← Back to the entry point (all 19 questions)

Down, back, up. Thermal from 70% to 30–40%, nuclear from 10% to 20%, and demand from decline to growth.

The national plan (the 7th Strategic Energy Plan, Cabinet decision of February 2025) sets out how electricity will be made in FY2040 in three figures. Those three determine how much work there is for batteries over the next fifteen years.

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How electricity is made (generation mix, %)Thermal 68.6Renewables 22.9FY2023 actualThermal 67.5Renewables 23.1FY2024 actualThermal 41Nuclear 21Renewables 37FY2030target (6th Plan)Thermal 35Nuclear 20Renewables 45FY2040outlook (7th Plan)Ranged figures shown at their midpoint (FY2030: renewables 36–38, nuclear 20–22; FY2040: renewables 40–50, thermal 30–40)
Fig. 1 — Thermal falls from 70% to 30–40%, nuclear returns to 20%, renewables rise to 40–50%. Sources: METI, Energy Supply and Demand Results (FY2023 and FY2024 final); 6th and 7th Strategic Energy Plans.

Thermal declines — but stays

Thermal was 67.5% in FY2024 (LNG, coal and oil). FY2040 is 30–40%. It halves, but it does not disappear. The 7th Plan reduces inefficient coal and positions LNG as a realistic transition fuel. The balancing work shed along the way shifts gradually to batteries, as seen in 48-6.

Nuclear returns

Nuclear was 9.4% in FY2024. FY2040 is around 20%. The 7th Plan drops the phrase about reducing dependence as far as possible and, alongside restarts, permits replacement with next-generation reactors on sites where decommissioning has been decided. The more nuclear returns, the larger the midday surplus (48-7).

Demand grows

Generation was 991.1 TWh in FY2024. FY2040 is 1.1–1.2 trillion kWh, 10–20% above FY2022. The reasons are data centres, semiconductor fabs and electrification. It is the first time in decades that the premise has switched from falling demand to rising demand. Seat prices rise when demand grows (48-10).

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Generation (TWh)9,911FY2024 actual11,000FY2040 outlook (low)12,000FY2040 outlook (high)Sources: METI, FY2024 Energy Supply and Demand Results (final); 7th Strategic Energy Plan supporting materials
Fig. 2 — Demand switches from decline to growth. FY2040 is 1.1–1.2 trillion kWh.

An overseas example: auctioning batteries to replace thermal

On 30 September 2025, Italy's transmission operator Terna ran its first auction to buy battery capacity on a 15-year fixed basis, awarding 10 GWh. One of its purposes is to reduce dependence on thermal. Bids exceeded the tendered volume more than fourfold, and prices settled near a third of the cap (48-15). Countries cutting thermal are starting to buy batteries to fill the hole.

How an investor should read this
All three figures point in the direction of more work for batteries. As thermal declines, balancing seats open up; as nuclear returns, the midday surplus grows; as demand rises, seat prices go up. The fifteen years to FY2040 are the period in which all three move at once. The plan could change in either direction. If nuclear's return is delayed, thermal stays longer and the balancing seats open up more slowly.
The questions in this series
I. Why the grid ran without batteries in the past
  1. 48-2The grid used to run fine without batteries, didn't it?
  2. 48-3What disappears from a grid with fewer spinning machines?
  3. 48-4Why "ten seconds"?
  4. 48-5Does more renewables mean more balancing power is needed?
II. Why thermal, nuclear and pumped storage are not enough
  1. 48-6Can't thermal just do the balancing?
  2. 48-7If nuclear grows, do we stop needing batteries?
  3. 48-8Wouldn't more pumped storage be enough?
  4. 48-9Where does the balancing power that the market failed to buy come from?
III. Where demand and the generation mix are heading
  1. 48-10Why do data centres point to batteries?
  2. 48-11What happens to solar from here?
  3. 48-12Thermal volume, nuclear operation, demand — what next? (this article)
  4. 48-13How much battery capacity is actually coming?
IV. The money, and what the state really wants
  1. 48-14Does the government actually want more batteries?
  2. 48-15What does battery storage resemble as an infrastructure investment?
  3. 48-16They say the earnings will thin out. Is that true?
  4. 48-17Can you copy the overseas playbook and make money in Japan?
  5. 48-18How much battery storage will Japan ultimately need?
  6. 48-19Is a battery the same wherever you put it?
The one question beyond the 1848-20 What do you pay, and what comes back?The answer differs by project, so we have built a calculator whose dials are made only from published figures. You can move unit price, clearing rate, seat fee, arbitrage spread and construction cost yourself.

Sources

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.