✅ Roughly speaking
- 🔋 System batteries, which began operation with government support, have a track record of receiving the majority of revenue from the supply and demand adjustment market. However, this does not represent a revenue structure common to all domestic projects.
- 📉 For some products in the supply-demand adjustment market, the upper price cap was reduced in two stages, in March and September 2026. While changing the upper price limit alone will not determine future revenue, it is believed that business plans based on conventional pricing need to be reviewed.
- 📊 When making investment decisions, it is important to consider not only the contracted price but also the actual amount and time of day that can be contracted, operating costs, and the possibility of trading in the wholesale electricity market.
- 📝 In your deal with aggregators, you want to see not only how revenue is distributed, but also who will take on the risk if market revenues fall below expectations.
Introduction
This time, we will explain how to rely on revenue in the supply-demand adjustment market for grid batteries and how operators and investors should estimate future revenues.
The other day Article: "Did the price of primary adjustment force really 『crash』" Now, we've looked at trading data immediately after the cap price reduction to see how to interpret short-term price changes.
This paper expands on this point, examining the revenue structure of grid batteries and then outlining what should be considered in business performance evaluations and contracts with aggregators.
In addition to storing electricity and discharging it at the required time, grid batteries are expected to play a role in regulating the gap between the supply and demand of electricity.
However, the value that equipment can provide is not the same as the actual revenue that businesses can earn from that value.
When considering investing in battery storage, many people are concerned about how much operating revenue they can expect to generate in the market.
To consider this point, it is necessary to review past operational performance and then reflect current market rules in the business plan.
How important supply-demand adjustment market revenues actually were
The supply and demand adjustment market is a market where general power transmission and distribution operators procure the "adjustment power" necessary for frequency control and balancing the supply and demand of electricity. Market explanation by the Power Supply and Demand Adjustment Power Exchange According to the information, storage batteries can also participate if they meet the requirements of each product.
The adjustment power traded here, simply put, is the ability to adjust the output when needed.
The nature of the revenue differs from trading in the wholesale electricity market, where electricity itself is bought and sold.
Agency for Natural Resources and Energy documents for March 2026 In fiscal year 2024, the majority of the total revenue from the target cases was generated by the supply-demand adjustment market.
However, this calculation covers cases that were introduced and started operating through past implementation support projects.
The document does not state that the same revenue ratio will be established for all grid batteries in the country.
Furthermore, even if there are contracts made in the capacity market, income that has not yet reached the target actual supply and demand period is not included in this calculation.
Therefore, what can be read from this document is: The target cases were heavily dependent on revenue from supply-demand adjustment markets That is.
When investors estimate the returns on new projects, they need to start with this track record and take into account the different start times, markets they can participate in, and the performance of the facilities they can participate in.
What the lower limit price means
The supply-demand adjustment market has multiple products depending on factors such as the speed of response.
What I want to focus on this time are primary adjustment force, secondary adjustment force①, and composite products.
The unit used here, ΔkW (delta kilowatts), does not represent the amount of electricity generated per se, but rather the adjustable width that allows the output to be moved up or down according to the commands of the general transmission and distribution operator.
Price cap table published by the Electricity Supply and Demand Adjustment Power Exchange According to the report, the upper limit price for these products was 19.51 yen/ΔkW/30 minutes until the actual supply and demand on March 13, 2026, but in line with the trading on the previous day, it will be 15 yen/ΔkW/30 minutes from the actual supply and demand on March 14, 2026, and further 10 yen/ΔkW/30 minutes from actual supply and demand on September 1, 2026 It has been lowered to.
In other words, this change is not a one-time reduction, but a second step.
This is not a price that applies uniformly to all products.
Furthermore, the term "upper price" does not necessarily mean that the price can always be determined.
It's not just the actual contract price that determines a business's revenue, but also how much is contracted and at what times.
Even if the upper price limit is lowered, it cannot be immediately concluded that the revenue from a particular case will decrease by the same percentage.
Conversely, it is considered prudent to extend the assumption of continuously trading at the conventional high price to the future.
Materials from the Power Stability and Supply Working Group, May 13, 2026 The main issues raised are the shortage of bids and the cost of procuring adjustment capacity.
After that, Working Group documents from July 14, 2026 The company announced that it will lower the upper limit prices for primary adjustment force, secondary adjustment force①, and composite products from 15 yen to 10 yen, effective from September 1, 2026.
When considering market prices, it is necessary to consider the relationship between the profitability of battery storage operators and the cost of ensuring coordination across the entire power system.
These documents also state that if the situation continues where competition is deemed not to be working sufficiently, the rate will be gradually reduced to 7.21 yen/ΔkW for 30 minutes, etc. However, It is not appropriate to write future changes in the business plan as already decided.
What to look for in a business performance evaluation other than "price"
What I consider important is that revenue forecasts are not presented based solely on a single price outlook.
First, we will verify that the equipment meets the requirements for participating in the supply-demand adjustment market and that the operators responsible for operation can continuously demonstrate their performance.
Next, for each target area and product, we will consider not only the contracted price, but also the contracted quantity and the time period during which it can be contracted.
Even under the same price cap, if more businesses accept bids, it may become impossible to determine the expected amount.
Furthermore, it is necessary to anticipate not only the construction costs of the equipment, but also the costs incurred throughout the business period, such as maintenance, operation, and addressing the decline in battery performance.
When it comes to loan applications, it's important not only to consider the average annual income, but also to ensure that the company doesn't run out of income when repayments are needed.
For example, if you only make a deal at a lower price than expected, you might try to calculate separately whether the amount you can make a deal for will decrease or if operating costs will increase.
If we can consider whether we can continue our business even if multiple adverse conditions occur simultaneously, the basis for our investment decisions will likely become clearer.
This is not a task to "exactly guess future prices."
This is the task of understanding which conditions will determine the continuation of the business when the future differs from the forecast.
Will revenues from wholesale electricity markets and other sources be a substitute
Batteries can also be profitable by charging during times when electricity prices are relatively low and discharging during times when they are high.
Trading electricity Japan Wholesale Power Exchange Transaction Overview The value of trading differs between the spot market, which is located in the market, and the supply-demand adjustment market, which trades adjustment power.
Therefore, when revenue in the supply-demand adjustment market changes, operations in the wholesale electricity market will also be considered.
However, the decrease in revenue in the supply-demand adjustment market cannot necessarily be directly covered by revenue in the wholesale electricity market.
Earlier Agency for Natural Resources and Energy documents for March 2026 He also points out that the use and revenue from so-called arbitrage, which takes into account the price difference between charging and discharging, for grid-use batteries introduced through the implementation support project is limited.
The reasons for this include the fact that in the supply-demand adjustment market, some products and areas are experiencing persistently high contract prices due to a shortage of bids, and that in the wholesale electricity market, the price fluctuation range is relatively small.
In the wholesale electricity market, it is necessary to take into account not only the price difference between charging and discharging, but also losses associated with charging and discharging, the usable time of equipment, and operational constraints.
Furthermore, even if there are revenue opportunities in multiple markets, the same battery capacity cannot be used in duplicate at the same time.
The explanation of "increasing revenue streams" is not enough; it is necessary to specifically consider when and how to operate in each market.
Risk sharing that you want to confirm in your aggregator contract
When battery owners leave market trading and charging/discharging decisions to external operators, their contracts with their counterparts, aggregators, significantly affect their profits.
Possible forms of contracts include methods for dividing market revenue by a certain percentage, guaranteeing owners a minimum income, and receiving compensation for operating rights.
The form in which the other party is granted the right to operate the system and receives compensation is sometimes called "tolling."
When comparing these, it is not sufficient to simply consider whether the fixed compensation is high or whether the profit distribution ratio is favorable.
If the market's contracted price and quantity fall below expectations, who will bear the impact.
What to do if the battery fails or fails to perform as expected.
If market rules change, can operational policies and compensation be reviewed.
I believe it is important to confirm these points in the contract.
Even with a minimum guarantee, it is impossible to fully assess the stability of income without verifying the creditworthiness of the other party who promises to pay it.
Even when considering loans from financial institutions, it is necessary to consider both the stability of the contractual income and whether the other party is actually able to pay that income.
Summary
The need for grid batteries in the power system and the expected revenue from individual cases need to be considered separately.
The published operational performance data shows that the company has a high reliance on revenue for supply-demand adjustment markets.
On the other hand, the upper price limits for the target products have been reduced in two stages, and it is considered that we should be cautious about using past conditions as they are in future revenue forecasts.
When we consider the case from now on, To estimate the price, quantitative amount, and cost fluctuations, and to confirm the feasibility of operation in wholesale electricity markets and the risk sharing under the aggregator contract is important.
I believe it's difficult to judge whether a project is good or bad based solely on revenue forecast figures.
I think that even looking at what market environment and contract terms those figures assume is the first step in evaluating battery storage as a long-term business.
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