2025-09-06

Optimizing Power Costs with BESS and Peak Shift: Latest Grants and AI Use Cases

Basic mechanisms for reducing energy costs

BESS is an integrated system that combines a storage battery and PCS (power control system), and it is a technology that achieves both economy and stability by adjusting the supply-demand balance of electricity.

BESS is an abbreviation for “Battery Energy Storage System,” and it is a power storage system that combines a large capacity storage battery and a power conversion device (PCS: Power Conditioning System). It optimizes the balance between electricity supply and demand by connecting to the power system, storing surplus electricity, and discharging it during peak demand periods.

The main components are composed of a storage battery body such as a lithium-ion battery, PCS that performs DC/AC conversion, an energy management system (EMS), a safety device, and a cooling system. By operating these in an integrated manner, high-speed response in milliseconds and stable operation over a long period of time are achieved.

There are two main mechanisms for reducing electricity costs. First, maximum power demand (demand) is suppressed by “peak cutting,” and basic charges are reduced. Second, “peak shift” reduces pay-as-you-go charges by storing cheap nighttime electricity and using it during the expensive daytime.

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Fee reduction mechanism through peak cut/peak shift

Peak cutting is a method for reducing maximum power demand (demand value) measured in 30-minute increments. In Japan's electricity rate system, the maximum demand value for the past 12 months is the basis for calculating basic charges, so it is possible to reduce basic charges by approximately 100,000 yen per year (5 kW x 1,890 yen x 0.85 x 12 months = 96,390 yen) by reducing 5 kW.

Peak Shift takes advantage of the price difference between hourly rates. In the example of TEPCO Energy Partners, there is a price difference of approximately 32% (7 yen 46 yen/kWh) between 23 yen 20 yen/kWh during peak hours and 15 yen 74 yen/kWh at night. If you shift 1,000 kWh/month, you can expect a reduction effect of 7,460 yen per month and approximately 90,000 yen per year.

In actual operation, BESS learns power usage patterns and automatically controls charging and discharging based on demand forecasts. This enables optimized operation 24 hours a day, 365 days a year without human intervention.

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Compatibility between Japan's electricity rate system and BESS

Japan's electricity charges use a two-part fee system of “basic fee+pay-as-you-go fee,” and the structure is highly compatible with BESS. In particular, for large consumers of high voltage/extra high voltage electricity, basic charges account for 30-40% of electricity costs, so the effect of reducing demand is greater.

In terms of time-zone fees (TOU: Time of Use), it is common to have a 3-hour system where the peak time period from 13-16 o'clock in the summer is the most expensive, and the nighttime period from 23:00 to 7:00 is the lowest. By utilizing this fee gap, the economy of BESS is maximized.

Furthermore, the FIP (Feed-in Premium) system, which began in April 2022, has made the combination of renewable energy and BESS more advantageous. Electricity can now be sold in conjunction with market prices, and profits can be maximized by discharging during times when prices are high.

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2024-2025 Japanese Market Trends and Implementation Results

The Japanese BESS market is rapidly expanding, and shipment results for fiscal 2023 recorded 125% year-on-year growth. Adoption is being accelerated by the expansion of government subsidies.

Market size expansion and growth forecast

According to statistics from the Japan Electric Manufacturers Association (JEMA), the shipment record for household storage battery systems in fiscal 2023 was 156,000 units, 1.369,000 kWh on a capacity basis, achieving significant growth of 125% compared to the previous year. The average capacity has also increased in size from 7.09 kWh in fiscal 2016 to 8.69 kWh in fiscal 2023.

According to Fuji Keizai's forecast, the global battery market is expected to expand 3.6 times from 3,4191 billion yen in 2023 to 8,741 billion yen in 2040. According to an analysis by Enegaeru, which specializes in the Japanese market, it is predicted that annual shipments will reach 413,000 units and the cumulative number of installed units will reach 3.01 million units (approximately 5.5% of the total number of households) in 2030.

The introduction of large-scale storage batteries for grids is also accelerating, and 27 projects were selected with a government subsidy of 34.6 billion yen in 2024. By region, Hokkaido (9 cases) and Kyushu (6 cases) account for the majority, and demand is remarkable in regions where the introduction of renewable energy is progressing.

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Technology competition with major manufacturers

Among domestic manufacturers, Panasonic is leading the market by achieving expandability of up to 37.8 kWh with the S+ series of savings cooperation systems. The company's characteristics are high efficiency of cooperation with solar power generation and reliability due to a 10-year warranty.

Overseas forces are also intensifying, and Tesla announced plans to double the number of domestic stores to 50 stores (currently 23 stores) by the end of 2026. China's BYD will also establish a 100-store system by 2025, and is launching a low price offensive with its own LFP (lithium iron phosphate) blade battery technology.

On the technical side, while CATL is ahead with high-energy density NCM (nickel cobalt manganese) batteries, the Japanese team has adopted a differentiation strategy that emphasizes safety and long life. In particular, Toshiba's SCiB technology has achieved over 20,000 charge/discharge cycles, and is appealing for total cost advantages in long-term operation.

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Optimizing and maximizing reduction effects with AI technology

Demand forecasting and charge/discharge control using AI makes it possible to make highly accurate predictions with an error of 5% or less, and the power cost reduction effect has been improved by up to 30%.

Improved accuracy and economic benefits of demand forecasting AI

With the latest AI technology, the accuracy of electricity demand forecasting has improved dramatically. Fujitsu's “AI Power Demand Forecast Solution” comprehensively analyzes past usage patterns, weather data, and calendar information, and achieves prediction accuracy with an error of 5% or less with industry-specific AI.

NEC's “supply-demand optimization platform” recognizes complex demand patterns using heterogeneous mixed learning technology and automatically generates charge/discharge schedules in 30-minute increments. In demonstration tests, an additional cost reduction effect of 15-20% was confirmed compared to conventional manual control.

What is particularly effective is linked control with the power spot market price. By acquiring JEPX market price data in real time, charging during times when prices are low and discharging during high hours, arbitrage profits are maximized.

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Integrated energy saving through EMS collaboration

By linking the energy management system (EMS) and BESS, it is possible to optimize the energy of the entire facility. According to an analysis by Hidakaya Co., Ltd., storage battery systems with AI achieve 20-30% higher energy savings compared to standalone batteries.

Integrated EMS co-controls load devices such as air conditioning, lighting, production equipment, etc., and storage batteries to achieve overall optimization. For example, during times when peak demand is predicted, peak power is effectively reduced by combining pre-cooling, which lowers the room temperature in advance, and battery discharge.

According to the Frost & Sullivan survey, the EMS market is predicted to grow from approximately 1.3 trillion yen in fiscal 2022 to approximately 2.7 trillion yen in fiscal 2035, and integrated solutions with BESS are the main drivers of market expansion.

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Investment effectiveness and ROI as seen from case studies

Actual implementing companies have achieved an annual reduction of 10-30% in electricity costs, and the payback period has been shortened to 5-15 years by utilizing subsidies.

Large-scale implementation cases in the manufacturing industry

In the case of the manufacturing industry supported by Eneris, electricity costs were reduced by approximately 10 million yen per year by introducing BESS on a scale of 500 kWh. The breakdown is that the basic fee reduction due to the peak cut is 6 million yen, and the pay-as-you-go fee reduction due to the peak shift is 4 million yen.

Universal Ecology's grid storage battery business has introduced a 2 MWh class system at a factory in the Kyushu region, and has secured multiple revenue sources by avoiding renewable energy output control and participating in the supply-demand adjustment market. The annual revenue is approximately 20 million yen, and the payback period is expected to be 8 years.

As an advantage unique to the manufacturing industry, stabilization of power quality has also been achieved through charge/discharge control linked to production plans. By preventing production line shutdowns due to instantaneous voltage drops, an opportunity loss avoidance effect of tens of millions of yen per year has also been reported.

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Use in data centers and commercial facilities

In data centers, peak cutting by BESS and AI control have achieved 25-30% reduction in air conditioning costs. According to Aspic's analysis, PUE (power usage efficiency) has improved from 1.8 to 1.4, and cost savings of hundreds of millions of yen per year have been confirmed.

At commercial facilities, 7-Eleven conducted demonstration tests using Nissan LEAF reused batteries at 10 stores in Kanagawa prefecture. By combining 40 kWh storage batteries and 28.8 kW solar panels at each store, we have achieved revolutionary results of reducing the amount of purchased electricity by about 60% compared to 10 years ago and reducing CO2 emissions by about 70%.

Large-scale commercial facilities are also increasingly generating additional revenue by participating in demand response (DR) using BESS. It is a system where compensation is obtained by supplying electricity to the grid when electricity supply and demand are tight, and it is an additional income of several million yen per year.

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BCP measures and economic effects at medical institutions

Medical institutions are balancing the BCP (Business Continuity Plan) function as a countermeasure against power outages and reducing electricity costs during normal times. In the case of implementation in a medium-sized hospital (200 bed scale), the 200 kWh BESS makes it possible to operate the electronic medical record system and pharmaceutical refrigerator for 72 hours even during a power outage.

During normal times, electricity costs have been reduced by approximately 3 million yen per year by utilizing nighttime electricity. Furthermore, by protecting medical devices from instantaneous voltage drops in grid power, it also contributes to reducing equipment failure rates and maintenance costs.

The introduction of BESS of about 10-20 kWh is progressing even in small-scale clinics, and due to the reduction effect of 30-500,000 yen per year compared to the initial investment of 2 to 4 million yen, it is possible to recover the investment in 8-10 years without subsidies.

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2024-2025 subsidy system and support measures

The government has recorded a record of 34.6 billion yen as a grid storage battery subsidy, and implementation support has been greatly expanded, including for home use.

Large-scale support for grid batteries

The 2024 grid battery subsidy was approximately 34.6 billion yen, the largest ever, and 27 projects were selected. The subsidy rate is within 1/2 of the target expenses, and equipment that can be used as adjustment power is eligible. What is noteworthy is that it is now possible to implement projects across fiscal years from 2024, and it is now possible to secure a maximum business period of 3 years.

The regional adoption situation is concentrated in regions where renewable energy output control is an issue, with Hokkaido having 9 cases and Kyushu 6 cases. In these regions, demand for BESS is increasing in terms of both effective use of surplus electricity and system stabilization.

According to an analysis by Growship Partners, the average scale of selected projects is in the 10-50 MWh class, and operators are mainly companies related to major electric power companies and renewable energy generation operators.

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Support system for household and industrial storage batteries

For household storage batteries, DR (demand response) subsidies are being implemented with a budget of 6.68 billion yen. The subsidy amount is based on initial effective capacity x 37,000 yen/kWh, and additional subsidies can be received by meeting various requirements. Specifically, +20,000 yen/kWh for compliance with the Storage Battery Industry Association SBA S 1101:2023 certification label, +50,000 yen/kWh for flame retardant JIS C 8715-2 compliance, etc.

The upper limit is 1/3 of the total cost of equipment and construction costs or 600,000 yen, whichever is lower. In the case of introducing a 10 kWh storage battery, a maximum subsidy of about 500,000 yen can be expected, including various additions to the basic subsidy of 370,000 yen.

Local governments' own subsidies are also substantial, and there are many systems that can be used in combination with national subsidies, such as a maximum of 1.2 million yen in Tokyo and a maximum of 400,000 yen in Kanagawa prefecture.

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Tax Incentives and Financial Assistance

Under the carbon-neutral investment promotion tax system, small and medium-sized enterprises will be subject to a tax credit of up to 14% or special depreciation of 50% for capital investments that have received plan certification by 2026/3/31. Target equipment includes stationary lithium-ion batteries that maintain 60% or more of the rated capacity even after 7,300 charging/discharging cycles.

As an application condition, it is necessary to increase carbon productivity (value added ÷ CO2 emissions from energy sources) by 10% or more for small and medium-sized enterprises and 15% or more for other companies. The combination of BESS and solar power generation makes it easier to meet this requirement.

As for the Japan Finance Corporation's environmental and energy countermeasure funds, the loan limit was raised to 72 million yen from 2024/4, and self-funding requirements were also abolished. As for interest rates, you can receive preferential treatment of up to 0.9% from the base interest rate, and it is possible to raise funds over a long period of up to 20 years.

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Next Generation Technology Outlook and Market Forecast

The economy of BESS is expected to improve dramatically due to the practical application of all-solid-state batteries in 2027 and the reduction in the cost of sodium-ion batteries.

A game change brought about by all-solid-state batteries

NEDO will begin the “evaluation and basic technology development of next-generation all-solid-state battery materials” business in 2023 with a budget of 1.8 billion yen, and 33 corporations including Toyota, Nissan, and Honda are participating. By replacing liquid electrolytes with solids, all-solid-state batteries reduce the risk of ignition to zero, and the charging time can be reduced from the current 30 minutes to 10 minutes or less.

Toyota is aiming for practical use in 2027-2028, and the energy density is expected to be more than double that of current lithium-ion batteries. The operating temperature range has also been greatly expanded from -40℃ to 150℃, making it possible to use it in cold regions and high temperature environments.

With the spread of all-solid-state batteries, the BESS installation area will be cut in half, and maintenance frequency will also be drastically reduced. The total cost is predicted to drop to 50-60% of the current level by 2030.

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Lowering costs with sodium-ion batteries

Sodium-ion batteries can drastically reduce material costs by using sodium, which can be supplied infinitely from seawater instead of lithium. According to Advanced Technology X's analysis, China CATL is the first in the world to begin mass production, and the cost is 60-70% of lithium-ion batteries.

In Japan, Nippon Electric Glass succeeded in developing all-solid-state sodium-ion batteries, and achieved high safety with oxide-based materials and stable operation at -20°C to 80°C. The energy density is around 70-80% of lithium-ion batteries, but the performance is sufficient for stationary applications.

It is predicted that the share of sodium-ion batteries will reach 30% of the stationary battery market by 2030, and there is a possibility that the initial investment cost of BESS will be reduced to about half of the current one.

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Full-scale development of the VPP market and profit opportunities

The virtual power plant (VPP) market is predicted to grow approximately tenfold from 7.5 billion yen in fiscal 2021 to 73 billion yen in fiscal 2030. BESS is positioned as the core technology for VPP, which bundles small-scale distributed power sources and functions as large-scale power plants.

According to NTT DATA Management Research Institute's analysis, additional revenue of 500,000 to 1 million yen per year can be expected even with 100 kWh BESS due to transactions in the supply-demand adjustment market. In particular, high unit price transactions with primary adjustment power (response time within 10 seconds) contribute to improved profitability.

According to the Ministry of the Environment's Reiwa 7 budget, large-scale budget allocations have been made to VPP related businesses, and it is expected that small-scale BESS market participation through aggregator operators will be promoted. The construction of large-scale VPP networks, including storage batteries for private homes, is progressing.

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Realizing a sustainable power system with BESS

More than just a cost reduction tool, BESS is evolving into a core infrastructure that supports the main power supply of renewable energy and the stabilization of power systems.

Effects of integration with renewable energy

According to EY Japan's analysis, demand for BESS is expected to expand 4 times the current level to 572 GW output and 1,848 GWh capacity by 2030. The main reason for this growth is the growing need for system stabilization as the introduction of highly volatile renewable energy expands.

With a combination of solar power generation and BESS, it is possible to increase self-consumption rate to 70-80% while suppressing backflow to the grid by storing surplus electricity during the daytime and discharging it from evening to night when demand is high. Under the FIP system, it is possible to achieve 20-30% higher profits compared to the FIT system by selling electricity during times when market prices are high.

Even in wind power generation, BESS is essential for smoothing output fluctuations. In particular, offshore wind power projects are being standardized to include BESS equivalent to 20-30% of the power generation capacity in order to avoid transmission line capacity restrictions.

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Contributing to achieving carbon neutrality

The spread of BESS is positioned as an important element technology for achieving carbon neutrality by 2050. According to the technical map analysis of the Institute of Economy, Trade and Industry (RIETI), energy storage technology is regarded as one of the important fields where Japan should maintain competitiveness.

At the corporate level, companies participating in RE100 and SBT (Science Based Targets) are accelerating the reduction of Scope 2 emissions by maximizing the use of renewable energy using BESS. In the manufacturing industry in particular, cases have begun to appear where 100% of real renewable energy is achieved even in factories that operate 24 hours a day.

At the regional level, BESS plays a central role in microgrids and smart city projects. Local governments are leading the introduction of “resilience-type BESS,” which balances continuous power supply in the event of a disaster and economic efficiency during normal times.

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Implementation considerations and future prospects

When considering implementing BESS, it is essential to first analyze your company's power usage patterns in detail. By collecting at least 1 year's worth of demand data every 30 minutes and understanding the peak occurrence time and frequency, it is possible to calculate the optimal battery capacity.

In investment decisions, it is important to evaluate not only the initial investment amount, but also the 15-20 year life cycle cost. It is necessary to comprehensively consider maintenance costs, performance deterioration, and the risk of future electricity price increases.

As a future outlook, it is predicted that BESS costs will drop to 50-60% of the current level in 2030, and optimal control technology using AI will also be commoditized. It is necessary to determine the balance between pioneer profit due to early implementation and waiting for technology maturity according to the circumstances of each company.

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