primary Reserve (Offline), Secondary Reserve 1, Secondary Reserve 2, Tertiary Reserve 1, Tertiary Reserve 2, and Composite. Among these, batteries primarily participate in the three products of Primary (Online + Offline) and Composite, which are the focus of this article's analysis.
Note that because the Balancing Market conducts cross-area interchange (procurement of balancing capacity across areas), the figures differ between "by power source location" and "by TSO." This article uses data by TSO (the volume actually procured by each area's transmission and distribution operator).
https://www.eprx.or.jp/information/results.php
Primary Reserve (Online) — Shortage Rate by Area (Apr–Jun 2026)
The Primary Reserve Online product is one of the markets with the largest trading volume for batteries, alongside the Composite product. Under the new regime (April–June 2026), the national shortage rate (weighted average) is 28.3%, roughly half the 59.2% recorded in FY2025 under the old system. Variation across areas remains significant.
(Green = fulfilled portion. Gray = shortage portion. Values on the right are average awarded unit prices (simple average of blocks with awards). Unit: yen/delta-kW per 30 min)
Even after the transition, Tohoku (shortage 60.9%) and Tokyo (shortage 46.2%) retain high shortage rates, leaving significant room for batteries to win awards. In contrast, Chugoku (shortage 3.7%) and Kyushu (shortage 4.9%) are nearly fulfilled, while Shikoku and Hokkaido are in oversupply. Tokyo, Chubu, and Tohoku, which exceeded 70% under the old system, have fallen sharply—Chubu down to 19.3%—reshuffling the ranking across areas.
Primary Reserve (Offline) — A Market Where Batteries Monopolize 98.9%
In addition to Online, Primary Reserve has an "Offline" product. The Online/Offline classification is not freely chosen by operators. Under EPRX trading rules, batteries eligible for Primary Offline are limited to those with installed capacity of 1 MW or more but less than 10 MW (at extra-high or high voltage), or cases where batteries under 1 MW are aggregated. This means batteries of 10 MW or more cannot enter Primary Offline and must use Online connection to participate in Primary Reserve.
In this Offline market, batteries effectively account for 98.9% of awarded volume (the remainder is VPP), with zero participation from thermal or hydroelectric power.
Battery Award Share: 98.9% — A market composed solely of batteries and VPP (1.1%)
Average Awarded Unit Price: ~12 yen/delta-kW per 30 min (approaching the 15-yen cap) — over 2x Online levels (~5 yen)
Offline shortage rates also fell under the new regime, but except for Tokyo (shortage 29.3%) they remain in the 60–90% range—still the most severe of the 5 products. In Shikoku (95.2%), Chugoku (86.2%), and Hokuriku (84.1%), most of the solicited volume remains unfulfilled. Tokyo is the best-supplied because it has the most battery entrants.
Why do shortages persist despite unit prices of around 12 yen, over twice Online levels? The reason is that batteries of 10 MW or more are institutionally barred from Offline participation, limiting entry to small batteries under 10 MW. The fact that such small batteries do not yet exist in sufficient numbers is the main driver of the 67.9% shortage rate.
On the other hand, Online has advantages that Offline does not. Batteries with TSO communication lines can bid not only on Primary Online but also on multiple products such as Composite and Secondary 1, enabling revenue stacking based on time periods and market conditions. While Offline's higher unit prices are attractive, the trade-off is that bidding is limited to the single Primary Offline product.
Looking at monthly trends, the shortage rate—which declined only gradually under the old system—dropped sharply at the boundary of day-ahead trading (from the March 14, 2026 delivery date). February 2026's 91.7% fell to 79.6% immediately after the transition (March 14–31) and to 64.7% by June.
Awarded unit prices approach the new-regime price cap of 15.00 yen in many areas such as Tohoku, Chubu, and Hokuriku, over twice Online levels (~5 yen). For battery operators, Primary Offline remains the product with the highest unit price and the highest probability of winning awards.
Secondary Reserve 1 — Oversupply and Shortage Coexist Across Areas
For Secondary Reserve 1, since April 2024, the procurement of delta-kW (capacity) itself is done through cross-area market matching, but actual operations (LFC control) are completed within each area. Because the effective supply of balancing capacity depends on each area's generation mix, inter-area disparities are even larger than for Primary Reserve.
Kansai (shortage 86.8%), Tohoku (shortage 53.0%), and Hokuriku (shortage 50.2%) are in significant deficit, while Hokkaido, Chubu, Chugoku, and Kyushu are in oversupply. Chubu shows a strong oversupply, with awarded volume far exceeding solicited volume. Because Secondary Reserve 1 operations (LFC control) are completed within each area, batteries entering Kansai, Tohoku, or Hokuriku would have a high probability of winning awards.
Secondary 2, Tertiary 1, Tertiary 2 — Nearly Fully Supplied Markets
The remaining three products offer limited entry benefits for batteries. Secondary 2 is in large oversupply nationally (national −72.3%), and Tertiary 1 has also shifted to oversupply nationally (−4.6%), with Tokyo—previously in shortage under the old system—now in oversupply as well. Only Tertiary 2 shows a slight shortage nationally (7.4%), but the room for entry is small.
Product x Area Cross-Tabulation — Shortage Rate Heatmap
Shortage rates by area under the new regime (April–June 2026) are summarized for the main 5 products. Deeper red indicates a higher shortage rate (= higher probability of battery contract award).
| Primary Offline | Primary Online | Secondary 1 | Tertiary 1 | Composite | |
|---|---|---|---|---|---|
| Tokyo | 29.3% | 46.2% | 25.9% | Surplus | 0.7% |
| Chubu | 64.0% | 19.3% | Surplus | Surplus | Surplus |
| Tohoku | 82.3% | 60.9% | 53.0% | Surplus | 17.7% |
| Kyushu | 65.6% | 4.9% | Surplus | Surplus | Surplus |
| Kansai | 76.4% | 25.8% | 86.8% | 25.6% | 21.5% |
| Hokuriku | 84.1% | 34.7% | 50.2% | 18.5% | 23.7% |
| Chugoku | 86.2% | 3.7% | Surplus | 6.0% | 17.6% |
| Shikoku | 95.2% | Surplus | 10.0% | Surplus | 1.6% |
| Hokkaido | 83.2% | Surplus | Surplus | 12.5% | 12.0% |
Even after the transition, Primary Offline retains 60–90% shortages in most areas and remains the deepest-red column on the heatmap. While Hokkaido and Shikoku are in oversupply for Online, even Hokkaido shows 83.2% and Shikoku 95.2% shortage for Offline—so for Offline, the picture that battery entry opportunities do not depend on area is unchanged.
Battery Entry Status — Distributed Across Composite, Not Just Primary
Looking at awarded volume data by power source type (April–June 2026 preliminary values), battery awarded volumes are distributed in roughly equal amounts between Primary Reserve (Online) and the Composite product.
Looking at the distribution based on battery awarded volume, Composite (36.0%) and Primary Online (35.5%) are nearly tied at the top, followed by Primary Offline (21.0%) in third place. Secondary 1 and below total only 7.6%. While Primary Offline unit prices are over twice Online levels, only small batteries of 1 MW to under 10 MW can participate in Offline; most operating batteries are large 10 MW-plus projects, institutionally limited to Online. This distribution reflects not operator "preference" but an institutional sorting based on installed capacity.
The battery share in Primary Online is 24.5%, but reaches 98.9% in Primary Offline. Looking at monthly trends, the battery share in Primary Online expanded from 14.3% in autumn 2025 and has held at 20–28% even after the shift to day-ahead trading (March 13, 2026 trade date / March 14 delivery date).
Notably, even after battery share reached 20–30% and shortage rates fell sharply, Primary Online shortage rates stand at 28.3% and Offline at 67.9%. The room for entry is shrinking, but—especially for Offline—remains significant.
Cross-Area Interchange (Interconnector) Utilization
The Balancing Market conducts cross-area interchange through interconnectors (transmission lines between areas). The figures below are interconnector utilization rates under the old system (weekly trading; FY2025; secured capacity / upper limit). Because procurement moved to day-ahead trading under the new regime, they are shown here as a reference indicating inter-area flow patterns.
Utilization rates are high for Hokkaido to Tohoku (reverse direction 47.2%) and Chugoku to Kyushu (forward direction 23.3%). This indicates Hokkaido's pumped-hydro surplus flows to Tohoku, and Kyushu's balancing capacity flows to Chugoku. The Tohoku to Tokyo forward direction (20.8%) reflects the reality that Tohoku's surplus balancing capacity partially supplements Tokyo's deficit.
When selecting battery sites, these cross-area interchange flows need to be taken into account. In some cases, increasing supply at the origin of outflow may be less constrained by interconnector limitations than in areas receiving inflow (such as Tokyo).
A Single Day Snapshot — April 1, 2026 (48 Slots)
Annual averages alone make it difficult to see what the market looks like on a daily basis. Here we visualize solicited and awarded volumes by area in 30-minute slots for April 1, 2026 (Wednesday, the first day of FY2026).
Move your mouse over the chart (or tap) to see detailed data for each slot. Green bars show awarded volume (fulfilled portion), gray shows shortage. Oversupply slots are displayed in blue showing the excess portion. Switch products using the tabs to compare how shortage conditions differ across areas.
Switching to Primary Offline shows that Shikoku has zero awarded volume in all 48 slots (100% shortage rate). While the first grid-scale battery (12 MW) in the Shikoku area became operational in August 2025, no bids for Primary Reserve have been confirmed. Meanwhile, even in Tokyo, the shortage rate is 33.2%, improved to a level close to Primary Online (36.3%), yet more than 30% remains unfulfilled.
https://www.eprx.or.jp/information/results.php
Seasonal Snapshots — Summer Peak Day and Winter Peak Day
The April 1 snapshot alone does not reveal seasonal variation. Here we compare solicited and awarded volumes by product and area for one summer day and one winter day when shortage rates were particularly high during FY2025.
Note that this period was under the old system (weekly block bidding), and the number of slots per day differs from the spring snapshot (48 slots). Here we examine inter-area differences using daily totals rather than slot-by-slot data.
Primary Reserve (Online) shows more severe shortage in summer (national 62.8%) than winter (47.0%). The Tokyo area has chronic shortages throughout the year, at 96.6% in summer and 75.7% even in winter. Chubu also reaches 96.7% in summer, on par with Tokyo.
Secondary Reserve 1 sees Tokyo at 97.7% in summer with nearly the entire solicited volume unfulfilled, while in winter the entire nation shifts to oversupply (-10.8%). Tertiary 1 has limited shortages even in summer at 17.8% nationally, with complete oversupply in winter (-26.7%).
This seasonal variation pattern is directly linked to battery operators' operational strategies. If Primary and Secondary 1 are the main focus, summer is the largest revenue opportunity; if relying on Tertiary 1, the probability of winning awards drops significantly outside of spring.
Capacity Market Clearing Prices by Area
In addition to the Balancing Market, the other pillar constituting battery revenue is the Capacity Market. Below are the area-based clearing unit prices from the Main Auction conducted in FY2024 (October 2024, for FY2028 actual supply and demand).
| Area | Clearing Price (yen/kW) | Price Cap Ratio |
|---|---|---|
| Hokkaido, Tohoku, Tokyo | 14,812 yen/kW | Cleared at price cap |
| Kyushu | 13,177 yen/kW | 89% of cap |
| Chubu | 10,280 yen/kW | 69% of cap |
| Hokuriku, Kansai, Chugoku, Shikoku | 8,785 yen/kW | 59% of cap |
Hokkaido, Tohoku, and Tokyo cleared at the price cap of 14,812 yen/kW, with the difference from the lowest area group (Hokuriku, Kansai, Chugoku, Shikoku at 8,785 yen/kW) reaching approximately 70%. This means annual revenue from the Capacity Market varies significantly by area even for the same battery installation.
https://www.occto.or.jp/market-board/market/oshirase/2024/20250129_youryouyakujokekka_kouhyou.html
Area Characteristics from the 3-Market Combination Perspective
Battery business viability is determined by the combination (stacking) of three markets: Balancing Market, JEPX, and Capacity Market. Area characteristics are summarized from the 3-market perspective. Primary Reserve shows the combined Online + Offline shortage rate.
| Area | Balancing Market (Primary Combined Shortage Rate) | Capacity Market (Clearing Price) | JEPX (Price Characteristics) |
|---|---|---|---|
| Tohoku | 65.9% (Highest) | 14,812 yen (Highest) | RE surplus, low daytime prices |
| Hokuriku | 49.4% | 8,785 yen | Small market, abundant hydro |
| Tokyo | 43.9% | 14,812 yen (Highest) | Large demand, stable spread |
| Kansai | 40.8% | 8,785 yen | Large demand, relatively stable |
| Chubu | 40.1% | 10,280 yen | Large industrial demand |
| Chugoku | 32.1% | 8,785 yen | Mid-size market |
| Kyushu | 21.4% | 13,177 yen | Solar surplus, pronounced duck curve |
| Shikoku | 11.6% | 8,785 yen | Small market |
| Hokkaido | Surplus | 14,812 yen (Highest) | Growing wind, high winter demand |
Looking at Primary Reserve as a combined Online + Offline total, under the new regime Tohoku (65.9%) has the highest shortage rate, followed by Hokuriku (49.4%) and Tokyo (43.9%). Under the old system (FY2025), Chubu and Tokyo were roughly tied near 90%, but the transition lowered shortage rates across all areas and reshuffled the regional ranking. Evaluated together with Capacity Market prices (FY2028 clearing), the most advantaged on both fronts are Tohoku and Tokyo.
Data Notes
(2) Shortage rate is not a "battery-only metric": If large numbers of batteries enter areas with high shortage rates, shortage rates will decline and clearing prices will also fall. Indeed, after the transition the national shortage rate fell from 59.2% to 28.3% for Primary Online and from 96.6% to 67.9% for Offline; there is no guarantee that current shortage rates will persist into the future.
(3) Impact of cross-area interchange: Awarded volumes by TSO include cross-area interchange volumes. The distribution of shortage rates may differ when viewed by power source location.
(4) Day-to-day variability: As shown in the snapshots, shortage rates can vary significantly day by day even within the same area. Caution is needed when directly comparing annual averages with data from specific days.
(5) Distinction between Online and Offline: Primary Reserve has two products: Online and Offline. Batteries eligible for Offline are limited to those with installed capacity under 10 MW (at extra-high or high voltage), while batteries of 10 MW or more must use Online connection to participate in Primary Reserve (per EPRX trading rules). Since price levels and battery shares differ significantly between the two, business plans must correctly reflect this distinction.
Energy Business Consultation
Project-specific information not covered in our articles
will be disclosed after NDA execution following your inquiry.