← Back to the entry point (all 19 questions)

Yes. But not at a high price. It cut the ceiling first, and is expanding seats and fast products.

How the state sees batteries shows not in its words but in how it buys. Here are three ways it buys.

1. Cutting the ceiling (the balancing market price cap)

The ceiling on the price of balancing power moved from ¥19.51 to ¥15 for delivery from 14 March 2026, and to ¥10 from 1 September (the price of holding 1 kW on standby for 30 minutes). The next step, ¥7.21, is conditional: it will be considered if a situation persists in which competition in the market is judged not to be working sufficiently. At the same time the requirement estimate moved from a rare day to an ordinary day, cutting tendered volume for the fast products by 13% (48-5). The state has shown by its actions that it will not buy balancing power at a high price.

← scroll sideways →

Balancing price ceiling (¥/kW per 30 min)¥19.51to 13 March 2026¥15from 14 March 2026¥10from 1 September 2026¥7.21next step (conditional)
Fig. 1 — The steps in the price ceiling: ¥19.51 (to 13 March 2026) → ¥15 (from 14 March) → ¥10 (from 1 September) → ¥7.21 (conditional). Sources: EPRX ΔkW price-ceiling table (updated 30 July 2026); Agency for Natural Resources and Energy, 4th Stable Electricity Supply WG, Material 6 (14 July 2026).

2. Seats and fast products: expanding

There are, on the other hand, things the state is trying to expand. One is seats (the capacity market). With demand turning upward (48-10) and thermal declining (48-6), the equipment that can "definitely deliver" in the evening has to grow. Seats are contested with thermal, pumped storage and demand-side resources, but as a way of creating new ones, batteries are fast (48-10). The other is fast products. Beyond the ten-second product, work is advancing on a one-second product and a momentum (inertia) product (48-4). Among non-spinning resources, these are the products batteries are best placed to supply. For large extra-high-voltage projects there is also an auction in which the state guarantees twenty years of fixed income (the Long-Term Decarbonised Power Source Auction), but it refunds roughly 90% of market earnings — and for high-voltage storage plants the main revenue sources are the balancing market, the wholesale market and the capacity market.

3. Widening the vessel (legislation and connection rules)

Under the amended Electricity Business Act in force from April 2023, discharge from batteries above 10 MW is classified as a generation business. In 2026 the state introduced measures against connection seat-blocking, so that genuine projects connect sooner (48-13). Widen the vessel; tidy the entrance.

Reading it: grow the volume, don't pay up

Line the three up and the state's real position appears. It wants more batteries — hence more seats, new fast products, and legislation and connection rules put in order. But it does not want to pay a high price for balancing power — hence cutting the ceiling first. Britain put its seats in order first (the capacity market, from 2014), created a one-second product in 2020 that widened the work available to batteries, and saw balancing prices fall only after batteries had grown. Japan has moved the price first, with volume still to come.

How an investor should read this
Balancing power is the main revenue source for Japanese storage plants today (abroad, the mix has shifted to seats and arbitrage — see 48-16). The ceiling came down first, and because the next step is conditional on competition failing to improve, it will not fall immediately. It will fall, though, if that condition is met. What the state wants to grow is volume; seats (the capacity market) are contested with thermal and pumped storage, while the fast one-second and momentum products are seats batteries are well placed to take. Japan's batteries still stand at 0.4% of peak demand. The state's "grow it" is aimed at the batteries yet to connect.
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?
  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? (this article)
  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.