Auctions

Japan: First capacity market battery commissioned, finance secured for 270 MWh Kikugawa BESS

Private and public cash supports more energy storage deployment in Japan, as developers take different approaches to project financing. More large-scale grid-connected projects expected in the wake of oversubscribed Japanese capacity market auction.

By

Blathnaid O’Dea

Apr 01, 2026

Japan’s first BESS project with a long-term capacity market contract has been commissioned, and the moment was marked by a special ceremony held on Mar. 24, 2026 celebrating a landmark moment for the local energy market.

Hexa Energy Services secured a capacity contract for its 23.97 MW/ 130.39 MWh Tagawa BESS in Japan’s 2023 Long-Term Decarbonization Power Auction. Commissioned in November 2025, the Tagawa BESS is the first high-voltage grid-connected battery from the auction to enter operation. It is also Hexa’s first grid scale project: the company has 640 MWh of energy storage capacity in development across four projects in Hokkaido, Japan.

More capacity market support BESS projects in Japan should be commissioned soon. The results of the government’s second Long-Term Decarbonization Power Auction were announced in May 2025 with BESS the most oversubscribed category. The state awarded 1.4 GW of BESS capacity in total.

Private finance

Meanwhile in Kikugawa City, in Japan’s Shizuoka Prefecture, independent power producer (IPP) Renova Inc. has secured JPY 6 billion ($39 million) loan agreement for a 90 MW/270 MWh Kikugawa Nishimura Energy Storage Facility. The IPP entered the finance agreement through its affiliate R1 Energy Storage Facility G.K.

Renova said the financing was evaluated and approved by SBI Shinsei Bank. The Kikugawa BESS is expected to begin operations in 2028, and the developer said it will be the largest battery project commissioned to date relying solely on private funding.

Kikugawa Nishimura Energy Storage Facility will be built without subsidies or feed-in tariff (FIT) support. The project is expected to contribute to grid stability and flexibility, securing revenues through a diverse set of markets.

The investment brings Renova’s total energy storage portfolio to just over 350 MW in rated power terms. The developer previously secured project financing for the 15 MW/48 MWh Hemeji Energy Storage Facility, the first market-based BESS project in Japan in 2023.

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Blathnaid O’Dea
Blathnaid is Features Editor with pv magazine Global. Prior to joining the team in 2024, she specialized in writing feature-length articles about STEM careers. She also covered news, including some of Ireland's renewable energy announcements over the past few years.
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