Japan poised for a battery boom

Taiwanese analyst InfoLink Consulting has said Japan could unlock a battery boom if it resolve a regulatory ambiguity, overcome urban density issues, and harmonize a national grid which operates on different frequencies in two halves of the nation.

The $593 million worth of commercial energy storage systems recorded in Japan in 2023 could balloon to $4.15 billion by 2030, InfoLink reckons, with “industrial adoption … expected to scale faster,” according to the data company.

Businesses aiming to hedge electricity price volatility and meet environmental, social, and corporate governance targets are turning to batteries, according to InfoLink, and can benefit from Japan’s Sustainable Innovation Initiative which awards grants to commercial entities installing high-efficiency batteries.

The government’s introduction, this year, of a solar panel mandate for new homes is helping fire battery demand, with the $279 million worth of residential lithium-ion systems recorded by InfoLink in Japan in 2023 expected to expand to $2.15 billion by 2030, for a compound annual growth rate of 33.9%.

Home battery demand will also be helped by plans to establish a national virtual power plant (VPP) program which will enable battery owners to sell excess electricity to the grid. The VPP scheme is slated to begin in fiscal 2026.

With Japan’s overall energy storage market expected to increase in value from $794 million last year to $2.5 billion by 2035, according to InfoLink, government policy is playing a key role.

Tokyo has issued GX (Green Transformation) Transition Bonds to help fund battery R&D and Japanese battery manufacturing investment, with the bonds to be settled out of future carbon pricing revenue. Japan’s GX Strategy aims to make the nation carbon neutral by 2050.

Domestic giants Toyota, Nissan, and Panasonic have committed more than JPY 1 trillion ($6.9 billion) between them to raising Japan’s annual battery manufacturing capacity 50% to 120 GWh by 2030, with the government providing funds to back those private-sector commitments.

Household battery systems have been helped by an amendment to the regulation relating to the feed-in-premium (FiP) paid for solar electricity. The FiP bonus payment, on top of wholesale electricity prices, can now be secured by co-located solar-plus-storage systems.

InfoLink pointed out, however, battery developers are still citing a lack of certainty over licensing, grid connection, and fire safety requirements, and would be helped by comprehensive battery regulation.

With urban density complicating the viability of commercial and industrial energy storage systems, Japan is further hampered by the fact its eastern grid operates on a 50 Hz frequency while the western network requires 60 Hz. With frequency conversion infrastructure costly and grid constrained, the nation’s ability to shift electricity nationwide is severely handicapped.

Nevertheless, InfoLink said Hitachi Energy and Japan Petroleum Exploration Co., Ltd are developing grid-scale batteries in the country and ESS News has reported initial grid-scale battery deployments by UK-based investor Gore Street Capital and Ireland’s Grid Beyond, alongside local partners Itochu Corp. and Port Inc., respectively.