DLA Piper survey finds merchant BESS appeal at 63% in Singapore and 53% in Australia, against just 22% in Japan

A new DLA Piper report published 14 October 2026 finds that appetite for standalone merchant battery energy storage systems (BESS) varies sharply across three Asia-Pacific markets: 63% of Singapore respondents and 53% of Australian respondents regard merchant BESS as attractive, against just 22% in Japan^[1].

The report, titled Energy Storage Investment Outlook: Japan, Singapore and Australia, draws on investor and lender surveys across the three jurisdictions. DLA Piper advises developers, investors and lenders on storage transactions in the region, including Palisade Investment Partners' April 2026 acquisition of the 240 MW / 960 MWh Summerfield BESS in South Australia from Copenhagen Infrastructure Partners^[1].

Regulatory certainty, not returns, divides the markets

The divergence is not primarily about return expectations. It tracks how much weight investors in each market place on predictable rules. Predictable market design was a key investment factor for 59% of Singapore respondents and 44% of Japanese respondents, against a global average of 31% and only 18% in Australia^[1].

DLA Piper partner Peter Armstrong, based in Tokyo, said: "Our research shows that revenue certainty, bankability and market design are increasingly influencing investment decisions, particularly in Japan and Singapore"^[1].

The firm linked Singapore's high score on regulatory sensitivity to the city-state's compact, centrally planned grid, where BESS revenue derives primarily from ancillary services and grid support rather than energy arbitrage^[1]. Singapore's Energy Market Authority has no dedicated capacity payment regime for grid-scale storage; revenues flow through short-interval energy trading and contracted ancillary services, making rule stability a prerequisite for bankability.

Japan: capacity auctions anchor revenue but constrain merchant upside

Japan's low merchant appetite reflects a market that has deliberately structured long-term revenue support away from spot exposure. Japan's Long-Term Decarbonization Electricity Capacity Auction (LTDA), launched in 2023, offers 20-year fixed capacity reserve agreements on a pay-as-bid basis, administered by OCCTO. BESS secured 1.1 GW in Round 1 and 1.3 GW in Round 2.

The LTDA framework is tightening, however. Round 3, with results published on 13 May 2026, reduced the combined procurement allocation for BESS and pumped hydro to 800 MW and raised the minimum discharge duration requirement from three hours to six hours. METI has also proposed cutting the balancing market price cap from JPY 19.51 to JPY 15 per kWh - a move that would compress the merchant revenue stack further and push developers toward long-duration, capacity-backed structures.

As of April 2026, Japan's grid-scale BESS installed capacity stood at approximately 640 MW, against contracted grid-connection applications of roughly 30 GW - a gap that reflects both the pace of regulatory reform and the difficulty of securing physical connections.

Key structural features shaping Japan investor sentiment:

• LTDA capacity payments provide 20-year revenue certainty but require proof of grid connection before bidding
• METI tightened anti-speculation rules in April 2026, raising financial security deposits and mandating proof of land rights
• A 30% single-country manufacturing cap on battery cells applies from Round 3, adding supply-chain complexity
• Balancing market price cap reductions, if finalised, would reduce arbitrage revenue for shorter-duration assets

Australia: contracted assets attract capital despite merchant tolerance

Australia's relatively high merchant appetite sits alongside a market that has recently favoured contracted structures at the transaction level. The Summerfield deal - the reference transaction in the DLA Piper report - illustrates the pattern: Palisade acquired the 240 MW / 960 MWh, 4-hour duration asset mid-construction, underpinned by a long-term tolling agreement with Origin Energy, with commercial operations scheduled for late 2026.

The tolling agreement effectively converts merchant exposure into a contracted revenue stream, allowing institutional capital to participate in a market where spot prices are volatile but long-term demand for storage is structurally supported by South Australia's target of 100% net renewable energy by 2027.

DLA Piper's earlier global survey of 550 battery storage investors and lenders, published in June 2026, found that merchant revenue exposure was concentrated in the 21-60% band: 44% of respondents accepted 21-40% merchant exposure and 34% accepted 41-60%. Lenders skewed toward the higher band, while strategic and institutional investors preferred the lower one - a pattern consistent with Australia's appetite for merchant exposure tempered by contracted anchor revenue.

What to watch

The three markets are moving in different directions simultaneously. Japan's LTDA Round 4 parameters and the final METI balancing market price cap decision will determine whether the country's merchant discount deepens or narrows. Singapore's EMA is developing a Future Grid Capabilities Roadmap that could expand BESS revenue streams beyond ancillary services. In Australia, the pipeline of contracted-but-merchant-tolerant deals will be tested as South Australia's grid approaches its renewable energy target and price volatility patterns shift. DLA Piper's regional split is a snapshot of where each market sits today; the structural drivers behind it are all in motion.