2026.06.07
【Article】Outlook for the Battery Storage Business and Solar Power Generation Business in 2026
2026.05.30 ナレッジ
(Click here for the 【Japanese version】)
In this blog, we will cover a review of 2025 and an outlook for 2026 with respect to the battery storage business and the solar power generation business.
Battery Storage Business for Grid Use in 2025
2025 was a year in which the number of business opportunities for grid-scale battery storage increased sharply. In light of that increase, we will discuss below the important 2025 developments relating to grid-scale battery storage.
1. Rapid Increase in Connection Applications and Insufficiency of Grid Reinforcement
According to Agency for Natural Resources and Energy materials regarding the status of acceptance of grid-scale battery storage, as of June 2025, connection studies reached approximately 143 million kW, and contract applications reached approximately 18 million kW, representing a significant increase within a short period compared to June 2024.
This rapid increase in contract applications is likely the result of a combination of factors, including support measures such as subsidies, revenue opportunity expectations in various markets (wholesale market, capacity market, and balancing market), and policy incentives including long-term decarbonization power source auctions.
At the same time, locally, connection demand has exceeded operational capacity, and relying only on the conventional growth framework of sequential connections is making it difficult to harmonize decarbonization requirements with stable grid operations. Because increasing grid capacity requires time for design, land acquisition, construction and coordination, it has not been easy to resolve grid shortages in the short term.
2. Additional Early Connection Measures (Promotion of Grid Connection through Limited Time Period Charging Restrictions)
In light of such circumstances, the Additional Early Connection Measures were introduced in April 2025. These measures provide a framework in which general transmission and distribution operators, based on grid characteristics and facility capacity, predefine time periods for charging restrictions to avoid congestion, and, on the premise that battery storage operators comply with such restrictions, permit connection without increasing grid capacity. In contrast to the conventional concept of increasing operational capacity through equipment reinforcement, these measures are characterized by circumventing the need for immediate grid capacity increases by accepting operational time constraints.
However, when utilizing the Additional Early Connection Measures, while operators may be able to shorten the time to connection, it is necessary to note that operational flexibility and revenue opportunities may be constrained by the system.
In addition, as an implementation method, because it requires time to create a system that distributes daily control instructions online, for the time being, the system operates on the premise that operators possess systematic safety enabling reliable suspension of charging even in an offline environment. While this is consistent with the purpose of accelerating grid capacity development, it should be noted that this approach increases cost burdens and technical difficulty in proceeding with projects.
3. Related 2025 Developments (Clarification and Strengthening of Licensing Regulations, Implementation of Measures to Increase Connection Rule Effectiveness, and Market Design Progress)
In addition, in 2025, clarification of licensing regulations, implementation of measures to increase the effectiveness of grid connection rules (including measures against speculative reservation), and review of market design also progressed. In other words, the need for horizontal risk evaluation across grid connection, licensing, safety regulation, environmental regulation and markets has become even more apparent.
First, on April 8, 2025, the Ministry of Land, Infrastructure, Transport and Tourism published technical advice regarding the treatment of grid-scale battery storage under the development permission system.
Where a battery storage facility is evaluated as a structure for storing hazardous materials and constitutes a Type I specified structure, development activities for installing such battery storage facility, in principle, require permission pursuant to Article 29 of the City Planning Act. In addition, development activities in urbanization control areas are subject to more stringent review. At the same time, there is also room for battery storage facilities to be classified as facilities serving a public interest that may fall under categories not requiring permission, and a practical point is that evaluation may vary depending on the business scheme, such as whether it is organized as a power generation business and whether retail or specified wholesale business (aggregation) is involved.
From a technical perspective, municipalities are encouraged to operate the development permission system in a manner tailored to local conditions, including through the establishment of review standards, and clarification of procedures for handling such facilities is progressing among municipalities. Accordingly, from the early stage of a project, it is important, from both schedule and cost perspectives, to have prior consultations with municipalities in parallel with the organization of land use and safety aspects of the proposed facility.
In addition, to realize rapid grid connection of grid-scale battery storage while maintaining fairness and efficiency in the grid access process, the following measures have been recommended or further developed at the stage of system design.
First, in connection with the acceptance and examination of connection study applications, mechanisms to prevent obstacles caused by applications with low project feasibility have been proposed and are being made more concrete. For example, from January 2026, at the time of a connection study application, applicants are required to submit documents setting forth the confirmation results of the battery storage installation site registration status, the name of the owner, and the status of follow-up. Through this requirement, projects with low feasibility, such as projects on land where implementation is effectively considered impossible, are expected to be excluded or reduced.
A proposal has also developed into a framework for setting an upper limit on the number of connection studies per business operator. The aim is to prevent operators that submit a large number of applications for the purpose of securing locations from becoming obstacles to examination by general transmission and distribution operators.
In the contract application process, a proposal is also being considered to require submission of documents evidencing the right to use the battery storage installation site, such as registry transcripts of land and copies of lease agreements, in principle within two months from connection approval, with the connection reservation being cancelled where such document submission is not made.
These strengthening measures aim to expedite acceptance processing and to prioritize connection to the grid of projects with high feasibility, and the relevant operations are expected to commence during 2026. In practical terms, they also mean that the legal and practical value of a merely submitted application may differ significantly from that of an application that has actually been accepted for review.
Finally, market reforms have also been implemented, centered on the balancing market, and a new system has taken commenced on March 13, 2026. This point will be described in detail below as a development in 2026.
Next Page Outlook for 2026 (Grid Connection and Revenue Assumptions for Grid-Scale Battery Storage; Regulation of Solar Power)
