Where is the floor below ¥7.21? The ceiling is set by rules, the floor by batteries themselves

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With the price cap moving from ¥15 to ¥10 and ¥7.21 named as the next step, the question becomes how far it goes after that. Some people say "down to thermal's ¥3." Follow the data and the floor is set not by the price of thermal but by what the battery itself could earn elsewhere. And that amount is not a single number: it differs by time of day.

This page deals only with price. The size of the room (procurement volume) is on 47-2, and the volume arriving is on 47-3.

1. The market moved before the cap came down

Figure 1 is the actual clearing price of primary offline, the battery seat (the average weighted by awarded volume). From April to June a bid reaching the ¥15 cap was there in almost every slot, and the nationwide average sat around ¥12 without moving. Bidding was short, so a bid placed at the cap still cleared.

From July it changes. In Kyushu, with the cap still at ¥15, August fell as far as ¥4.9. Chubu and Kansai came into the ¥9 range. Meanwhile, ¥11–14 is where Tokyo and Tohoku stayed. As 47-3 showed, the battery seat was still half open even in August. Even so, area by area as bidding grew, the price began to be set by bids rather than by the cap. The way bids are placed changed without waiting for the seats to fill.

When the cap came down to ¥10 on 1 September, the nationwide average was ¥6.8. Tokyo at ¥8.6 and Tohoku at ¥9.4 sit just under the new cap, while Kyushu at ¥3.4, Chugoku at ¥4.6 and Kansai at ¥5.1 sit away from it. At the same time as the rules lowered the ceiling, the market itself has begun to set the price.

2. The floor is "what the battery could earn elsewhere"

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In the hours it is not offered into the balancing market, a battery can earn on JEPX, the wholesale power market: charge in the cheap hours and discharge in the expensive ones, which is arbitrage. Selling ΔkW in the balancing market means giving up the arbitrage in those hours. So the lowest price a battery puts on ΔkW is what it could earn from arbitrage at that time. Economists abroad call this opportunity cost (what the battery could earn elsewhere).

The left of Figure 2 is the shape of a JEPX day in FY2026: cheap at midday, expensive in the evening. With a 4-hour battery charging in the 8 cheap slots and discharging in the 8 expensive ones, that difference is "what it could earn elsewhere."

The right converts that into ΔkW units. Looking only at the 8 evening slots, it is ¥6–8 depending on the area. Tohoku and Hokkaido are in the ¥8 range, above the next cap of ¥7.21. Averaged across 48 slots, on the other hand, it is in the ¥1 range. Late at night there is no arbitrage opportunity, so the floor in those hours approaches zero.

So the floor is not one line but the shape of a day: high in the evening, low late at night.

3. The areas where bidding grew are already in that shape

Figure 3 lines up the primary offline price for August 2026 by time of day. Tokyo is almost flat across all slots at ¥11–12. Kansai, Chugoku and Kyushu, where bidding grew, have taken the shape of high by day and cheap by night. Kansai is in the ¥11 range by day and around ¥6 late at night.

It is high by day because that is when the battery is busy charging. It is cheap at night because there is nothing else to do. When bidding grows, the price does not collapse uniformly; it takes the shape of the battery's own day. What happened overseas is happening the same way in Japan's 30-minute slots.

The median of the lowest awarded price (the cheapest bid to clear in that hour) is ¥2.4–3.0 in Kyushu, ¥1.4–2.5 in Kansai and ¥2.6–3.5 in Tokyo. That sits exactly between Figure 2's "averaged across 48 slots" (¥1.0–1.4) and its "evening" figure (¥6–8).

4. The ladder of ceiling and floor

Figure 4 puts the ceiling and the floor on one ladder.

The ceiling is set by the rules: a cap of ¥10, with ¥7.21 as the next step. The indicators and the timing of the decision are as written on 47-2.

The battery's floor is set by the battery itself: ¥6–8 in the evening, in the ¥1 range averaged over a day. Kyushu's ¥4.9 in August and the median lowest award of ¥1.4–3.5 both fall in between.

There is a floor outside the market as well. The bilateral contract under which a transmission and distribution operator (TSO) contracts pumped storage directly ran at ¥0.47–1.34 per kW per hour on FY2025 results, or ¥0.2–0.7 on a 30-minute basis, and in FY2026 5 companies locked up 266 × 10,000 kW in total. Since April 2025 thermal has been able to settle start-up costs ex post, so it no longer has to load start-up costs onto the ΔkW price and can bid lower. In practice 70% of primary online awards are thermal, and the nationwide average in August was ¥4.4. Governor-free response only leaves a little headroom on a plant that is already running, so the ΔkW bid can be cheap. You see it said that thermal cannot bid below ¥10, but that does not match the record.

There is no single floor at "thermal's ¥3." Thermal can go down to a price with start-up costs taken out, and a battery in the evening stops higher than that.

5. How it landed overseas

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There are 4 markets overseas where batteries have saturated the balancing capacity market. What they have in common is that the price floor was set not by "the cost of the cheapest provider" but by the batteries' own opportunity cost.

In the UK, frequency response revenue fell from £150k/MW-year in 2022 to about £50k in 2023, but the price did not fall to the cost of provision (£0.5–1.5/MW/h); it stopped at about £5/MW/h, the opportunity cost (Modo Energy estimate). In CAISO in the US, battery revenue fell from $103/kW-year in 2022 to $53 in 2024, and 82% of it came from energy (arbitrage) (CAISO Department of Market Monitoring). In ERCOT, the ancillary services share of revenue went from 84% to 48% (Enverus estimate). In every case batteries kept being used, and the center of revenue moved to arbitrage and capacity. System operators in each country are adding new products (Quick Reserve and Balancing Reserve in the UK, ECRS in ERCOT).

The closest to Japan is Germany. Batteries there clear below thermal but above their own opportunity cost, still short of saturation — the state the analyst Modo Energy describes overlaps with Japan today, clearing near the cap while beginning to feel for the floor.

6. Where Japan differs from overseas

There are three.

The ceiling bites first. Overseas the fall was free, with no cap; in Japan the rules are lowering the ceiling in steps. With less room between ceiling and floor, price movement is gentler.

30-minute slots. The UK and Germany use 4-hour blocks; Japan uses 30 minutes. The market catches up faster with the floor for each part of the day. That is why the shape in Figure 3 appeared within 1 to 2 months of saturation.

There is a floor outside the market. The bilateral contract for pumped storage and the spare-capacity utilization contract are mechanisms with no overseas equivalent, and the higher the market, the more procurement goes outside it. Conversely, when bidding thickens, some areas move back to market procurement, as Hokkaido has.

One more thing, a little further out, is the co-optimized market. The direction under review is a shift in the first half of the 2030s to a mechanism that clears kWh and ΔkW together. There the concepts of a price cap and a procurement volume are themselves replaced by optimized clearing based on lost profit. It is a world in which "what the battery could earn elsewhere" becomes the market's pricing as it stands.

7. What an owner can do

If the price is not one line but the shape of a day, the way you offer does not have to be one line either.

• Change the price by slot. In the evening, do not sell below what you could earn on JEPX; late at night, offer even on a thin margin. The 30-minute slot is the unit made for that.
• Move seats. In areas where the primary offline frame is filling up, there are the online seats (primary online 1,500 MW, combined 3,700 MW). That is a displacement contest against thermal and pumped storage, so the order of play is to lower the bid within the range that does not go below what you could earn on JEPX (47-3).
• Combine with fixed revenue. The capacity market, the Long-term Decarbonization Power Source Auction (LDA) and tolling agreements are revenue separate from the ups and downs of the ΔkW price.

Summary

• Before the cap came down, in the areas where bidding grew, bids began to set the price. Kyushu came in at ¥4.9 in August with the cap still at ¥15.
• The floor is "what the battery could earn elsewhere": ¥6–8 in the evening, in the ¥1 range averaged over a day. Not one line but the shape of a day.
• "Thermal's ¥3" is not the floor. Thermal can go close to zero, and a battery in the evening stops higher.
• In the 4 overseas markets batteries kept being used, and the center of revenue moved to arbitrage and capacity. Japan, with a ceiling, moves more gently.

Back to the overview (COLUMN 47).

Reference tables

Reference table 1 Primary offline clearing price (average weighted by awarded volume, JPY/ΔkW·30min, 2026)

Source: our calculation from EPRX trading results (preliminary). The price cap was ¥15 through August and ¥10 from 1 September. The aggregation window differs from the August figure in COLUMN 41 (nationwide ¥9.80, deliveries through 8/17)

Reference table 2 JEPX arbitrage converted into ΔkW (4-hour battery, top 8 slots and bottom 8 slots, efficiency 0.85, April–September FY2026)

Source: our calculation from JEPX spot market area prices. Wheeling charges, degradation costs and fees are not included. Deducting the volumetric wheeling charge on the charging side (extra-high voltage, excluding tax; on the discharging side the energy charge is exempted under special measures in each company's terms) brings the evening 8 slots down to ¥5.5–8.0 and the 48-slot average to ¥0.9–1.3

Notes: September in Figures 1 and 3 and in Reference table 1 is preliminary for 1–7 September. The JEPX shape on the left of Figure 2 is the April–September FY2026 average of the system price. The pumped storage bilateral contract unit prices in Figure 4 are FY2025 results converted to a 30-minute basis. The overseas figures are from published materials of each market's operator and monitor and from Modo Energy's analysis (details in Sources).

Sources

• EPRX, trading results (clearing data by area) (取引実績（エリア別約定データ）) https://www.eprx.or.jp/information/results.php
• EPRX, on the ΔkW price cap in the balancing market (需給調整市場のΔkW上限価格について) https://www.eprx.or.jp/information/post.php
• EPRX, "On ex-post settlement of start-up costs and of economic substitution" (起動費等および経済差替時の扱いに関する事後精算について) (in operation from 1 April 2025; revised version of 31 July 2026) https://www.eprx.or.jp/outline/docs/kidouhi_sashikae_20260731.pdf
• JEPX, spot market trading results (area prices) (スポット市場 取引結果（エリアプライス）) https://www.jepx.jp/electricpower/market-data/spot/
• Agency for Natural Resources and Energy (ANRE), System Design Working Group, 110th meeting, Document 4 (23 January 2026, the price cap steps and the decision) https://www.meti.go.jp/shingikai/enecho/denryoku_gas/jisedai_kiban/system_review/pdf/110_04_00.pdf
• Electricity and Gas Market Surveillance Commission (EGC), Expert Committee on System Design and Market Surveillance (制度設計・監視専門会合), 19th meeting (30 March 2026), Documents 5-1 to 5-5; 20th meeting (29 May), Document 5 (actual unit prices of the bilateral contracts for pumped storage) https://www.egc.meti.go.jp/activity/emsc_systemsurveillance/
• Transmission & Distribution Grid Council, "Outline of and application for the spare-capacity utilization contract" (余力活用に関する契約の概要と申込) https://www.tdgc.jp/yoryoku/outline/
• Study Group on the Design of a Co-optimized Market, Second Interim Report (同時市場の在り方等に関する検討会 第二次中間取りまとめ) (15 October 2025) https://www.meti.go.jp/shingikai/energy_environment/doji_shijo_kento/pdf/20251015_1.pdf
• CAISO Department of Market Monitoring, "2024 Special Report on Battery Storage" (29 May 2025)
• AEMO, "Quarterly Energy Dynamics," Q3 2024, Q4 2024, Q1 2026
• NESO, "Balancing Cost Winter Report 2023/24"; NESO Data Portal (Dynamic Containment / Moderation / Regulation)
• regelleistung.net (German FCR and aFRR procurement results)
• Modo Energy, "Germany: Europe's biggest merchant market," "German aFRR market data explained" and others (secondary sources)
• Enverus Intelligence Research (ERCOT battery revenue, secondary source)
• Ascend Analytics (commentary on opportunity cost in ancillary services, published on Energy-Storage.news, secondary source)