Gore Street Capital and ITOCHU Corporation have been selected by the Tokyo Metropolitan Government (TMG) to launch Japan's first fund dedicated to grid-scale energy storage systems. The two firms have been jointly selected as the managers of TMG's energy creation and energy storage promotion fund following a competitive process held in April 2023. The pair will launch a joint venture to manage the public-private partnership fund, to which TMG will contribute JPY 2 billion (£10.6 million) in funds by the end of fiscal year 2023. Additional funding will be raised from the private sector, including from ITOCHU.

The fund will be targeted at projects in the Kanto region of Japan. ITOCHU intends for the energy storage assets to support its efforts to expand renewable electricity usage to 50% by 2030. ITOCHU is already developing several grid storage battery projects in Japan, with a cumulative total of more than 100 MWh of assets under development.

The new fund will aim to establish a new green financing model for investments in Japan's nascent utility-scale energy storage sector. GSC and ITOCHU will jointly manage the investment and technical decisions taken by the fund, creating the foundations for the country's future deployment of grid-level energy storage assets. Several revenue streams are already in place nationally to support new energy storage, including access to Japan Electric Power Exchange (JEPX) - one of the most mature wholesale energy markets in the Asia-Pacific region - and grid balancing services.

New ancillary services are expected to launch in 2024 alongside a low-carbon capacity market allowing battery energy storage of three hours to participate in auctions scheduled for 2023 and 2024 and secure subsidies over a 20-year period.