Why are Japanese companies investing in battery energy storage systems?

Sign up here. That is creating surging interest in battery energy storage systems (BESS) to smooth mismatches in supply and demand. Since December 2023, companies have announced investments of at least $2.6 billion in Japanese battery storage projects, according to calculations by Reuters.

Will battery storage projects connect to the transmission grid?

Companies planning battery storage projects requested to connect to the transmission grid 113 GW of capacity in the fiscal year ending in March, according to data from the Ministry of Energy, Trade and Industry (METI).

Why are Japan and Kyushu so attractive for battery projects?

"Tohoku and Kyushu regions have a lot of renewables, which makes these regions very attractive for battery projects, and that's why there is a lot of contracted and considered projects there already," said Uranulzii Batbayar, a Tokyo-based analyst with Rystad Energy.

Could decarbonised capacity auctions threaten battery storage?

Still, planned changes to the government's long-term decarbonised capacity auctions (LTDA), which guarantee project revenue for up to 20 years once new power generation facilities come online, could threaten the attractiveness of battery storage.

Why is a longer-operating battery needed?

METI documents from May said the change is needed so longer-operating batteries can respond to the additions of more intermittent renewable energy and reduce curtailments, which will smooth out the flow of power to the grid and help lower prices for end-users.

How big is Japan's battery storage capacity?

Rystad forecasts Japan's battery storage capacity could reach about 4 GW based on projects under construction, planned and awarded, which would require $6 billion in investment.