Glossary of Grid-Scale Battery Storage Terms

Balancing Market and revenue

Balancing Market (需給調整市場)

A market in which general transmission and distribution utilities buy “balancing capacity”, the capacity that closes the gap between demand and supply, from sellers. Sellers are operators that own batteries or power plants, and they are paid for standing by, ready to operate at any time at a specified output during specified time slots. It is operated by EPRX. Japan’s Balancing Market (guide) →

EPRX (Electric Power Reserve Exchange, 電力需給調整力取引所)

The general incorporated association that operates the Balancing Market. Its formal name is the Electric Power Reserve Exchange (電力需給調整力取引所). It is a separate legal entity and a separate market from JEPX, the wholesale power exchange, and it publishes its trading results. What is EPRX →

Primary Reserve (一次調整力)

Of the five products in the Balancing Market, the one that first absorbs instantaneous frequency fluctuations. It requires a response within 10 seconds and sustained output for 5 minutes or more, and batteries win more than 90% of the contracted volume. Primary Reserve and the five products →

Composite product (複合商品)

In the Balancing Market, a method of bidding the Primary Reserve through Tertiary 1 products together as a bundle. The five products →

ΔkW

The unit of the “capacity kept free” that is traded in the Balancing Market. Money is paid for the promise to keep the capacity available itself, separately from the electricity actually delivered. The second ceiling →

Price cap in the Balancing Market (上限価格)

The upper limit placed on bids in ΔkW. For Primary Reserve, Secondary Reserve 1 and the composite product it was ¥15 per ΔkW per 30 minutes, and it fell to ¥10 for delivery from September 1, 2026. What disappears when the price cap falls →

Fixed amount in the guidelines (一定額)

The second ceiling on bids set by the Balancing Market Guidelines. The idea is to set the bid ceiling at lost profit plus a fixed amount plus the trading fee; it does not reach other power sources and reaches only batteries. The second ceiling →

Move to day-ahead trading (前日取引化)

A rule change under which Primary Reserve through Tertiary 1 in the Balancing Market moved from “weekly products”, bid in one batch covering a week, to “day-ahead trading”, bid at 14:00 on the day before for the following day (starting with the trades of March 13, 2026).

Weekly product (週間商品)

A method under which, about one week before delivery, a week’s worth of balancing capacity was bid and contracted in one batch. It was abolished when trading moved to day-ahead in March 2026.

1σ procurement volume (募集量の1σ化)

The change of the procurement volume for Primary Reserve and Secondary Reserve 1 from “3σ”, which covers 99.9% of the fluctuation, to “1σ”, which covers 84%. The total balancing capacity procured in the market fell sharply. Procurement volume and the 1σ change →

Capacity Market, Main Auction (容量市場)

A market, run by the Organization for Cross-regional Coordination of Transmission Operators, Japan (OCCTO), that secures future supply capacity (kW) in advance. It contracts the delivery year four years ahead on a single-year basis.

Long-Term Decarbonization Power Source Auction, LDA (長期脱炭素電源オークション)

A scheme created in fiscal 2023 as part of the Capacity Market. It combines 20 years of fixed capacity revenue with a mechanism that refunds about 90% of revenue from other markets. For a winning project there is no deal route for selling it midway. What is LDA →

Full merchant

An operating policy that makes a battery business work on market revenue alone (JEPX, the Balancing Market and the Capacity Market), without relying on fixed-revenue contracts such as LDA. What is full merchant →

Merchant risk

Bearing market price fluctuations yourself, in a form (merchant) with no fixed-price long-term contract, where what you sell in the market is your revenue as it stands. What is merchant →

Tolling contract, offtake contract (トーリング契約)

A contract in which the capacity and operating rights of a storage station are handed over to a counterparty (the offtaker) for a fixed fee, and that counterparty bears the market price risk. In Japan it is used with almost the same meaning as “offtake contract”, and it has the same form as tolling (contract processing) for thermal power. What is a tolling contract →

Revenue stacking (収益のスタッキング)

Earning, with the same battery, several revenue sources stacked together: the wholesale power market (JEPX), the Balancing Market and the Capacity Market. Three revenue sources and stacking →

Aggregator

A business that schedules a storage station’s charging and discharging and bids it into the markets. Depending on how the fee is taken (gross or net), the take-home amount differs even at the same rate. Aggregator fees: gross vs net →

JEPX (Japan Electric Power Exchange, 日本卸電力取引所)

The wholesale power market where electricity itself (kWh) is traded. It is a separate legal entity and a separate market from the Balancing Market (EPRX). The three revenue sources →

Grid and connection study

Grid connection study (接続検討)

The procedure in which the general transmission and distribution utility examines whether a project can be connected to the grid. The reply document states the connection conditions (connection point, construction cost contribution and construction period).

Connection study reply (接続検討回答書)

The reply document issued by the transmission and distribution utility that states the grid connection conditions. It is the core document of the development rights; both the contribution and the construction period are desk studies, not commitments. It expires one year after the reply.

Notes document attached to the reply (注意事項説明書)

A common form of OCCTO attached to the connection study reply. It shows that both the contribution and the construction period are desk studies and will move with the on-site surveys and land negotiations that follow the contract application.

Check on whether a new study is needed (接続検討の要否確認)

A procedure for confirming with the general transmission and distribution utility whether a new connection study is needed, when equipment such as the battery or the PCS is changed after the connection study reply has been received. It is applied for on an OCCTO form, the reply comes in principle within one month, and no study fee is charged. Changing equipment after the connection study reply →

Contract application, final reply (契約申込み)

The stage after the connection study. The final reply to the contract application fixes the construction cost contribution and moves the project up one stage.

Construction cost contribution (工事費負担金)

The part of the grid connection construction cost that the applicant bears. The amount differs by an order of magnitude depending on whether the connection point is a transmission line or a distribution line; it is fixed at the final reply, and in most cases the connection construction period is counted from the payment. Why connection costs differ tenfold →

Connection approval, connection contract (連系承諾)

Being granted connection on the basis of the final reply to the contract application. Some things are fixed, and some still move.

Anti-slot-hoarding measures, the new rules of April 2026 (空押さえ対策)

Measures taken in response to the sharp rise in the number of connection studies. From April 2026, an increase in the deposit and mandatory submission of proof of land title, among other things, began, and the gap widened between projects already developed and projects only now starting. New rules for connection studies and contract applications →

Cap on connection studies (接続検討数の上限)

From August 1, 2026, a cap on the number of connection studies for grid batteries per operator (those not yet replied to).

Non-firm connection (ノンファーム型接続)

A system that allows new grid connections on the premise that output may be curtailed without compensation when the grid is congested. Non-firm connection and curtailment risk →

Expected connection timing (連系の見込み)

How our project list shows it. For projects with a decided start of operation it is shown by year and month; for projects without one, by the number of months until connection stated in the reply document.

Regulation, rules and tax

JC-STAR

A labeling scheme that evaluates the security functions IoT devices should have and shows conformity by the number of stars (★1 to ★4). It is run by IPA and operated under the supervision of the Ministry of Economy, Trade and Industry.

JC-STAR ★1 mandate

The requirement that products with JC-STAR ★1 (PCS, EMS and so on) be used for grid connection. For extra-high and high voltage it starts in April 2027, and for low voltage under 50 kW in October 2027; the reference point is the connection contract application, not the connection date. When does JC-STAR ★1 become mandatory →

PCS / EMS

The device that converts between the battery’s DC and the grid’s AC (PCS), and the management system that controls charging and discharging (EMS). They are devices covered by JC-STAR; the battery cells themselves do not communicate directly over the network and are outside its scope.

Bold Investment Promotion Tax Scheme (大胆な投資促進税制)

A tax scheme that allows immediate depreciation or a tax credit for capital investment confirmed by the Minister of Economy, Trade and Industry. Acceptance of applications for confirmation began on July 31, 2026. Immediate depreciation: applications are open →

Immediate depreciation (即時償却)

Depreciating the entire acquisition cost of equipment in the fiscal year that includes the day it was put into use in the business. It defers tax; it is different in nature from a tax credit, which is a pure reduction of tax. Immediate depreciation →

Storage station under the Electricity Business Act (蓄電所)

As defined in the ministerial ordinance on technical standards for electrical equipment, a facility that stores power transmitted in from outside the premises in an on-site power storage device and transmits it out at the same voltage and frequency. Regardless of output it is an electrical facility for business use, and it needs safety regulations and a chief electrical engineer. Low voltage is not the easy route →

Chief electrical engineer (電気主任技術者)

A qualified person who oversees the safety of the construction, maintenance and operation of electrical facilities for business use. A storage station must appoint one regardless of its output. Grid-scale BESS O&M →

Urbanization control area (市街化調整区域)

An area under the City Planning Act where both development and construction require permission. No municipality that publishes review criteria for permitting storage stations has yet been found, and projects in this area are unlikely to be permitted. Farmland additionally requires a separate farmland conversion permit.

Foreign Exchange and Foreign Trade Act, inward direct investment (外為法)

The regulation of notification and review of inward direct investment that applies when foreign capital acquires a storage station in Japan. The gates foreign capital must clear →

Disposal restriction on subsidized assets (補助金の処分制限)

Property acquired with a subsidy requires SII’s prior approval for sale, exchange, lease, disposal or pledging as collateral within the disposal restriction period. A discount keeps being applied to the exit price. BESS subsidies →

Buying, selling and project practice

Development rights (開発権)

A practical term with no legal definition, used for the connection study reply and the right to use the project site, among other things, taken together as one package. Transferring development rights →

Rights transfer (権利譲渡)

A way of buying in which the rights are acquired once the connection study reply and the land are settled. Construction can be contracted directly with an EPC chosen by the buyer, and it avoids the pattern of placing a large sum with the seller before anything is built.

Completed-asset sale (完成渡し)

A way of buying in which the plant is received already built. It is hands-off for the buyer, but the usual practice is to pay most of the price before completion, so the seller’s creditworthiness is tested. Four ways to buy →

Operating asset (稼働中案件)

A storage station that is energized and participating in the market. Because its revenue record can be seen, it costs more, and eligibility to participate in the market does not pass to the buyer automatically.

Name change (名義変更)

An application to the transmission and distribution utility to change the applicant name of the connection study from the seller to the buyer. The review period varies with the utility and the project, and it is usual to split payment between the time of application and the time of completion. The transfer procedure →

Anonymous teaser (匿名ティーザー)

A project overview that shows the prefecture, scale, expected connection timing, progress and form of acquisition, while withholding the lot number, seller and price. It can be viewed before an NDA.

DealRoom

Our space where, after an NDA, the due diligence materials such as the connection study reply, the registry and the evidence of the construction cost contribution can be viewed in one place.

Due diligence, DD (デューデリジェンス)

Work done before buying to check whether what the documents say crosses the lines that change the judgment. It covers nine areas, including the reply document, contracts, ownership and succession of rights, the land, the zoning and the equipment. Technical checks before buying →

EPC

A construction company that takes on design, procurement and construction. We do not take on construction, and we have no capital ties with any particular manufacturer or EPC. The full development process →

O&M

Operation and maintenance. Between the aggregator’s charging and discharging, the chief engineer’s statutory inspections and the manufacturer’s repairs, an area remains that no one covers. Grid-scale BESS O&M →

Expected loss, EAL (期待損失)

An indicator that measures disaster risk as “probability × amount of damage”. Rather than waiting for land with no risk of flooding at all, you decide in money up to what frequency you bring the damage to zero. Measuring disaster risk by expected loss →

SPC (special purpose company, 特別目的会社)

A company created to hold a project. When you buy the vehicle as a whole, you also take on what is inside the vehicle. Choosing the vehicle →

Form of acquisition (取得の形)

The classification used in our project list: three types, namely rights transfer (in development), completed-asset sale and operating asset.

Terms not listed here are in the beginner’s Q&A and Knowledge (all articles). For the projects themselves, see the list of projects for sale (Japanese); for counts by region, market data on projects for sale (Japanese).

Published October 29, 2026. Definitions follow the descriptions in our explainer articles and are corrected when the articles are updated.