OCCTO Awards 7.3 GW in Latest LTDA Round, With BESS Competition Easing

The Organization for Cross-regional Coordination of Transmission Operators (OCCTO) has announced the results of the third round of the Long-Term Decarbonized Power Source Auction (LTDA). Total bidding volume reached 10.856 GW, of which 7.299 GW was awarded. The LTDA is part of Japan’s capacity market framework, under which awarded projects receive capacity revenues equivalent to fixed-cost levels for 20 years.

Competition for grid-scale BESS eased significantly compared to the first two auction rounds, with the BESS bidding ratio falling to around 2x from roughly 4–5x in previous rounds. Total BESS bid volume reached 2.73 GW, of which 1.25 GW was awarded. One key reason was the introduction of new economic security-related battery sourcing rules. From FY2025, OCCTO separated BESS into lithium-ion and non-lithium battery categories, while also introducing limits to ensure batteries sourced from any single non-Japan country or region do not account for more than 30% of awarded capacity. The measures were aimed largely at reducing reliance on Chinese battery supply chains.

Eligible resources are broadly categorized into ‘decarbonized power sources’ and ‘LNG-only thermal power.’ Awarded capacity for decarbonized power sources declined 15.3% year-on-year to 4.26 GW, while awarded capacity for LNG-only thermal power increased 2.3 times to 3.03 GW.

Awarded capacity under the category of decarbonized power sources included:

Lithium-ion BESS and pumped hydro, excluding newly developed pumped hydro: 819 MW
Other battery storage systems and newly developed pumped hydro: 886 MW
Ammonia co-firing retrofit and hydrogen-only thermal power projects: 517 MW
Safety-related investments in existing nuclear power plants: 558 MW (down sharply from 3.153 GW in the previous round)
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🔍 Shulman Commentary:

The LTDA is likely to continue to be a relevant scheme for generators amid the current volatile market conditions. Among the different categories, BESS remains the most competitive arena for bidders, primarily driven by the steady demand from operators to hedge long-term risks, while some specialists describe the current BESS market as a ‘bubble,’ citing aggressive bidding behavior, compressed return expectations, and rapidly rising project volumes.