Japan’s Ministry of Economy, Trade, and Industry (METI) and the Organization for Cross-regional Coordination of Transmission Operators (OCCTO)’s third round of the Long-Term Decarbonization Power Source Auction (the LTDA, or Round 3) recently concluded, with the results published by OCCTO on May 13, 2026. The Round 3 results come at a time of continued evolution for Japan’s power market and battery energy storage systems’ (BESS) role therein. Since the second round LTDA auction process commenced in late 2024 and results were published in April 2025, several material developments in the LTDA scheme and greater Japan BESS market have occurred. Material changes to the Round 3 auction guidelines were implemented in late 2025, but in spite of such changes Round 3 has produced storage category awards above the original procurement caps. Outside the LTDA scheme, METI has put forward consequential amendments to the balancing market’s price cap regime, reflecting policy changes in the merchant energy market affecting non-LTDA BESS projects. Further, co-location of BESS alongside renewable energy assets (and, increasingly, alongside power-consuming assets such as data centers) is also emerging in Japan as a new commercial opportunity for developers.
BESS and the Japan Power Market The Current State of Play at LTDA Auction Round 3
