Japan’s FIT scheme was introduced in FY2012 and offered tariffs of ¥32/kWh or higher to solar projects certified through FY2014. Many of these early-certified assets, however, did not begin commercial operation until years later, leaving more than 9.5GWAC under contracts valid until 2040 or later. Approximately 70% of this capacity is concentrated in the Tohoku, Tokyo, and Kyushu TSO areas.

In recent years, Tokyo had among the lowest battery arbitrage potential. Since March 2026, however, battery spreads in the region have risen sharply, driven in part by higher evening price spikes. Possible drivers include the expiration of a bilateral contract between TEPCO Energy Partner and JERA, as well as the ongoing geopolitical situation in the Middle East. Shikoku, by contrast, saw its ranking decline as battery spreads in the area narrowed.

Battery storage and VPP assets clear at significantly higher prices in the balancing market than other technologies, with BESS recording monthly average prices between ¥8.83/kW and ¥14.69/kW per 30 minutes for the composite product in 2025. The two technologies also contract at multiples of surplus capacity utilization agreement prices, which averaged about ¥1/kW to ¥2.3/kW per 30 minutes, according to METI. While recent reforms appear to have pushed prices down slightly, bids at or near the cap continue to clear regularly, prompting the ministry to continue monitoring the market and consider whether further intervention may be needed.