Publication date: Oct 1, 2025 Japan Moves to Develop Hydrogen and Ammonia Supply Chains

Activating Flexibility: Growing Aggregator Business and Market Outlook

Since the introduction of the “Designated Wholesale Supply Business Operator System” (commonly referred to as the aggregator system) in April 2022, the aggregation business has expanded rapidly in Japan. An aggregator is a business entity that provides demand response (DR) and virtual power plant (VPP) functions through integrated control of demand side resources (DSRs) and distributed energy resources (DERs). 

This business model is often referred to as the Energy Resource Aggregation Business (ERAB). It promotes the efficient use of electricity and is drawing growing attention as a new business domain in the Japanese energy market. Earlier this year, a domestic think tank projected that Japan’s ERAB market will nearly triple in size, reaching JPY 73.5 billion by FY2035. 

We take a closer look at what an aggregator business is, how to obtain an aggregator license, and how it differs from a retailer license.

What is an aggregator business, and how to obtain an aggregator license?

Aggregators remotely control generation and storage systems (such as solar panels and batteries) owned by third parties and instruct them to generate or discharge electricity. This contributes to greater flexibility and resilience in the power system. There are two types of aggregators:

• Resource Aggregator 

Directly contracts with small-scale generators and consumers to provide VPP services and manage resources

• Aggregation Coordinator 

Coordinates the entire aggregation operation, further bundling the electricity gathered by Resource Aggregators and handling system-wide control signals. It supplies the aggregated electricity to power retailers and T&D operators. 

Of these two, the Aggregation Coordinator is required to obtain an aggregator license as it plays a central role in the aggregation business and holds overall accountability, including the Resource Aggregators’ activities. 

As of mid-September 2025, a total of 124 companies have obtained the aggregator license, including electric power companies, gas companies, and housing manufacturers. In general, aggregators are expected to have a total supply capacity exceeding 1 MW, which is the threshold required for an aggregator license.

To obtain an aggregator license, companies are required to submit a notification to the Ministry of Economy, Trade and Industry (METI), with details including:

• Basic corporate information
• Supply capacity details (including total contracted/installed capacity)
• Details of designated wholesale supply counterparties (including contract details, expected business start date)
• Information concerning cybersecurity 

Note: An application for OCCTO membership is required before submitting the notification.

Businesses are required to submit the notification to METI at least 30 days before commencing operations. During this period, METI conducts an assessment to ensure that supply capacity and cybersecurity measures are adequately in place.
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How does it differ from the retailer license?

While both aggregators and retailers typically do not own power generation assets themselves, the key difference lies in how and from whom they secure electricity. 

A specific feature of aggregators is their ability to provide flexibility services through DR. For example, during periods of high electricity demand, aggregators may instruct DER operators to reduce their electricity usage (“Downward” DR), and in return, compensate them for the reduction. Conversely, when there is an excess in energy supply, aggregators will instruct DER operators to increase their electricity usage (“Upward” DR), by consuming more electricity or charging batteries. This bidirectional functionality distinguishes aggregators from retailers, whose business model is often one-way supply from large generators to end users.

Another major difference is that aggregators source electricity from multiple small-scale DERs, such as solar plants, storage batteries, heat pumps, and flexible loads, many of which are located behind the meter. By coordinating and integrating these resources, aggregators form VPPs, which can provide electricity to retailers and T&D operators. In contrast, retailers often secure electricity from large-scale generators, such as electric power companies and solar power plants, through individual contracts or by participating in the wholesale market.

The Japanese government aims to increase the share of renewable energy in its 2040 energy mix to 40–50%, making electricity supply less predictable compared to fossil fuel-based generation. In this context, aggregators will play a vital role in balancing demand and supply, which can drive further market growth. Our team closely monitors the evolving aggregator landscape and licensing processes in Japan, offering tailored analysis and strategic guidance to help navigate these developments and identify potential business opportunities. Please reach out to us if you’re interested in learning more about this topic, and how we can support your business to succeed in Japan’s evolving power markets.

Activating Flexibility: Growing Aggregator Business and Market Outlook