At first, Japan's push into energy storage seems odd. Why is a country awash with underused pumped hydro energy storage (44 projects and growing, providing almost 29 gigawatts) now looking to invest heavily in grid-scale batteries -- particularly when the major use for pumped hydro is to service the currently slumbering nuclear fleet?

We were alerted to Japan's enthusiasm for large-scale battery deployment when Kyushu Electric Power and Tohoku Electric Power announced they are receiving significant government subsidies in order to install large batteries to "verify the improvement of supply-demand balance with large-capacity power storage systems."

At 300 megawatt-hours, the Kyushu project is particularly impressive. The company says it wants to test out the battery's ability to compete with pumped hydro in terms of capacity. Kyushu also says that it is interested in testing the battery system for controlling the voltage of a power grid.

The main reason for bigger batteries is to integrate more renewable energy. Kyushu is responsible for the grid in an area with plenty of potential for solar -- too much, in fact, according to spokesperson Daishin Kuramoto in an interview with Bloomberg.

Kyushu announced a year ago that 5,000 solar projects with a combined capacity of 1,400 megawatts had been canceled because the grid could not cope with them. The reason for the timing of the announcement was that, after a change in legislation, utilities were now able to force renewable suppliers to reduce their output, without having to compensate them.

It looked like Japan's 10-gigawatt solar bonanza since the March 2011 Fukushima meltdown had finally ended.

As Japan's nukes lay slumbering, their lack of activity freed up another great resource: the vast pumped hydro infrastructure. Varying output according to demand is an inefficient way to run a nuclear fleet, so absorbing excess power with pumped hydro was a great way to keep both the engineers and the customers happy.

What's more, Japan's pumped hydro isn't just big. It's highly sophisticated, as well. The more costly variable-rate pumps that the country has installed allow this form of energy storage to provide grid frequency regulation. 

However, Japan's utilities are pressing ever harder for the right to put their reactors back on-line -- and they're winning the battle. In fact, Kyushu recently won a court case that overturned local residents' objections to restarting the company's Sendai reactors, which are "very close" to gaining their final approval, an official from Japan's nuclear regulator told Reuters early this April.

So it looks like the Japanese utilities might want to save pumped hydro for their reactors, rather than using their energy storage capabilities for new renewables -- hence the interest in massive batteries. GTM Research analyst Ravi Manghani also points out that sophisticated pumped hydro can't swing into action as fast as batteries can, providing motivation for investment in electrochemical storage.

Another reason for recent government storage investments may be Japan's ambitions to dominate the global grid-scale battery market.

In a presentation given at an International Energy Agency event in 2013, Yoshiaki Shibata of the Japanese Institute of Energy Economics made his government's position very clear. Noting that by 2020 the storage battery market is projected to increase to some $200 billion, the Japanese government was interested in "developing technologies, seeking international standardization and expanding dissemination of storage batteries," with the goal of helping Japanese companies capture 50 percent of the global market by 2020.

In order to do so, said Shibata, "the government aims to reduce costs to around $230 per kilowatt-hour," which he noted was equivalent to the cost of pumped hydro.

At the moment, Japan has around 170 megawatts of grid-scale battery storage. It's mainly sodium-sulfur chemistry, the majority of it provided domestically by NGK.

Although it's not yet clear what type of battery Kyushu's project is using, the Tohoku installation is lithium-ion.

The government is also supporting a 40,000-kilowatt redox flow battery demonstration project, commissioned by Hokkaido Electric Power. There will likely be more to come as the Japanese government prepares its energy storage sector for world domination.