CATL to enter Japan’s residential storage market

Previously known for its automotive activity, CATL is turning to another promising sector to generate demand for its battery cells. With the first few hundred thousand Japanese solar households seeing their 10-year FIT contracts expire, demand for small scale storage is on the rise

Japanese renewable energy company Next Energy & Resources says it has entered a business partnership with Chinese battery manufacturer Contemporary Amperex Technology (CATL).

The move breaks new ground for the Chinese company, whose battery cells have previously been largely used in the automotive industry. The manufacturer will supply its Japanese partner, which will assemble the cells into residential and commercial batteries for the Japanese market.

Next Energy said the batteries will initially be sold via leading utilities under a third-party ownership model popular in Japan, although both partners stated there are plans to sell direct to households.

A report from financial news provider Nikkei Asian Review claimed Next Energy and CATL will aim to slash the price of a 10 kWh residential battery from its current $20-25,000 to less than ¥1 million ($9,200). The Nikkei report quoted Next Energy president Atsushi Ito as saying: “We want to cut prices to about a quarter of current levels in three to five years.”

Fertile grounds

If the business partners can hit that target, it would be a timely move in a fertile market for small scale storage products. Around half a million households began installing solar systems in 2009 to receive a ten-year feed-in tariff set at ¥48/kWh ($0.44). With the first of those FIT payment agreements expiring, demand is rising for residential energy storage solutions.

Although Japan’s leading utility has pledged to keep paying for excess solar power generated by household systems, the ¥10/kWh on offer is well below the average electricity price of ¥23.35/kWh recorded by the Japanese Agency for Natural Resources and Energy between 2011 and 2016.

The nation’s Ministry of Economy, Trade, and Industry set a new FIT rate for commercial and industrial solar generators on March 22. Since April 1, the FIT has been cut for the seventh consecutive year, this time by 22% to ¥14/kWh, for installations with a generation capacity of 10-500 kW. The new rate is one-third of the level offered when the program started in 2012. FIT payments for Japan’s residential PV sector – systems smaller than 10 kW – will be left unchanged at ¥24-26/kWh, depending on the region where systems are operating.

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