Nozu Battery Project Reaches Financial Close in Japan

Nozomi Energy reached financial close on the Nozu battery project in Oita Prefecture, Japan, on September 14, securing non-recourse financing from Aozora Bank for a 50 MW/196 MWh battery energy storage system.

The project in Nishihata, Nozu Town, Usuki City is designed for about 3.9 hours of storage at its rated output. It holds a 20-year, inflation-linked capacity payment under Japan’s fiscal 2023 Long-Term Decarbonisation Auction, and Nozomi expects construction to begin shortly before targeted completion in the third quarter of 2028.

Financial close is the material development. It indicates that the financing agreements and other conditions required to fund the project have been completed, moving Nozu beyond an auction award and development plan. The financing amount, total project cost, battery supplier, chemistry and construction contractor were not disclosed.

Nozu battery project moves into financed construction phase

Actis, which backs Nozomi Energy, announced the close and identified Aozora Bank as the provider of non-recourse project financing. In that structure, lenders principally depend on the project’s contracts, assets and future cash flows for repayment rather than relying on a general corporate guarantee from the sponsor.

That does not eliminate construction or operating risk. Nozomi still must complete procurement, civil and electrical work, grid connection, testing and commissioning. The company described construction as imminent but did not publish a specific start date.

The 196 MWh energy rating divided by the 50 MW power rating produces a simple duration of 3.92 hours. Actual usable discharge duration can differ because of operating limits, auxiliary consumption, degradation allowances and the performance requirements in the project’s contracts.

The auction provides a 20-year capacity revenue framework

Nozu was selected in Japan’s first Long-Term Decarbonisation Auction, held for fiscal 2023. The program is intended to support investment in low-carbon and flexible power resources by providing long-term capacity revenue rather than paying only for electricity sold into short-term markets.

The Organization for Cross-regional Coordination of Transmission Operators explains that successful resources enter capacity agreements and that annual capacity payments are based on the contracted price and capacity, subject to applicable adjustments. Actis says the Nozu contract provides a consumer-price-index-linked payment for 20 years.

The structure gives lenders a contracted revenue component extending well beyond construction. It does not mean all project revenue is fixed or guaranteed without conditions. Capacity-market resources must meet their contractual obligations, while the public announcement does not disclose Nozu’s auction price, operating-revenue assumptions or financing covenants.

Financial close is different from commercial operation

Battery-project announcements often refer to several separate milestones: auction selection, financing, construction start, energization and commercial operation. The Nozu battery project has now completed the financing milestone, but it is not yet under confirmed physical construction and is not delivering electricity or grid services.

The distinction is important when comparing Nozu with operating assets or projects that have only received investment approval. Microgrid Media’s coverage of the 1 GWh Brunsbüttel battery investment decision describes a project that has sponsor approval but still faces construction and commissioning. Its report on the Naos-1 solar-and-storage financial close shows a different contracted-market model backed by industrial power-purchase agreements.

Energy Global independently reported the Nozu financing, 50 MW/196 MWh configuration, auction award and third-quarter 2028 completion target. Its report did not add a financing amount or identify equipment suppliers.

What remains before the battery enters service

Nozomi says the project will support flexibility and resilience in Japan’s power system, but the announcement does not specify the grid services Nozu will provide, its expected annual dispatch, interconnection voltage or the share of revenue expected outside the capacity contract.

The company also says it is developing another 50 MW battery project that could reach financial close later in 2026. That remains a forward-looking target and should not be counted as financed capacity.

For the Nozu battery project, the next verifiable milestones are a confirmed construction start, equipment selection, grid-connection progress and commissioning. Financial close materially increases execution certainty, but the 196 MWh facility should remain classified as financed and pre-construction until physical work is officially confirmed.