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Thermal / hydro / nuclearMachines that spin to generateMomentum (inertia)Slows down sudden changeAutomatic output up and downCorrects frequency drift on the spotHolds voltageIf it stops, neighbouring machines drop off tooFree extras. No price, no marketSolar / windDo not spin. No free extrasBattery storageDoes not spin, but responds within one second on commandThermal declines → the free extras vanish → they must be procured separately (= balancing power acquires a price)
Fig. 1 — The free extras of spinning machines. Thermal, hydro and nuclear delivered momentum, frequency restoration and voltage support as a by-product of generating. Solar and batteries do not spin, so no free extras come with them. As thermal declines, those extras have to be procured separately.

Electricity cannot be stored. Unless consumption and generation are matched second by second, frequency drifts and machines trip. In the past that balancing was done on the side by the spinning machines of thermal, hydro and nuclear plants. Because it came free, it had neither a price nor a market.

Now those free extras are disappearing. Thermal capacity fell by roughly 16 GW in seven years; solar generation is projected to reach 2.5–3.6× its FY2023 level by FY2040; and Japan's nuclear fleet, even as it returns, does not throttle down during the day. As non-spinning generation grows, the resource that can take over the widest share of those extras is battery storage. The skeleton of the case for batteries in Japan is in this single diagram.

This series answers plain questions, one line at a time. Each question is used verbatim as its headline. The final question is "What do you pay, and what comes back?", which carries a calculator whose dials are built only from published figures. Start wherever your curiosity takes you.

I. Why the grid ran without batteries in the past

48-2The grid used to run fine without batteries, didn't it?It did. Spinning machines were doing the balancing work for free48-3What disappears from a grid with fewer spinning machines?In Spain, April 2025, what vanished was voltage support48-4Why "ten seconds"?Frequency falls within seconds. Britain and Australia built one-second products48-5Does more renewables mean more balancing power is needed?Half right. What grows is the cover for wobble. The cover for a trip does not shrink

II. Why thermal, nuclear and pumped storage are not enough

48-6Can't thermal just do the balancing?It still leads. But it is squeezed in daytime, and capacity fell 16 GW in seven years48-7If nuclear grows, do we stop needing batteries?The opposite. Nuclear does not throttle down by day. Kyushu curtails solar while running four reactors48-8Wouldn't more pumped storage be enough?Already 42 sites, 27 GW. New builds take a decade; batteries took 1–2 years in Britain48-9Where does the balancing power that the market failed to buy come from?Outside the market. Thermal headroom (¥0.93) and bilateral pumped-storage contracts

III. Where demand and the generation mix are heading

48-10Why do data centres point to batteries?What they consume is not balancing power but seats. In the US, seat prices pinned to the cap48-11What happens to solar from here?2.5–3.6× by FY2040. Tokyo has started curtailing too. Hokkaido at 30% by 203448-12Thermal volume, nuclear operation, demand — what next?Down, back, up. Demand rising for the first time in decades48-13How much battery capacity is actually coming?172 GW in connection studies, 30 GW in contract applications (3× the government's FY2040 outlook), 640 MW actually connected

IV. The money, and what the state really wants

48-14Does the government actually want more batteries?Yes — but not at a high price. It lowers the ceiling and expands seats and fast products48-15What does battery storage resemble as an infrastructure investment?A vehicle combining fixed income with variable income. Bonds and banks have started to attach48-16They say the earnings will thin out. Is that true?What falls is the unit price. Abroad, the mix shifted from balancing to seats and arbitrage, and volume grew48-17Can you copy the overseas playbook and make money in Japan?The reason it is needed is the same; the route to earnings is different. Japan cut the ceiling at 0.4% battery penetration48-18How much battery storage will Japan ultimately need?The government's FY2040 outlook is 2.8–10 GW. Contract applications are three times that48-19Is a battery the same wherever you put it?The frequency effect is identical within the same area. What differs is interconnectors, line congestion and the voltage role

V. The one question beyond the 18

48-20What do you pay, and what comes back?The answer differs by project. A calculator whose dials are built only from published figures lets you move unit price, clearing rate, seat fee, arbitrage spread and construction cost yourself
This series uses only four pieces of jargon.
Balancing power: the ability to close the gap between consumption and generation on the spot (調整力).
Curtailment: asking generators to stop when solar is in surplus at midday (出力制御).
Seat (capacity): the volume of generation that can promise to be available on the hottest and coldest days. The state buys this through a market (容量).
Price ceiling: the cap the state sets on the price of balancing power. ¥10 from 1 September 2026 (the price of holding 1 kW on standby for 30 minutes) (上限価格).

What this means for Japanese companies

A battery is equipment that turns electricity we throw away into electricity we use. In FY2024, Kyushu curtailed 750 GWh of solar and wind. Part of that was electricity a battery could have kept. Batteries reduce the need to hold thermal plants on standby, create seats that can "definitely deliver" on hot and cold evenings, and become one input when deciding where to site a data centre or a factory. The government has set an FY2040 generation mix of 40–50% renewables, around 20% nuclear and 30–40% thermal. Moving to that mix requires equipment that absorbs the midday surplus and delivers it in the evening. A battery is equipment that turns discarded electricity into usable electricity.

Japan cut the ceiling while batteries were still at 0.4%

We have set Japan alongside three markets that moved earlier — Australia, Britain and the United States. In all three, thermal declined, solar and wind grew, batteries entered the balancing market, and earnings have now shifted to seats (capacity) and to the spread from storing cheap and selling dear. Japan has entered the same road. One difference stands out. In South Australia, Britain and Texas, the price of balancing power moved inside the market only after batteries had accumulated to a few percent; in Japan, with connected batteries at 0.4% of national peak demand, the state moved first and cut the ceiling in two steps, from ¥19.51 to ¥15 to ¥10. The ceiling came down first. The room to grow remains on the volume side.

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Battery volume (as a share of peak demand) at the point where balancing prices began to moveSouth Australia (around 2020)approx. 9%Britain (2023)approx. 8%Texas, USA (2025)approx. 12%Japan (2026)0.4%← this is where the state cut the ceiling from ¥19.51 to ¥15 to ¥10Overseas figures are approximations based on analyst estimates. Japan = 640 MW connected ÷ 147.84 GW national peak demand
Fig. 2 — Abroad, the price of balancing power (ΔkW) moved only after batteries had accumulated to a few percent. In Japan, the state cut the ceiling first, at 0.4%. Sources: EPRX ΔkW price-ceiling table; Agency for Natural Resources and Energy (640 MW connected, end-December 2025); OCCTO (winter peak demand 147.84 GW, FY2024). Overseas figures are approximations drawn from Modo Energy and AEMO materials; definitions and reference dates differ by market.

Why now

In closing

Both the physics and the policy point towards more batteries. The ceiling came down first; what still has room to grow is volume, fast products and seats. What Japan shares with the markets abroad is the reason batteries are needed; the way they earn is built to a Japanese pattern. Readers coming from outside Japan should start at 48-17 and 48-19, then check the numbers at the final question (48-20).

Figures are drawn principally from published materials of government agencies, system operators, exchanges and operators, with some private estimates and press reports (named where used). Sources sit at the foot of each article; those for this page are collected below.

Supervised by
Shinya Nakashima(Representative Director, Science X Inc.; Ph.D. in Engineering)

Works on the development, sale and technical due diligence of grid-scale battery storage plants. This column is written and supervised on the basis of hands-on transaction and evaluation practice.

Sources (figures used on this page)