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Home - Energy Storage - Japan awards 1.25 GW of battery storage in capacity market auction – SPE
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Japan awards 1.25 GW of battery storage in capacity market auction – SPE

solarenergyBy solarenergyMay 16, 2026No Comments3 Mins Read
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In the third long-term decarbonization auction, BESS bids dropped significantly due to the new rule on storage duration. However, allocated battery storage capacity remained relatively strong.

May 16, 2026
Matthew Lynas

By ESS news

Japan’s battery storage sector has secured 1.25 GW of allocated capacity across 19 projects in the country’s latest Long-Term Decarbonization Auction (LTDA). Lithium-ion and non-lithium-ion battery storage projects were both successful in the latest capacity market auction.

The Organization for Cross-regional Coordination of Transmission Operators (OCCTO) awarded a total of 7.3 GW (reduced) to 32 projects in the FY2025 LTDA round. Of that total, 4.26 GW was allocated to decarbonization projects and 3.04 GW to LNG thermal energy generation projects.

Lithium-ion battery storage accounted for 551 MW of allocated capacity, while non-lithium battery storage technologies secured 699 MW at auction. Combined, battery storage accounted for almost 30% of all allocated capacity in the decarbonization category, despite a large decline in bidding volumes.

Bidding capacity for battery storage has more than halved year-on-year, from almost 7 GW in FY 2024 to 2.73 GW in FY 2025. The decline followed significant rule changes introduced during the last round of auctions.

Unlike previous LTDAs, storage projects with a duration of less than six hours were no longer eligible for participation in FY 2025. The previous categorization system based on storage duration was also abolished. Instead, the projects were divided into two broad categories. One included pumped hydro energy storage (PHES) regeneration projects and lithium-ion battery systems, and the other involved new PHES developments, non-lithium-ion battery technologies and long-term energy storage (LDES).

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The latest auction also introduced stricter requirements around battery cell procurement and cybersecurity compliance.

Despite the changes, the 1.25 GW secured by battery storage in FY 2025 represented a modest decline from the 1.37 GW awarded in the FY 2024 auction.

Two pumped hydro storage projects also won contracts at the auction: the repowering of Tokyo Electric Power Renewable Power’s Shiobara Power Station Unit 2 and the construction of a new unit at Hokkaido Electric Power’s Kyogoku Power Station.

In addition to storage, nuclear energy was responsible for the largest share of allocated decarbonization capacity, amounting to approximately 46% of the category total. The auction also marked the first successful awards for pure hydrogen-fired thermal generation projects, with contracts awarded to projects developed by CEF H2 and Hoku Energy. Other successful projects in the decarbonization category included the retrofit of ammonia co-firing for existing thermal power stations and one biomass generation project.

Four winning projects were featured in the LNG-fired thermal installations category.

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