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Japan already has the second-largest fleet in the world. Adding to it takes about a decade, and the cost is unreadable. Batteries go on flat ground, and in Britain they are typically running in one to two years.

Pumped storage is a water battery. At night, cheap electricity pumps water into an upper reservoir; at midday or in the evening it is released to generate. Now that solar has grown, the pumping happens at midday and the release in the evening. The technology is old and Japan is good at it.

Japan is already second in the world

Per the Agency for Natural Resources and Energy, as of 2022 Japan had 42 pumped-storage sites totalling about 27 GW — second in the world behind China (the US Energy Information Administration puts China at 50 GW). Large plants sit across the country: Kansai Electric Power's Okutataragi (1.93 GW), TEPCO Renewable Power's Kannagawa, J-POWER's Shin-Toyone. In the state's own auction (the Long-Term Decarbonised Power Source Auction), pumped storage is tendered alongside batteries and has won awards.

Adding to it takes mountains and a decade

Pumped storage needs two reservoirs, upper and lower, and a head between them. The suitable sites are already used, and few new ones remain. Including environmental survey, permitting and civil works, the build period for conventional schemes is generally put at around a decade (academic reviews). In Japan the activity is not new build but upgrading existing units to variable-speed machines that can vary output more finely.

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Snowy 2.0 cost (A$ billion) and completion date202017, announcedcompletion 202160after feasibility study120August 2023completion December 2028over 12October 2025disclosed as set to exceed it (under reassessment)67% complete as of October 2025, 70% as of February 2026. Output 2.2 GW
Fig. 1 — Cost and completion date of Australia's Snowy 2.0 (2.2 GW). Announced in 2017 at A$2bn for 2021 completion, revised in August 2023 to A$12bn for December 2028. In October 2025, at 67% complete, Snowy Hydro disclosed that it would exceed A$12bn and began a cost reassessment. Sources: Snowy Hydro disclosures; ABC News.

New builds abroad run into the same wall. Australia's Snowy 2.0 began in 2017 as an A$2bn scheme due for completion in 2021. After the feasibility study it became A$6bn, then in August 2023 A$12bn for completion in December 2028, and in October 2025 it was disclosed as set to exceed A$12bn, with independent experts now reassessing the cost. As of February 2026, construction is 70% complete.

Batteries are flat-ground, and fast

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Pumped storage versus batteries — what differsPumped storageBattery storageSiteTwo reservoirs, upper and lower, in hillsFlat ground, near transmission linesSizeHundreds of MW to 2 GW per siteSingle-digit to tens of MW per site; divisibleBuild timeAround a decade (academic reviews)Typically 1–2 years in Britain (NESO)Cost visibilitySnowy 2.0 went from A$2bn to over A$12bnCell prices keep falling (48-16)How the state buys itLong-Term Decarbonised Power Source Auction (same bracket from round 2)Same bracket
Fig. 2 — How pumped storage and batteries differ. Pumped storage is large, but needs the site and the time. Batteries can be divided up, sited freely and built fast.

A battery needs neither a dam nor a head. It goes on flat ground and can be divided into small units placed near transmission lines. Britain's system operator NESO writes in its 2030 plan that battery build periods are typically one to two years. In Japan some projects take three to five years waiting on grid-side works (48-13) — still shorter than pumped storage's decade. That is why the state built a scheme that buys pumped storage and batteries side by side rather than adding to pumped storage. The first auction (announced April 2024) awarded 1.092 GW of batteries and 577 MW of pumped storage; from the second round, the two are tendered in a single "battery and pumped storage" bracket. Keep the pumped storage; let the growth come from batteries.

How an investor should read this
The state's own scheme buys pumped storage and batteries side by side as equipment doing the same job. Because pumped storage cannot be expanded quickly, most of the growth comes to batteries. It is also worth not overlooking that some existing pumped storage sets a floor under balancing power through bilateral contracts with the network companies (48-9). A battery's competitor is not new pumped storage but this existing pumped storage and thermal headroom.
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? (this article)
  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?
  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.