PowerX and Kansai Transmission and Distribution Sign Basic Agreement to Explore a New Grid Connection and Infrastructure Development Approach Utilizing Battery Energy Storage

PowerX, Inc. (Director, President and CEO: Masahiro Ito; hereinafter "PowerX") and Kansai Transmission and Distribution, Inc. (President and Representative Director: Takayuki Shirogane; hereinafter "Kansai TD") have today concluded a basic agreement to advance studies for a demonstration (the "Demonstration"). The Demonstration will test a new approach to grid connection and infrastructure development utilizing a Battery Energy Storage System (BESS). 

In addition to the conventional reinforcement of transmission and distribution facilities, this initiative would use BESS charging and discharging to make better use of existing transmission and distribution infrastructure.  The aim is to connect new electricity users and power plants, including renewable energy facilities, to the grid sooner and make infrastructure investment more efficient.  In recent years, demand for grid connection has grown, driven by rising electricity demand from new data centers and other facilities and the expanding deployment of renewable energy. When available grid capacity is insufficient, however, grid facilities generally need to be reinforced, and connection can take a long time.

The two companies will therefore study an approach in which BESS owned and operated by a BESS operator are used for grid connection and infrastructure development under a contract with the general transmission and distribution utility, as a new option that does not rely solely on reinforcing transmission and distribution facilities.

Specifically, when power flows are expected to approach grid capacity limits, the BESS operator would charge or discharge the battery according to conditions set in advance by the grid utility. This would adjust power flows to ease congestion. New electricity users and power plants could then connect soon, while some grid updates could be avoided or deferred. 

Going forward, the two companies will advance concrete studies toward implementing the Demonstration under this basic agreement. The Demonstration is expected to confirm whether BESS owned and operated by PowerX can be operated in accordance with predetermined conditions, and to verify whether relieving grid congestion with BESS can serve as a new alternative to reinforcing transmission and distribution facilities.

Through this initiative, the two companies aim to achieve both earlier connection of new demand and power sources and more rational infrastructure investment through the avoidance or deferral of facility reinforcement, and to contribute to the development of a more efficient and flexible power system.

Appendix 1 : Overview of Studies toward a Demonstration of a New Grid Connection and Infrastructure Development Approach Utilizing BESS

• Purpose
  To achieve earlier connection of new demand and power sources, and more rational infrastructure investment through the avoidance or deferral of facility reinforcement, by relieving grid congestion through BESS charging and discharging.

• Demonstration overview (planned)
  A PowerX grid-scale BESS (assumed output and capacity: approx. 2,000 kW / 8,000 kWh*) will be installed within the premises of a Kansai TD substation in the northern Osaka area and operated for charging and discharging under assumed grid congestion. The Demonstration is scheduled to begin in FY 2027. The site, equipment specifications, duration and other details will be decided through further study.

^{*Based on an average Japanese household’s monthly electricity consumption of 260 kWh (30 days), this is equivalent to one day’s electricity use by approximately 920 households. The actual amount of electricity and the duration that can be supplied will vary depending on the BESS operating conditions and other factors.}

• Expected future benefits
  The approach may allow the reinforcement of transformers at distribution substations to be avoided or deferred. Adding such a transformer generally costs from 100 million yen to several hundred million yen per unit and takes two to three years or more from design to completion, so more rational infrastructure investment and earlier connection of new demand and power sources are expected.

• Main items for study

  • Charging and discharging conditions, operating methods and contractual terms needed to relieve grid congestion

  • BESS equipment, control and communication systems, and other equipment and system requirements for the Demonstration

  • Demonstration and evaluation methods to confirm the reliability of BESS operation and its applicability as an alternative to facility reinforcement

  • Division of roles, implementation structure, schedule and other specifics for carrying out the Demonstration

How the Initiative Works and Relieves Grid Congestion 

• For example, if transmission and distribution facilities with a capacity of 100 serve existing demand of 100 and new demand of 20 is added, the capacity would be exceeded, so facility reinforcement would normally be required.

• By discharging 20 from the BESS during periods of higher demand, the power flowing through the facilities can be held at 100, potentially allowing reinforcement to be avoided or deferred.

*The figure illustrates application on the demand side. Specific charging and discharging conditions, operating methods, and terms of use under the contract will be defined through further study.

Appendix 2: Positioning of This Initiative for PowerX

1. PowerX's View on the Contribution of BESS to the Grid

BESS have traditionally delivered value mainly through trading in electricity markets and supply-demand balancing. In addition, BESS can adjust the power flowing through the grid at specific locations and times by charging and discharging. Utilization of transmission and distribution facilities tends to approach capacity limits not constantly throughout the year, but during specific seasons and times of day. PowerX believes that BESS can contribute directly to the grid through planned operation that anticipates these periods.

2. Objectives and Scope of the Demonstration

PowerX's objective in this initiative is not the installation of BESS at substations in itself. Rather, it is to establish a new utilization model that expands BESS deployment without relying solely on grid reinforcement, by contributing to the relief of grid congestion. Using actual equipment, the Demonstration will verify whether BESS can be connected to and operated on the grid within the capacity of transmission and distribution facilities, while meeting the conditions set in advance by the general transmission and distribution utility and also operating in electricity markets during other periods.

3. PowerX's Role as a BESS Manufacturer That Also Handles Operation

Realizing this approach requires that BESS reliably charge and discharge at the designated times and in the designated amounts. In addition to developing and manufacturing BESS, PowerX handles their operation and control in electricity markets on an integrated basis. As a manufacturer that operates its own systems, PowerX is taking on this initiative first, together with Kansai TD, to verify the reliability of charging and discharging from both the hardware and control perspectives.

PowerX believes the knowledge gained through the Demonstration will serve as a common foundation for other operators involved in BESS. Drawing on this knowledge, PowerX will work to ensure that this BESS utilization model is widely adopted in other electricity service areas as well, in coordination with general transmission and distribution utilities.

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.