Eku Energy has begun its first battery storage project in Japan, while Gore Street Capital has raised funding for the country’s first energy storage-dedicated fund.
Eku: 120MWh project with 20-year tolling agreement
A groundbreaking ceremony was held last week (24 September) at the site of Eku Energy’s 30MW/120MWh Hirohara battery energy storage system (BESS) project in Miyazaki, a prefecture on the southern Japanese island of Kyushu.
Enjoy 12 months of exclusive analysis
- Regular insight and analysis of the industry’s biggest developments
- In-depth interviews with the industry’s leading figures
- Annual digital subscription to the PV Tech Power journal
- Discounts on Solar Media’s portfolio of events, in-person and virtual
Or continue reading this article for free
Developer Eku Energy announced the financial close of the project in early August, with project financing arranged by Japanese bank MUFG. Energy-Storage.news noted at the time that while it marks MUFG’s first grid-scale BESS project financing transaction in its home country, the bank has previously participated in financing and investing in BESS projects in other territories, including the US.
The project also marked what Eku claimed to be a milestone for the Japanese energy storage market when the developer announced a 20-year off-take deal with utility company Tokyo Gas for the output of the Hirohara BESS, in April.
The developer was launched by Macquarie’s Green Investment Group (GIG) in November 2022. It is jointly owned by Macquarie and institutional investor British Columbia Investment Management Corporation (BCI) from Canada.
The company’s first project to go online was the 150MW/150MWh Hazelwood BESS in Victoria, Australia, which was developed in partnership with Engie with BESS equipment integrated and supplied by Fluence.
Eku’s other projects in Australia include a 200MW/400MWh co-investment with Shell Energy, also in Victoria—for which Shell has signed a tolling agreement with the developer—and a 500MWh project in the Australian Capital Territory (ACT).
The company also has projects in other regions, including the UK, where it has just brought its first 40MW system online in Maldon, Essex, and Italy.
Eku Energy APAC technical lead Nick Morley said in a panel discussion on the Japanese market at this year’s Energy Storage Summit Asia that the tolling deal with Tokyo Gas is the first-of-a-kind in Japan. Morley and other panellists said the deal was evidence that the business case for battery storage in the country can be varied (Premium access), with other business models including energy trading available.
This year, much of the attention focused on Japan has been based around the new Long Term Decarbonisation Auction (LTDA), a low-carbon capacity payment mechanism. Launched by the government, the first round of the LTDA earlier this year awarded around 1.1GW of 20-year contracts to bids from BESS developers and 577MW to pumped hydro energy storage (PHES) capacity. A second round is expected in Q4.
As the audience at the Asia summit heard, LTDA is not the only game in town. However, panellist Ross Bennett of bank NORD L/B said that while he expected merchant business cases to develop in Japan, at present the market is relatively conservative and typically centred around long-term contracted opportunities.
Gore Street: Investor eyes merchant upside as fundraising completes
Yesterday, London Stock Exchange-listed battery storage investor-developer Gore Street Capital announced the completion of a fundraising round for Japan’s first dedicated energy storage fund.
Gore Street, which invests in battery assets in the UK, Europe, and North America through its Gore Street Energy Storage Fund, was appointed by the Tokyo Metropolitan Government in late 2023, along with Japanese industrial conglomerate Itochu, to manage the Tokyo Energy Storage Investment Limited Partnership fund.
Itochu and Gore Street established a joint venture (JV) for the fund in February, while Gore Street established a local subsidiary, Gore Street Japan Limited to support its general investment activities.
The fund will be directed to invest in BESS projects in the Kanto plain, the large region of urban centres including and surrounding Tokyo.
Financial terms of the fundraising were not disclosed. Investors were revealed however, with Itochu and the Tokyo Metropolitan Government joined by others, including the Bank of Yokohama, Honda Motor Co, Mitsubishi UFJ Trust and Banking Corporation, and Tokyo Land Corporation. Nomura Securities acted as financial advisor to the transaction.
In its announcement, Gore Street also highlighted that while the LTDA is the low-risk model underpinning the business case for storage in Japan today, the investor sees potential in the emerging merchant business model.
Eku too highlighted the Japanese market’s potential, quoting figures from BloombergNEF (BNEF) that forecast the country’s energy storage deployments to see a compound annual growth rate of about 117.5% over the next six years.
BNEF predicted in its 1H 2024 Energy Storage Market Outlook report that from an installed base of 4GW/10GWh at the end of 2022, Japan will go to about 10GW/27GWh of cumulative deployments at the end of 2030.
