Introduction: Two Years Since Full Market Launch
The Electric Power Reserve eXchange (EPRX) achieved full market launch in April 2024, initiating trading across all products: Frequency Containment Reserve (FCR), Synchronized Frequency Restoration Reserve (S-FRR), Frequency Restoration Reserve (FRR), Replacement Reserve (RR), Replacement Reserve-for FIT (RR-FiT), and composite products. This article provides a detailed analysis based on EPRX's published reports: "FY2024 Annual Trading Results" (June 19, 2025) and "FY2025 First Half Trading Results" (December 11, 2025). We examine clearing price trends by product, composite product characteristics, price differences by resource type, and the policy significance of the price cap reduction implemented in February 2026.
[KEY DATA]
In FY2025 H1 (April–September), the national average clearing price was ¥3.63/ΔkW per 30 min for FCR (+17% YoY) and ¥2.87 for composite products (+2.5% YoY). Battery storage continued to clear near the price cap (¥14–19).
1. Clearing Price Trends by Product: FY2024 vs FY2025 H1
The table below compares national average clearing prices (¥/ΔkW per 30 min) by product between FY2024 (full year) and FY2025 H1 (April–September).
| Product |
FY2024 Annual Average |
FY2025 H1 Average |
YoY Change (Apr–Sep) |
| FCR (Frequency Containment Reserve) |
¥3.10 |
¥3.63 |
+17.1% |
| S-FRR (Synchronized Frequency Restoration Reserve) |
¥3.21 |
¥2.94 |
▲8.4% |
| FRR (Frequency Restoration Reserve) |
¥2.67 |
¥2.67 |
±0% |
| RR (Replacement Reserve) |
¥2.69 |
¥2.66 |
▲1.1% |
| Composite Product (FCR+S-FRR+FRR) |
¥2.80 |
¥2.87 |
+2.5% |
| RR-FiT (Replacement Reserve-for FIT) |
¥3.30 |
— (shortage rate only) |
— |
FCR showed the most pronounced increase, reaching a peak of ¥4.38 in July 2025. This reflects both summer demand tightness and the limited supply of resources capable of providing primary frequency regulation (primarily pumped hydro and battery storage). S-FRR, conversely, declined slightly year-on-year, likely due to increased bid volumes from new market entrants.
FY2025 H1 Monthly Clearing Prices
| Month | Apr | May | Jun | Jul | Aug | Sep | H1 Avg |
|---|
| FCR (¥/ΔkW per 30 min) |
2.85 |
3.53 |
3.81 |
4.38 |
3.76 |
3.40 |
3.63 |
| Composite (¥/ΔkW per 30 min) |
2.39 |
2.82 |
2.76 |
3.72 |
3.07 |
2.81 |
2.87 |
2. Deep Dive: Composite Products and Their Strategic Significance
The composite product enables TSOs to procure FCR, S-FRR, and FRR in a single weekly transaction, offering both cost efficiency and administrative simplicity. In FY2024, the composite product's annual average clearing price of ¥2.80/ΔkW per 30 min was notably lower than standalone FCR (¥3.10) and S-FRR (¥3.21).
This price differential stems from the composition of composite product bidders. Thermal and pumped hydro generators—which can simultaneously provide all three services—dominate composite product volumes at relatively low prices. Battery storage, while clearing at premium prices near the cap (¥14–18), contributes limited volume but at high unit prices.
FY2024 Composite Product Clearing Prices by Resource Type (¥/ΔkW per 30 min)
| Resource | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar |
|---|
| Thermal | 2.68 | 2.50 | 2.90 | 2.94 | 3.59 | 3.37 | 3.15 | 2.83 | 2.73 | 2.75 | 2.66 | 2.58 |
| Hydro | 1.70 | 1.56 | 1.85 | 2.12 | 3.59 | 2.83 | 3.45 | 1.36 | 0.81 | 0.70 | 0.65 | 1.22 |
| Pumped Hydro | 2.02 | 2.37 | 1.94 | 1.58 | 2.15 | 1.98 | 3.56 | 2.93 | 1.57 | 1.43 | 1.51 | 2.43 |
| Battery Storage | 16.16 | 18.46 | 17.76 | 15.34 | 17.05 | 13.31 | 18.15 | 18.03 | 17.53 | 14.69 | 11.39 | 11.74 |
Battery storage's composite product clearing prices far exceed those of thermal, hydro, and pumped hydro, consistently approaching the price cap (¥19.51). This premium reflects battery storage's unique ability to simultaneously provide FCR, S-FRR, and FRR with fast response times, commanding scarcity rents in a market with limited competing resources.
In FY2025 H1, approximately 90% of composite product clearing prices fell below ¥6 (compared to 90% below ¥8 in FY2024), confirming the persistence of a bipolar market structure: thermal and pumped hydro dominating volume at low prices, while battery storage clears limited but high-value capacity at premium prices.
3. Price Cap Reduction: A Policy Inflection Point
On February 5, 2026, EPRX reduced the price cap for FCR, S-FRR, and composite products from ¥19.51 → ¥15.00/ΔkW per 30 min. This change was motivated by battery storage's persistent clearing near the cap, with the policy objective of improving market competitiveness and reducing procurement costs.
| Product | Previous Cap | New Cap (Feb 2026–) | Future Plan |
|---|
| FCR | ¥19.51 | ¥15.00 | ¥7.21 (FY2026) |
| S-FRR | ¥19.51 | ¥15.00 | ¥7.21 (FY2026) |
| Composite Product | ¥19.51 | ¥15.00 | ¥7.21 (FY2026) |
| FRR | ¥7.21 | Unchanged | — |
| RR | ¥7.21 | Unchanged | — |
METI's System Design Working Group has further indicated plans to reduce FCR and S-FRR caps to ¥7.21—aligning them with FRR and RR—during FY2026. If implemented, this would fundamentally challenge battery storage's current high-price clearing model, requiring operators to diversify revenue across capacity markets, spot markets, and intraday markets.
4. Shortage Rate Improvement: Dramatic Change in FY2025 H1
FY2024's annual shortage rates were elevated: FCR at 84%, S-FRR at 65%, and composite products at 46%. These figures indicate persistent difficulty in procuring sufficient balancing capacity through market mechanisms.
FY2025 H1 saw a dramatic improvement in RR-FiT (Replacement Reserve-for FIT type) shortage rates, falling from 36.9% (FY2024 annual) to just 2.2%. This improvement followed the March 2025 change to 30-minute block trading units for RR-FiT, which significantly increased bid volumes from FiT renewable energy sources. Across all areas, bid volumes now consistently exceed procurement volumes, signaling improved market competitiveness.
| Product | FY2024 Shortage Rate (Annual) | FY2025 H1 Shortage Rate (Apr–Sep) |
|---|
| FCR | 84% | (Remained elevated in H1) |
| S-FRR | 65% | (Maintained at certain level) |
| RR-FiT | 36.9% | 2.2% (Dramatic improvement) |
5. Key Market Changes in FY2025 H1
Multiple significant market design changes were implemented during FY2025 H1, reshaping procurement dynamics across regions.
| Period | Change |
|---|
| April | 30-minute block trading for RR-FiT (implemented with March 2025 system migration); Tohoku area weekly market volumes revised due to pumped hydro bilateral contracts |
| June | Natural surplus capacity deducted from weekly market procurement requirements in Tohoku, Tokyo, Chubu, Hokuriku, Chugoku, Shikoku, and Kyushu areas |
| July | Hokkaido and Kansai area weekly market volumes revised due to pumped hydro bilateral contracts; natural surplus deduction extended to Hokkaido |
| August | Hokkaido area weekly market requirements revised following completion of EPPS deduction operational preparations for emergency (generator trip) response |
The "natural surplus capacity deduction" introduced in June deserves particular attention. By subtracting the balancing capacity held outside the market (natural surplus) from weekly market procurement requirements, TSOs reduced market procurement volumes, creating relative surplus in bid volumes and contributing to shortage rate improvement.
6. Outlook: Day-Ahead Market Transition and Price Cap Reform
The transition from weekly to day-ahead trading, scheduled for April 2026, is expected to improve market liquidity and enable more responsive procurement aligned with renewable energy output variability. Combined with the phased price cap reduction (¥15.00 → ¥7.21), these changes will fundamentally reshape the economics of balancing market participation.
For battery storage operators, the path forward involves three strategic pillars: securing stable revenue through capacity market participation (Tokyo area capacity price: approximately ¥14,812/kW); expanding arbitrage revenue in spot and intraday markets; and optimizing across multiple balancing products (FCR, S-FRR, composite) to maximize total revenue. The operators who successfully navigate this transition will be those who treat the balancing market as one component of a diversified revenue portfolio rather than a standalone profit center.
Conclusion
The EPRX balancing market has matured rapidly in the two years since full launch. Four trends define this evolution: rising FCR prices, dramatic improvement in RR-FiT shortage rates, battery storage's persistent premium clearing, and the price cap reduction policy. Composite products play a pivotal role both in TSO procurement efficiency and battery storage revenue opportunities. Market participants must closely monitor the FY2026 day-ahead transition and price cap reform timeline while accelerating revenue portfolio diversification.
