The grid used to run fine without batteries, didn't it?

← Back to the entry point (all 19 questions)

It did. The spinning machines were doing the balancing work for free.

Electricity cannot be stored. Unless the amount used and the amount generated are matched second by second, frequency (50 Hz in eastern Japan, 60 Hz in western Japan) drifts and machines trip. The ability to close that gap on the spot is what is called balancing power (調整力).

Japan's electricity used to come almost entirely from thermal, hydro and nuclear plants. All of them generate by spinning a large machine. Three free extras come with a spinning machine.

Momentum.A heavy machine already spinning cannot stop suddenly. Even if a power station somewhere trips, it slows the rate at which frequency falls.
Automatic adjustment of output.When frequency falls, the machine raises its own output slightly. It acts before anyone issues an instruction.
Voltage support.A spinning machine holds steady the "pressure" that pushes electricity out.

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Fig. 1 — The free extras of spinning machines. Thermal, hydro and nuclear delivered momentum (the inertia that slows a fall), frequency restoration (the movement that fills back what was lost) and voltage support as a by-product of generating. Solar and wind do not spin, so no free extras come with them.

Momentum and frequency restoration are two different jobs. On a bicycle, momentum is the inertia that keeps you rolling after you stop pedalling; frequency restoration is somebody pushing the pedals harder. The instant one power station trips, momentum slows the fall and buys time, and within those few seconds frequency restoration fills back what was lost. Momentum is simply the mass of the spinning machine and works without being told. Frequency restoration is the machine sensing the drift and moving its output up or down — it corresponds to the fast end of the balancing products bought and sold in the market.

All three came automatically once you built a power station. So nobody priced them and no market existed. It was work the utilities did as a matter of course, using their own plants.

The extras have only had a price for ten years

Electricity retail was fully liberalised in 2016, and transmission and distribution were legally unbundled in 2020. The companies that carry electricity (the TSOs) became entities that own no power stations of their own. From FY2016, therefore, a scheme began under which they buy balancing power from generators through competitive tender. That was the first time the free extras had a price.

In April 2021 a nationwide market (the balancing market) opened, starting with the slower-moving products. The faster-moving products were complete by April 2024, and all five products came to be bought through the market. From March 2026 trading moved to day-ahead, in 30-minute blocks, and on 1 September the price ceiling became ¥10.

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Fig. 2 — A timeline of how balancing power became a product in Japan. It is only ten years since the tender (FY2016) and five since the market (2021). Sources: METI, 17 October 2016; Agency for Natural Resources and Energy, 96th Working Group on Institutional Design, Material 3, 27 September 2024; EPRX.

Momentum still has no price

Of the three free extras, frequency restoration acquired a market. Momentum, however, still has no price in Japan. As solar and wind grow and spinning machines decline, momentum declines with them. In July 2024 OCCTO published an estimate that, under its assumed future generation mix, the rate at which frequency falls would exceed the reference value (2.0 Hz per second) in six areas of western Japan by 2050. The cost of countermeasures is estimated at ¥210–820 million per year. Mechanisms for supplying momentum separately — synchronous condensers, and batteries able to imitate momentum — are under study now.

How an investor should read this

In Japan, balancing power is a young product: ten years since it had a price, five since it had a market. Young markets mean moving rules. The next stage to arrive is a price on momentum and on speed, and among non-spinning resources batteries are the easiest to supply both from. The more thermal declines, the greater the need to procure the free extras separately.

The questions in this series

I. Why the grid ran without batteries in the past

48-2The grid used to run fine without batteries, didn't it? (this article)
48-3What disappears from a grid with fewer spinning machines?
48-4Why "ten seconds"?
48-5Does more renewables mean more balancing power is needed?

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

III. Where demand and the generation mix are heading

IV. The money, and what the state really wants

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

METI, "Approach to Competitive Procurement of Balancing Power by TSOs," 17 October 2016
Agency for Natural Resources and Energy, "On the Balancing Market," 96th Working Group on Institutional Design, Material 3, 27 September 2024 (opened April 2021; all products from April 2024)
EPRX, "Balancing Market Explanatory Materials," 2nd ed., 13 March 2026 (day-ahead trading, 30-minute blocks); EPRX ΔkW price-ceiling table (updated 30 July 2026; ¥10 applies from delivery on 1 September 2026)
OCCTO, 99th Committee on Balancing Capability and Supply-Demand Balance Assessment, Material 1, 23 July 2024 (declining inertia, RoCoF 2.0 Hz/s, cost estimates for countermeasures)
OCCTO, 18th Grid Code Study Group, Material 4 (grid-forming and inertia requirements from Phase 3 onward)

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.