"Battery Storage Subsidies in Japan"

Battery Storage Subsidies in Japan

Introduction

In the Sixth Strategic Energy Plan, published by the Japanese Government in October 2021, targets are set to (a) achieve carbon neutrality by 2050; (b) increase the share of renewables as part of Japan’s total electricity generation to 36-38% by 2030 (including 19-21% from solar and wind) compared to an 18% share in 2019; and (c) reduce greenhouse gas emissions by 46% in 2030.

Solar and wind power generation are heavily dependent on weather conditions and other factors.  Therefore, in order to stabilise the fluctuating supply of electricity from such sources, the Government recognises that it is essential for Japan to develop large-scale battery energy storage systems (BESS), which allows the storage of energy for utilisation at appropriate times.

In the last month, details of at least two subsidy schemes which relate to battery storage have been announced by the Government.  This includes the 2023 BESS subsidy scheme (which seeks to increase subsidy support for BESS installation projects following on from a similar scheme in 2022), together with a subsidy scheme with a more specific focus on large scale battery production and supply.

The subsidy schemes are open for applications from companies and special purpose companies (SPCs) registered in Japan.  As this includes Japanese subsidiaries of foreign registered companies, it will be of interest to foreign investors in Japan.  We have therefore prepared this newsletter to set out details of these subsidy schemes, together with a brief analysis of the 2022 BESS subsidy scheme which might be helpful for prospective applicants.  In addition, details of a third battery subsidy scheme, which is currently Tokyo-specific, is considered.

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