Analytical Assumptions
The data in this article is based on FY2025 (April 2025 to February 2026) trading results published by the Electric Power Reserve Exchange (EPRX). The shortage rate is calculated as "(solicited volume - awarded volume) / solicited volume x 100." A higher shortage rate indicates that the supply of balancing capacity is insufficient in 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) — Annual Shortage Rate by Area
The Primary Reserve Online product is one of the markets with the largest trading volume for batteries, alongside the Composite product. The national annual shortage rate (weighted average) is 59.2%, with significant variation across areas.
(Green = fulfilled portion. Gray = shortage portion. Values on the right are annual average awarded unit prices (simple average of blocks with awards). Unit: yen/delta-kW per 30 min)
In the three areas of Tokyo (shortage 88.8%), Chubu (shortage 77.4%), and Tohoku (shortage 76.6%), shortage rates exceed 70% with an overwhelming deficiency in balancing capacity supply. In contrast, Shikoku (shortage 13.0%) and Chugoku (shortage 24.8%) are relatively well-supplied. Hokkaido is in an oversupply state due to bilateral contracts with pumped-hydro generators.
Primary Reserve (Offline) — A Market Where Batteries Monopolize 97.8%
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 97.8% of awarded volume, with zero participation from thermal or hydroelectric power.
Battery Award Share: 97.8% — A market composed solely of batteries and VPP (2.2%)
Annual Average Awarded Unit Price: 14-19 yen/delta-kW per 30 min — 2-3 times Online levels (2-10 yen)
In contrast to Online, shortages above 90% persist in all areas. Tokyo at 91.3% is the "best" among them, but this is because Tokyo has the most battery entrants. In Hokuriku, Tohoku, and Chugoku, nearly the entire solicited volume remains unfulfilled.
Why do such severe shortages persist despite unit prices of 14-19 yen, 2-3 times higher than Online? 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 barely exist in the market yet is the primary cause of the 96.6% 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, shortage rates are gradually declining due to expanding battery entry, but as of February 2026 it remains at 91.7%, with supply overwhelmingly insufficient.
Awarded unit prices are pinned at the price cap (19.51 yen under the old system, 15.00 yen under the new system) in most areas, at 2-3 times Online levels (2-10 yen). For battery operators, Primary Offline can be said to be 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.
Tokyo (shortage 79.1%) and Tohoku (shortage 59.1%) are in significant deficit conditions, while Kansai (shortage 2.3%) and Shikoku (shortage 13.8%) are nearly fulfilled, and Hokkaido, Chubu, Hokuriku, and Chugoku have oversupply. Kyushu also has oversupply on an annual basis, but there were months in the first half of the fiscal year with shortages, so stable fulfillment cannot be assured. Since Secondary 1's actual operations (LFC control) are completed within each area, the probability of winning awards is very high if batteries enter the Tokyo and Tohoku areas.
Secondary 2, Tertiary 1, Tertiary 2 — Nearly Fully Supplied Markets
The remaining three products offer limited entry benefits for batteries. Secondary 2 has significant oversupply in all areas (national -120%), and Tertiary 2 is nearly fully supplied (national 1.4%). Tertiary 1 is either in oversupply or fully supplied except for Tokyo (13.7%).
Product x Area Cross-Tabulation — Shortage Rate Heatmap
Annual shortage rates by area 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 | 91.3% | 88.8% | 79.1% | 13.7% | 28.8% |
| Chubu | 98.3% | 77.4% | Surplus | Surplus | 21.6% |
| Tohoku | 99.5% | 76.6% | 59.1% | Surplus | 4.2% |
| Kyushu | 93.4% | 66.9% | Surplus | Surplus | 22.3% |
| Kansai | 98.0% | 45.0% | 2.3% | Surplus | 6.6% |
| Hokuriku | 99.7% | 41.3% | Surplus | Surplus | 6.1% |
| Chugoku | 99.2% | 24.8% | Surplus | Surplus | 14.8% |
| Shikoku | 98.9% | 13.0% | 13.8% | Surplus | 10.6% |
| Hokkaido | 98.8% | Surplus | Surplus | 0% | -1.3% |
Primary Offline has shortages exceeding 90% in all areas, with the entire row showing the deepest red on the heatmap. While Hokkaido has oversupply for Online, even Hokkaido has a 98.8% shortage for Offline, meaning there is room for battery entry regardless of area.
Battery Entry Status — Distributed Across Composite, Not Just Primary
Looking at awarded volume data by power source type (October 2025 to April 2026 preliminary values), battery awarded volumes are distributed in roughly equal amounts between Primary Reserve and the Composite product.
Looking at the distribution based on battery awarded volume, Composite (37.7%) and Primary Online (37.1%) are nearly tied at the top, followed by Primary Offline (17.8%) in third place. Secondary 1 and below total only 7.4%. While Primary Offline unit prices are 2-3 times higher than Online, only small batteries without TSO communication lines can enter Offline, and the majority of currently operating batteries are large-scale projects of 10 MW or more, institutionally limited to Online. This allocation ratio reflects institutional assignment based on equipment capacity, not battery operator "preference."
The battery share in Primary Online is 19.7%, but reaches 97.8% in Primary Offline. Looking at monthly trends, the battery share in Primary Online expanded from 14.3% to 22.5% over six months, maintaining that level even after the system change (March 13, 2026).
Notably, even with battery share exceeding 20%, Primary Online shortage rates remain at 88.8% and Offline at 96.6%. The room for additional battery entry remains significant.
Note: The "April 2025 to February 2026" mentioned at the beginning is the compilation period for annual shortage rates. Data in this section follows the coverage period of the publicly available data by power source type.
Cross-Area Interchange (Interconnector) Utilization
The Balancing Market conducts cross-area interchange through interconnectors (transmission lines between areas). The utilization rate of interconnector secured capacity in weekly trading (annual total, secured capacity / upper limit) is shown for each major corridor.
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) |
|---|---|---|---|
| Chubu | 90.3% (Highest) | 10,280 yen | Large industrial demand |
| Tokyo | 89.5% | 14,812 yen (Highest) | Large demand, stable spread |
| Tohoku | 84.1% | 14,812 yen (Highest) | RE surplus, low daytime prices |
| Kyushu | 76.7% | 13,177 yen | Solar surplus, pronounced duck curve |
| Kansai | 66.1% | 8,785 yen | Large demand, relatively stable |
| Hokuriku | 64.1% | 8,785 yen | Small market, abundant hydro |
| Chugoku | 55.9% | 8,785 yen | Mid-size market |
| Shikoku | 34.9% | 8,785 yen | Small market |
| Hokkaido | 16.5% | 14,812 yen (Highest) | Growing wind, high winter demand |
Looking at Primary Reserve as a combined Online + Offline total, Chubu (90.3%) surpasses Tokyo (89.5%) as the area with the highest shortage rate. This reflects Chubu's large weight (62%) relative to Offline solicited volume. When evaluated comprehensively together with Capacity Market prices, Tokyo and Tohoku can be said to be the most advantageous areas from both the Balancing Market and Capacity Market perspectives.
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. 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.
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