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Marubeni putting 100MWh BESS onto the grid in Japan’s storage hotspot Hokkaido

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Major Japanese conglomerate Marubeni Corporation will build and own a large-scale battery energy storage system (BESS) on the country’s northern island of Hokkaido.   

The group, involved in energy storage, the renewable and conventional energy industries internationally, as well as a plethora of other areas from industrial machinery to agriculture and real estate, made the announcement on Monday (18 March).  

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The project will be a 4-hour duration asset with 25MW power output to 103.7MWh of energy storage capacity, delivered through a wholly owned subsidiary of the corporation in the Hokkaido city of Kitahiroshima.

Marubeni’s new subsidiary, Kitahiroshima Battery Storage, will put the energy stored in the BESS to use in a number of different applications.

They include the new capacity market, grid-balancing ancillary services opportunities and wholesale power trading, with the Kitahiroshima project among those to avail of government subsidies.

The government scheme is intended to promote the use of distributed energy resources that can enable the uptake of renewable energy on Japan’s network of partially interconnected electric grids while increasing grid stability.

Hokkaido, which is in the far north of Japan, is an island with limited interconnection to Honshu, the country’s ‘main’ island housing major urban centres such as Tokyo and Osaka. Along with the main southern island of Kyushu at the other end of Honshu, Hokkaido is fast becoming the place to be for BESS in Japan.

Their island grids, which have seen more rapid renewable energy uptake than most other parts of the country, make them the areas with the best business case for batteries right now, according to Japan-based independent expert Shunsuke Amanai.

They will also become very competitive markets Amanai said in an interview with Energy-Storage.news, “because everyone is throwing money at Hokkaido and Kyushu, there are lots of connection requests being processed right now”.

Several large-scale BESS units will start commercial operations soon on the northern island, including projects from other major domestically headquartered corporations such as petroleum company Eneos.

Marubeni said its project in Hokkaido is scheduled to begin commercial operations in the 2025 fiscal year.

Mature markets could signpost future for Japan’s grid batteries

The business case for batteries today in Japan is nascent, but Amanai said he is thinking about what the case might be in a couple of years from now, taking cues from more mature markets such as the US, UK and Australia.

Amanai said that an event that occurred last week in the UK could be taken as a great example of the benefits that battery storage could also provide to Japan.

The Viking Link interconnector between the UK and Norway, which only went into action around the beginning of this year, experienced a trip event. Battery storage stepped in and was among the technical solutions to prevent deviation in grid frequency, as seen in this LinkedIn post by Charlotte Johnson, global head of markets at Octopus Energy-owned optimiser and trader Kraken.

“That was last week, and that has great implications in Japan as well,” Amanai told Energy-Storage.news.

“Because it shows that wherever inertia is weak, there is a big chance that batteries can make lots of money [from such an event]. So we are now checking where the inertia could be weak, like where an old, ‘tired’ power plant is still running. We are trying to identify such areas, and maybe there could be big opportunities there.”

Such events that cause volatility are an ‘event risk’ for some people, but for others, like BESS, they could be an ‘event opportunity,’ according to the expert. The Viking Link incident just highlighted that opportunity in a very clear way.

Particularly with most of Japan’s nuclear fleet taken offline since the aftermath of the 2011 Great East Japan Earthquake and the resulting accident at the Fukushima Daichi nuclear plant, leaving the country reliant on a mix of thermal generation along with a growing share of renewables, Japan’s need for grid-balancing flexibility services could become acute.

Also of interest from the UK market is the electricity system operator National Grid ESO’s ongoing launch of an automated dispatch platform for the Balancing Mechanism which manages the supply and demand of power in real time.

“That sort of streamlined process… with the push of a button you can broadcast the communication to every battery on the platform. In Japan, we will eventually need that sort of platform.

For now, the system hasn’t been tested and the very fast frequency response product is yet to be traded. FCR and 5-second response, as well as secondary reserve, and secondary 2, will start trading from April but the dispatch system hasn’t been tested yet.

National Grid ESO’s rollout of its Open Balancing Platform hasn’t all been plain sailing, with a relaunch necessitated last year. However, according to recent numbers from market intelligence group Modo Energy, in around two months, it increased the dispatch volume of energy from battery storage on the UK’s GB grid by 47%.

Wholesale market: ‘Not yet fully open’

The first grid-scale battery storage units went into the JEPX energy trading market last year, two 2MW/8MWh units by developer Pacifico Energy.

JEPX isn’t yet “fully open” to BESS, according to Shunsuke Amanai and much of the money that can be made from battery storage is expected to come from ancillary services, and then the capacity market, with just a small wedge of the typical BESS revenue stack made up of wholesale market income.

The spreads in JEPX aren’t that lucrative today, as the market has Daily Price Limit caps imposed on the range that can be captured by traders. That has been useful in some ways, preventing negative pricing events, for example, of the type seen with increasing regularity in Europe.

This, however, will likely change over the coming years, and the exchange will become more exposed to market forces, and Amanai has heard the cap’s value could at least triple.

“There are still areas where Japan has a lot to catch up,” Amanai said, such as the implementation of automated trading platforms.

“In Japan, I believe that almost no one is doing automated optimising,” Amanai said.

In a very recent meeting with a large energy trading entity, he said he was “amazed” to see the trader still using Excel spreadsheets “like 20 years ago”.

Nonetheless, the need for storage will only grow in the coming months and years, likely driving the industry forwards.

“Right now, Hokkaido and Kyushu are very visible and obvious places to have battery storage. But as I said, maybe we need to look closer where inertia and grid are weak, and so on.

So it will be a case of figuring out, as we have seen in other markets like the US, where storage is most needed and where it may not be. For example, in the service area of utility and grid operator Tokyo Electric Power Co (TEPCO), flexibility is enough, because Tepco has been very keen to have good flexibility resources that include demand response. In Tokyo, probably not much flexibility is required.

Last year the Tokyo Metropolitan government launched a subsidy scheme of its own for BESS in the Tokyo area, but not many projects are expected to arise based on that limited business case, Amanai said.

Energy-Storage.news’ publisher Solar Media will host the 2nd Energy Storage Summit Asia, 9-10 July 2024 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

24 September 2024
Singapore, Asia
Returning after a short hiatus, the re-launched 8th Annual Solar Finance and Investment Asia Summit brings together the most influential leaders representing funds, banks, developers, utilities, government and industry across the Asia-Pacific region on a programme that is solutions-focused from top to tail.

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