← Back to Knowledge

Primary offline bids have carried a cap of ¥10.00/ΔkW·30min since the 1 September 2026 delivery. That is the market's ceiling, at the same height for everyone.

Below it is a second ceiling whose height differs from operator to operator: Section III.2 of the Balancing Market Guideline (需給調整市場ガイドライン, revised 13 March 2026). This article reads only the text. It asks one question: how does the text set the upper limit on a storage plant's bid price? The estimates with numbers in them are in 50-3 Calculation.

1. The formula is one line

This is the whole formula in the text.

ΔkW price ≤ lost profit (opportunity cost) of the resource concerned + fixed-cost adder, etc.
Figure 1 The bid-price formula (Balancing Market Guideline, pp. 4 and 6)

← Scroll sideways →

The bid-price formula It is desirable for the ΔkW price to be no more than opportunity cost (what is not earned on the wholesale market) + the fixed-cost adder (recovering fixed costs: ¥0.33 for Type A or a calculated value for Type B) + the ¥0.06 exchange trading fee. Whichever is lower, this or the ¥10 market cap, is the real ceiling. Bid price (ΔkW) ≤ Opportunity cost + Adder + Trading fee Opportunity cost Wholesale earnings lost by holding capacity open. No battery formula + Fixed-cost adder Recovers fixed costs. Type A: ¥0.33; Type B: (fixed − other rev.) ÷ volume + Trading fee FY2026 (excl. tax): ¥0.06/ΔkW·30min Examples: generators Falls to ¥0.33 once costs are recovered Bids inside the formula are deemed not to aim at moving prices: no business improvement order (safe harbour). Against the ¥10 market cap, the lower of the two is the real ceiling.
The “etc.” is the exchange trading fee. EPRX's trading fee for FY2026 is ¥0.06/ΔkW·30min (excl. tax). Against the ¥10 market cap, the lower of the two is the real ceiling.

The text says a bid that satisfies this formula “is deemed not to be intended to cause market prices to fluctuate”, and that as long as it is followed, it will not be subject to a business improvement order (p. 4). Section I at the start calls this a “safe harbour” (p. 1).

It also says whom the formula is for. For operators deemed likely to hold significant market power, registering at this price is “desirable”. For all other operators it is also “desirable” (pp. 4–5). The March 2025 edition “requested” it of the former, so the wording has softened a little.

But the same revision added to the list of “problematic conduct”. Section IV.1 names “conduct that unfairly earns profits through the unreasonable setting of bid prices or bid volumes … in the balancing-capacity ΔkW market” as conduct that can be subject to a business improvement order or recommendation (p. 9). It draws no line by market power. The formula is not an obligation, but a bid outside it is exposed unless the reason can be explained. The plain reading is that in practice it works as a ceiling.

2. Opportunity cost — there is no formula for batteries

The first term of the formula, “lost profit (opportunity cost)”, is what you fail to earn elsewhere because you hold capacity open for the balancing market. The text defines it as something “arising from bidding into the balancing market” (p. 5) and gives two types. One is the start-up cost and the like when a generator that would otherwise not run is started up additionally. The other, when output that would have gone to the wholesale market is reduced, is the difference between the wholesale price and fuel costs and the like.

The wholesale price is “the expected intraday market price”, which is “calculated on the basis of the spot market price” (p. 6). For a battery, the equivalent of fuel cost (marginal cost) is the cost of the electricity used for charging, and electricity charged through imbalance supply may not be used (p. 3).

Both types are about generators. There is no formula for counting the opportunity cost when a battery holds back discharge to keep capacity open. Unsettled The place to check is the Network Business Surveillance Division of the EGC secretariat. In our view, “what a battery can earn on JEPX”, which we counted in 47-4 Floor, is the closest thing to this term, but those are not the words of the text.

3. The fixed-cost adder — Type A at ¥0.33, and Type B

The “certain amount” [the fixed-cost adder] shall be ¥0.33/ΔkW·30min (Type A resources) or an amount calculated on the basis of the concept of “a reasonable amount for fixed-cost recovery” (Type B resources), and “etc.” shall be the trading fee.Balancing Market Guideline, revised 13 March 2026, p. 6

Type A is ¥0.33, open to anyone. Type B is a “calculated amount” that can be used only while fixed costs have not yet been recovered. Just below comes one sentence: “After the fixed costs for the current fiscal year have been recovered, the certain amount shall be that of a Type A resource.” Once the year's fixed costs have been recovered, it falls to ¥0.33 from that moment.

The Type B amount is set by three sentences (p. 6). The text does not write it as an equation; it defines it in words.

The single-formula form, “(current year's fixed costs − revenue obtainable from other markets) ÷ expected bid volume”, appears in a note on p. 4 of Document 6 for the 21st meeting of the Expert Committee on System Design and Market Surveillance (19 June 2026). When this series writes “the adder formula”, it means these three sentences.

Figure 2 The four steps to the Type B adder (Balancing Market Guideline, pp. 6–7)

← Scroll sideways →

The four steps to the Type B adder ① A year's fixed costs (personnel, depreciation, repairs, outsourcing, the kW portion of the generator-side charge; corporate tax and capacity contributions are excluded). ② Deduct revenue from other markets (capacity-market revenue is deducted even if you did not bid). ③ Divide by the volume you can bid (allowing for inspection outages and charge/discharge constraints). ④ The adder. Add opportunity cost and ¥0.06 and you have the ceiling; once fixed costs are recovered, it is ¥0.33. ① Add up a year's fixed costs • In (examples): personnel, depreciation, repairs, outsourcing, kW portion of the generator-side charge • Conditional: aggregator costs “once fixed costs are identified”; system upgrades with a recovery plan • Out: corporate tax, capacity contributions (business return and interest were also refused) ② Deduct revenue from other markets • Capacity-market, wholesale-market and bilateral-contract revenue, etc. • Capacity market: deduct “what you would have earned” even if you did not bid (area price × expected capacity) • Only two exemptions: too new to bid in time / bid but not awarded ③ Divide by the volume you can bid • Not “volume awarded” but “volume you can bid”; take off only inspection outages and charge/discharge limits • A battery can bid into most of the 48 daily slots = large divisor = small adder • The 2026 revision closed the route of understating awards to inflate the adder ④ The adder is set • Bid ceiling = opportunity cost + adder + ¥0.06 fee, or the ¥10 market cap if that is lower • Once the year's fixed costs are recovered, it falls to ¥0.33 (Type A) from that point • If the calculated amount is negative or below ¥0.33, read it as ¥0.33 (our reading)
①–③ follow the order of the text. In ④, “¥0.33 when negative or below ¥0.33” is not stated in the text; it is our reading.

4. What goes into fixed costs, and what does not

The text says “for example, the following items are included” and lists personnel costs, depreciation, repairs, outsourcing costs and the kW portion of the generator-side charge (p. 7). With “for example” attached, these are examples. Only two items are expressly excluded: corporate tax and capacity contributions.

In (examples)
What fixed costs contain
  • Personnel costs
  • Depreciation
  • Repairs
  • Outsourcing costs
  • kW portion of the generator-side charge
  • Basic wheeling charge on storage losses (“can be included”, per the public-comment responses)
In, with conditions
Need identification or a plan
  • Aggregator costs (personnel, systems, etc.) “once the fixed costs are identified”
  • System upgrades for market participation “once a year-by-year recovery plan is set”
  • For a battery co-located with a FIP plant, only the battery's fixed costs
Out
Excluded by the text or in consultations
  • Corporate tax, capacity contributions (the text)
  • Business return (public-comment responses)
  • Interest on loans and bonds (removal requested in consultations)
  • Fixed asset tax, insurance and land rent: not mentioned in the text (unsettled)

The wording on aggregator costs has a history. In the consultations there were cases where the aggregator's success fee (merit share) was added to fixed costs as it stood; the secretariat reportedly checked the breakdowns and counted only personnel and system costs (Document 7, 15th meeting of the Expert Committee on System Design and Market Surveillance). The text does not say that success fees may not be included. The plain reading is that the part of the commission identifiable as fixed costs goes in. How the fees work is covered in COLUMN 17.

5. Deducting revenue from other markets — even if you are not in them

Revenue from other markets “includes, for example, capacity-market revenue, wholesale-market revenue and bilateral revenue” (p. 7). For batteries, what matters is how the capacity market is treated.

Where there is no capacity-market revenue, it shall be deducted as revenue from other markets on the assumption that capacity-market revenue is obtained.Balancing Market Guideline, revised 13 March 2026, p. 7

The amount deducted is “the clearing price (the area price published by OCCTO) × expected capacity in the capacity market”. Even a plant that is not in the capacity market deducts what it would have earned there. The only two exemptions are “resources that, being newly in operation, could not bid into the capacity market in time” and “resources that bid into the capacity market but were not awarded”.

Figure 3 Deducted even if you are not in the capacity market (Balancing Market Guideline, p. 7)

← Scroll sideways →

Deducted even if you are not in the capacity market In calculating the adder, “area price × expected capacity” is deducted as if earned, even with no capacity-market revenue. The two exceptions are a year in which the plant was too new to bid in time, and a bid that was not awarded. In the capacity market, awarded Actual revenue comes in (FY2029 Tokyo: ¥15,111/kW) In the adder calculation Deduct actual revenue Not in the capacity market Revenue is zero In the adder calculation Deduct as if you had bid Bid but lost / too new Bid but not awarded, or could not bid in time In the adder calculation No deduction needed “Chose not to bid” is not an exemption (a public comment asking for it was not adopted). In our 2 MW / 8 MWh Tokyo estimate, this ¥21.38 million of deemed revenue cuts the adder by ¥0.45 in year 2.
Expected capacity is the plant's output multiplied by the adjustment coefficient published by OCCTO (50-3 Calculation).

Batteries, which can start operating within a short time, were reportedly mostly in the first group (15th meeting, Document 7). The adder drops sharply in the year deduction starts, and in our estimate that was the biggest step in 20 years (50-3 Calculation). The text does not say up to which year a plant can claim it “could not bid in time”. Unsettled

6. Dividing by the volume you can bid

The divisor is “calculated by the bidding operator … on the basis of the ΔkW that can be bid in the current year, taking into account outage periods due to periodic inspections, fuel constraints and the like, and battery charge/discharge constraints and the like” (p. 7). It is not the volume you expect to win, but the volume you can bid. This denominator was changed from “expected awarded volume” to “expected bid volume” at the 15th meeting of the Expert Committee on System Design and Market Surveillance (21 November 2025). That closed the route of inflating the adder by assuming few awards.

A battery can bid into most of the 48 slots in a day. The denominator is large, so the adder is small. That is the difference from resources that take outage periods for periodic inspections out of the denominator.

7. What is new

Figure 4 How the guideline has evolved (established 30 March 2021 to the 13 March 2026 revision)

← Scroll sideways →

How the guideline has evolved Established on 30 March 2021 and revised on 10 March 2023, 25 March 2024, 24 March 2025 and 13 March 2026. In FY2024 and FY2025 the amount was set through Type B consultations; from FY2026 operators calculate it themselves and the Commission checks afterwards. Mar 2021 Formula from here Mar 2023 Opp. cost clarified Mar 2024 Type A ¥0.33, Type B talks Mar 2025 Fixed − other revenue Mar 2026 ÷ bid volume, cost list FY2024–25: set by consultation FY2026 on: own calculation
Each revision was preceded by a formal recommendation from the Commission (13 December 2022, 21 November 2023, 2 December 2024, 10 December 2025). The 13 March 2026 revision applies from deliveries on 14 March.

The formula itself — “take other-market revenue from fixed costs and divide” — is not new. It was already in the original draft (prepared by METI) put out for public comment jointly by the Japan Fair Trade Commission and METI on 29 January 2021. The March 2025 text went only as far as the numerator, and the Type B amount was “the amount decided after consultation with the secretariat of the Electricity and Gas Market Surveillance Commission”. Three things are new. The divisor became “the volume you can bid”; examples of what goes into fixed costs and what does not were written into the text; and consultation with the secretariat (the Type B consultation) has gone, replaced by calculating the amount yourself and keeping the basis. The revised text applies from deliveries on 14 March 2026 (p. 9).

8. What has been settled outside the text

Some of the gaps in the text are filled by the expert committees' conclusions and by the responses to public comments on the draft revision (published 13 March 2026 on e-Gov under the joint names of the Japan Fair Trade Commission and the Agency for Natural Resources and Energy). Here are the ones that matter for batteries.

9. Applied to 2 MW / 8 MWh in primary offline

Primary offline is not a separate product but a category of “how it is monitored” within primary reserve. High-voltage batteries of at least 1 MW and under 10 MW can enter offline, without laying a dedicated line (EPRX, “Guide to entering the balancing market with pumped-storage or battery facilities”, 3rd edition, p. 24). The requirements for offline monitoring are a response time within 30 seconds, a duration of “not set” and a minimum bid of 1 MW (EPRX, “Product requirements and trading schedule of the balancing market”, 6th edition, p. 2). The products as a whole are covered in COLUMN 15.

A high-voltage 2 MW plant often bids through an aggregator, and here the text runs one word short. The formula applies per “resource concerned”, but there is no definition of whether a “resource” means the aggregator's bidding unit (list or pattern) or each individual plant. Unsettled The same goes for how fixed costs and bid volumes are allocated when plants are pooled.

The prior checks and quarterly reports apply to operators deemed likely to hold significant market power (pp. 4–5). A 2 MW owner is unlikely to be one of them, but if the aggregator you contract with is, your bids go in within that framework. The operators covered are named in the documents of the EGC's Expert Committee on System Design and Market Surveillance.

10. What the text does not say

Here is what stays open even after reading the text to the end, with whom to ask. Every “Unsettled” in the body corresponds to an item here.

As answers are published in the Commission's or OCCTO's documents, we will update this article item by item.

Sources

Supervised by
Shinya Nakashima, Ph.D. (Eng.) — Representative Director, Science X Inc.

Works on the development, sale and technical due diligence of grid-scale battery storage plants in Japan. This column is written and supervised on the basis of that hands-on transaction and due-diligence practice. This English edition is a translation of the Japanese original; where the wording of the guideline matters, the Japanese primary sources govern.