“This is a big deal:” Akaysha signs Japanese battery storage deal with trading house

Akaysha Energy, the Australian battery storage developer backed by global funds giant BlackRock, says it has signed a “strategic alliance” with Japanese racing house Itochu Corp for the roll out of big batteries in the country.

In a deal announced this week, the two companies said they plan to install 10-20 big batteries across Japan and capitalise on billions of dollars of government funding for big batteries. 

Akaysha is best known for landing the contract to build the Waratah Super Battery in NSW, the biggest “shock absorber” battery in the world and a key part of the government’s strategy to replace the giant Eraring coal generator.

Itochu is a 160 year old commodity specialist that has been transforming into a private equity business, and is part owned by Warren Buffet’s Berkshire Hathaway. Akaysha is owned by asset manager Blackrock. 

The two investor giants have clashed in the past as Blackrock tried to push Buffet’s storied American company into taking ESG reporting practices more seriously, such as in 2021 when the former voted for two shareholder proposals that would require Berkshire Hathaway to disclose how it manages climate risk and diversity efforts. 

Japan desperately needs batteries

Itochu is expecting to capitalise on Japan government expectations of 150 trillion yen ($1.6 trillion) worth of public and private funding to transform the country’s energy sector, and particularly the transmission infrastructure.

Japan first introduced curtailment for wind and solar in 2018. The lack of transmission infrastructure means curtailment grew by six times by FY2022 when it reached about 600GWh, according to Japan energy market information service Shulman Advisory this year.

Batteries are seen to be a solution, particularly by the government which has changed laws to allow batteries to connect to the grid. It has also issued the first round of subsidies, worth $155 million, to pay for half of construction costs for batteries larger than 10 MW.

Regulatory changes to make energy trading more transparent are allowing batteries to play in the Japan energy market, such as by offering frequency control services.

Itochu provides scope for Akaysha

Itochu is planning to build up to 20 large-scale storage batteries with a capacity of 1 GWh, to help support a growing share of wind and solar in Japan by 2030. It’s forecasting this could become a 100 billion yen business. 

Currently Itochu has installed some 600 MWh of residential and industrial storage systems in Japan and internationally, but is still developing its utility-scale business. What it does have, as a commodity specialist, is a growing supply chain of battery materials, manufacturing plants, and sales capacity. 

In July, it revealed a new business called Senri Chikuden (Senri Power Storage) which will, alongside two partners, build a 11 MW /23 MWh grid-scale battery in Suita City, Osaka Prefecture, western Japan. Itochu will source the battery equipment from inside its own network, build the system and handle all maintenance. 

Akaysha delivers on experience

Blackrock bought energy startup Akaysha last year and the company quickly landed one of the biggest prizes in Australian energy storage and the world: the 850 MW / 1680 MWh Waratah Super BESS.

It plans to develop some 10 GWh of energy storage around the world, but also has in-house software that, using artificial intelligence algorithms, handles buying and selling of electricity in wholesale markets, allowing batteries to fine tune how they make money from energy arbitrage. 

“This is a big deal,” Akaysha CEO Nick Carter said in a LinkedIn post. “The scene is set for an exciting ride in terms of battery deployment as the Japanese market begins to deregulate and assist with large-scale renewables deployment and energy independence,” his company said in a separate post.

Akaysha has also pioneering new ways of making money from big batteries. 

In July, it revealed what it called a “first of its kind” revenue swap and risk hedging deal for the 150 MW / 300MWh Ulinda Park battery it is planning to build in Queensland, with climate risk transfer platform Bermuda-based Re2.

The deal involves a 10-year revenue swap arrangement that hedges the market risk.