Hitotsubashi University
Institute of Innovation Research

The Tokyo Electric Power Company,
Inc. and NGK Insulators, Ltd.
Inside Cooperative Innovation: Development andCommercialization of Sodium-Sulfur Batteries
for Power Storage

Eishi Fukushima

IIR Case Study CASE#13-01

April 2013

Hitotsubashi University
Institute of Innovation Research
2-1 Naka, Kunitachi Tokyo 186-8603, JAPANhttp://www.iir.hit-u.ac.jp
The copyright for this case study belongs to the author or the Hitotsubashi University
Institute of Innovation Research. Reprinting or copying any of the information contained inthis case study for purposes other than personal use requires the prior written consent of
the Hitotsubashi University Institute of Innovation Research. For more information pleasecontact the following office.
Inquiries: Hitotsubashi University Institute of Innovation Research, Research Support Office

Phone:+81-(0)42-580-8411 Fax:+81-(0)42-580-8410
e-mail: chosa@iir.hit-u.ac.jp

Hitotsubashi University 21st Century COE Program
Dynamics of Knowledge, Corporate Systems and Innovation
Research Project on Okochi Prize Cases

The Tokyo Electric Power Company, Inc. and NGK Insulators, Ltd.
Inside Cooperative Innovation: Development and Commercialization of Sodium-Sulfur
Batteries for Power Storage
Eishi Fukushima
April 2013
(Updated based on Japanese version written in 2008.)
CASE #13-01

This case study is the result of research undertaken for the Research Project on Okochi Prize
Cases, which is being conducted with financial support from the Dynamics of Knowledge,
Corporate Systems and Innovation project under in the 21st Century COE Program at
Hitotsubashi University. The project prepares case studies of research efforts that have been
awarded the Okochi Prize that provide overviews of technical innovations and analyze thedevelopment process, the details and results of commercialization and related topics, incooperation with the Okochi Memorial Foundation and firms that have received the award.
Together with creating a portfolio of case studies and accumulating case data on Japan’smajor innovations, the project performs cross-comparative analyses of cases and seeks to
identify the characteristics and issues surrounding innovation efforts at Japanese firms (fordetails

refer

to

the

following

website(Japaneseonly):

http://www.iir.hit-u.ac.jp/reserch/21COE.html). The author would like to express his deep
appreciation for the extensive support and cooperation provided by the Okochi Memorial
Foundation while pursuing this project.
Note: The copyright for this case study belongs to the author or the Hitotsubashi University
Institute of Innovation Research. Reprinting or copying any of the information contained inthis case study for purposes other than personal use requires the prior written consent of the
Hitotsubashi University Institute of Innovation Research. For more information please contact
the following office.
Inquiries: Hitotsubashi University Institute of Innovation Research, Research Support Office
TEL: 042-580-8423

e-mail: chosa@iir.hit-u.ac.jp1

Inside Cooperative Innovation: Development and Commercialization of Sodium-Sulfur
Batteries for Power Storage 1
Eishi Fukushima (Hosei University, Faculty of Business Administration)
1. Introduction
This paper examines the technology and business development process of the“sodium-sulfur battery for power storage” (referred to below as “the NAS battery”) 2
created by The Tokyo Electric Power Company, Inc. (TEPCO) and NGK Insulators Ltd.
(NGK). This innovation deserves deep consideration. As of 2007, the NAS battery iseffectively the only high capacity battery for large-scale power storage that is being
mass-produced and sold 3 . Although various firms in Japan, the U.S. and Europe
undertook development efforts after the U.S. automaker Ford Motor Company announced
the basic NAS battery principle in 1967, most of these projects ended in failure. Amongthe companies were TEPCO and NGK, which jointly pursued development and were thefirst in the world to commercialize NAS batteries. The two firms’ NAS battery businesslaunched its first products in 2002 and began mass production in 2003.
The TEPCO and NGK project to commercialize the NAS battery had the following
characteristics. First, despite being the last to be formed, the development team was theworld’s first to achieve commercialization of the NAS battery. Almost no other examplesof power storage battery commercialization on a mass production scale can be found.
Second, it was a long-term project that required a period of about 20 years from the startof development to commercialization. Third, although a national project with a goal ofdeveloping a large-scale power storage battery was carried out during this period, neither
TEPCO nor NGK participated in that effort. Various other entities took part in the1

The author received extensive support from individuals involved in research at The Tokyo ElectricPower Company and NGK Insulators, Ltd. through interviews, presentations, and plant tours. The
author would like to express sincere appreciation for this support. The author also wishes to express
appreciation to the Okochi Memorial Foundation for its cooperation. Any errors or omissions in the text,
however, are the sole responsibility of the author.
2“NAS” battery is a registered trademark of The Tokyo Electric Power Company, Inc. and NGK
Insulators Ltd. As sodium-sulfur batteries use sodium (natrium or sodium) for the positive electrodeand sulfur for the negative electrode, such batteries are typically referred to as NaS (Natrium-Sulfur)
batteries after the initial letters of the materials. To avoid confusion, the mark “NAS battery” is useduniformly throughout this text.
3
As we will see later, there are existing and potential competing technologies and products in themain markets for NAS battery use. These include systems such as superconducting magnetic energy
storage, which have been sold to customers and installed for the purpose of verification tests, andsome firms have seeking to move into commercial production since FY2007 (Nikkei Sangyo Shimbun,
August 11, 2005). Although not being mass-produced and sold, there are other types of power storage
systems, such as the pilot plant constructed under the Moon Light Project described below, or thelead-acid storage battery power storage systems that have been built in the U.S. and Germany(Nomura et al., 1993). Furthermore, according to the Nikkei Sangyo Shimbun in 2001, the UK electric
power company Innogy (now npower, a subsidiary of the German company RWE, as of 2007) had
plans to start operation of a power storage facility using Innogy’s proprietary rechargeable “Regenesis”
batteries as a commercial plant from 2002 and to sell the same plant overseas (Nikkei Sangyo
Shimbun, August 29, 2001). Whether such plans have been executed could not be confirmed.
An “electric power facility system “verification test” (system field-evaluation) is a test by a supplieror specific user to assess the results of a system by operating a prototype product system under an
actual application environment, and use the information obtained for future product development
activities. The term “pilot plant” indicates the equipment setup for the verification test.

2

development of a battery for power storage under the “Moon Light Project,” which theformer Agency of Industrial Science and Technology of the Ministry of International Tradeand Industry (MITI) promoted in the 1980s. While this program achieved some results, noparticipants have reached commercialization. Fourth, rather than being an in-housedevelopment effort by one firm, the first half of the project was undertaken by threecompanies and the latter half was a joint development undertaken by TEPCO and NGK.
The relationship between the two firms was basically as seller and buyer of the NASbattery, similar to their relationship for electric power-related materials such as insulators.
While each company had their own objective, based on their relationship of the past andfuture transaction, they achieved commercialization through the joint development. Overthe course of 20 years, the project faced various changes in its circumstances. As the
project had progressed, conditions unique to each entity and the economic and social
environment had also changed. Unlike other entities sought to realize practicalapplications of power storage batteries during this same period, the TEPCO-NGK project
did not enjoy central government support for the development. Why, and in what manner,
was the NAS battery commercialization pursued by TEPCO and NGK? In the following,
we examine the background and historical process of their venture, and then discuss why
their commercialization became possible in the last section.
2. Background of Development
2-1. Alternatives to electric-load leveling and pumped-storage power generation
The NAS battery first attracted attention as a means to level electric power loads inplace of pumped-storage power plants, and the development started in this vein. Behind
this push were the fact that capacity factors of power generating facility had declined
whilst maximum electric power demand was growing, and that pumped-storage power
generation faced some restrictions concerning location, cost, power loss and construction
period.
The beginning of NAS battery development by various firms was the discovery andannouncement of the fundamental principle in 1967 by Ford Motor Company 4 . Ford’s
announcement was related to the basic principle for a new type of battery that usedsodium and sulfur, plus “β-alumina.” β-alumina is a ceramic that until then had been
considered a fireproofing material, as the electrolyte. This new battery, which later cameto be called the NAS battery, was characterized by its ability to achieve 4-5 times greater
energy density compared with conventional lead acid storage batteries. Following Ford’s
discovery, NAS battery development was pursued actively in the 1970s, mainly in Japan,
the U.S. and Europe. One major reason the NAS battery garnered attention was the factthat at that time, the only practical means power utilities had to store the large amountsof power they generated was “pumped-storage power generation.”
Generally speaking, an electric power utility is required to prepare power supply
capacity to meet the maximum demand during its peak periods rather than an average ofdemand (over one year or one day, for example). For example, even if the peaking timeis short and the peak demand differs greatly from the average demand, supply capacity
4

Yao and Kummer (1967), Weber and Kummer (1967), and Kummer and Weber (1968).

3

needs to meet the maximum demand. The reason is that if demand cannot be met, evenfor a short period, power outage occurs, which will cause extensive losses to bothindividuals and organizations. A stable supply of electric power is therefore demandedfrom a social and public viewpoint, and ensuring its product does not “run out of stock” isconsidered to be one critical mission of every electric utility. Given such circumstances,
power utilities will maintain facilities for power generation that add 8-10% reserve power
generation capacity to maximum demand, to respond to uncertain demand fluctuations.
As a result, to the extent the difference between the maximum demand (and reserve) andaverage demand increases, a power generating facility’s average capacity factor will
decline, as shown by its annual load factor 5 .
Such difference is not necessarily resulted from special conditions. It is well known
that the volume of electric power demanded typically varies greatly between the daytime
and nighttime time bands. During the day, when most people are active, electric andelectronic equipment use is many times greater than during the night when people areasleep, and on the whole more electricity is needed. In addition, to the extent people
increase their electric and electronic equipment use, the quantity of electricity demand
based on each individual’s activity will grow. If use of electric devices increases, average
power increases as well, while the difference between peak demand and average
demand widens. The result is that when offices increase their use of telecommunications
equipment, factories introduce industrial robots in conjunction with industrial development
and households run home appliances such as air conditioners, the difference between
peak demand and average demand will widen, as power generating facilities are built tomeet growing peak demand 6 . If a power generating facility’s average capacity utilization
rate falls, the cost of power supply rises. To provide for maximum power demand, power
utilities must boost investment in plant and equipment, and consumers must purchaseexpensive electricity.
To cope with such conditions, one effective approach is to hold electric power (on the
power sending side or receiving side) in a “storehouse” – that is, to store electricity. Ifelectric power generated during time bands when power demand is low can be stored,
and the stored electricity released during time bands when electric power demand is high,the peak demand for which a power company must prepare will be leveled toward theaverage demand volume, as shown in Figure 1. This approach is referred to as electric
power “load leveling.”
The traditional method used as a means to store electricity to meet load leveling needs
is pumped-storage power generation. Pumped-storage is a type of hydroelectric power
generation using two reservoirs constructed at different elevations. Nighttime surplus
electricity is used to pump water to the upper reservoir, which is then discharged into thelower reservoir to generate electricity by spinning turbines with water pressure during thedaytime when electricity demand is high. This cycle is repeated. In other words, electric5

Annual load factor is the percentage (%) calculated by dividing average power per day for a one-year
period by the peak demand in the same year. For the peak demand value, utilities normally use theaverage electric power for the three-day period during the year that required maximum electric power.
6
Fluctuations in electric power demand include not only changes depending on the time of day but
seasonal ups and downs as well, such as the demand surges during summer when numerous air
conditioners are operating.

4

power is stored as “potential energy of water.”Figure 1. Electric power load leveling conceptual diagram
En erg y sup ply (disch a rg e)

E le ctricity d em a nd curve

Ene rg y stora g e (ch a rg e)

D a ytim e g e n era tin g ca pa city

N ig h ttim e g en era tin g
ca pa city

012
Tim e of d a y

Pow e r pla n t ca p a city

Pow er pla n t ca p a city

Electric g e ne ra ting ca p a city

D a ytim e g e ne ra ting ca pa city

N ig httim e g e ne ra tingca p a city

024

W ithout stora g e

12Tim e of d a y

24

W ith stora g e

Source: Prepared by referring to Isozaki et al. (1998).

Figure 2. Change in peak demand and annual load factor
75

18,00070

14,00012,00065

10,0008,000

Peak demand
Annual load factor

60

6,000
4,000

Annual load factor – %Peak demand – 10,000kW

16,000

55

2,000
0

50
51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 year

Source) Prepared by referring to Japan Business History Institute (2004).

Electric power load leveling has been used in Japan through pumped-storage power
generation facility construction. However, as peak demand has been rising annually, theannual load factor for electricity has exhibited a long-term downward trend, as shown in

5

Figure 2. When the total and average values for nine Japanese general electric utilities
shown in the graph are examined (excluding Okinawa Electric Power Company, Inc.),
peak demand has expanded greatly from 6.67 million kilowatts (abbreviated below as
kW) 7 in 1951 to 92.45 million kW 30 years later in 1981. The average annual growth rateduring this interval was 9.16%. In contrast, during the same period the annual load factor
has decreased from 72.9% to 59.4%.
An alternative means of electricity storage was sought because, in addition to the risein peak demand and the declining trend in the annual load factor, pumped-storage power
generation was considered to have the following problems 8 . First, for technical reasons
the locations of pumped-storage power plants are limited to remote mountain areas, andit was thought that appropriate locations for such facilities within Japan would decrease 9 .
Second, the construction of pumped-storage power plants, power transmission lines andother facilities is extremely expensive. Power plant construction costs alone aresubstantial, and when a power plant is built deep in the mountains, a long transmission
line to the areas where the electric power is consumed must be built. To save electricity
through pumped-storage power generation, the construction cost was estimated as300,000 yen per 1kW at that time. Third, there is a commensurate loss of power. As the
distance of power transmission increases, the transmission of electricity is accompanied
by a loss of electric power, and changing the form of electric power into the potential
energy of water causes a further loss through the process of reconverting this into
electricity. As a power supply, the charge and discharge efficiency was estimated at65-70% 10 . Fourth, from the viewpoint of nature conservation, the submersion of a broad
expanse of ravine area for construction of a pumped-storage power plant cannot always
be considered desirable. Finally, because building a pumped-storage power plant cantake about ten years from start of construction to completion, there is a potential for
discrepancies to arise between the load leveling plan and actual requirements.
As we will see below, during the 20 years until the NAS battery was commercialized by
TEPCO and NGK the circumstances described above changed, and these changes
influenced the battery commercialization project. Behind the push by these two firms andmany other companies to develop the NAS battery, however, was the consistent social
need to search for an alternative means of storing electricity to replace pumped-storage
for the purpose of load leveling. After confirming that electric power storage technologythat might provide an alternative to pumped-storage was not limited to the NAS battery,
let us examine the NAS battery characteristics, which led TEPCO and NGK to focus on
the development of the battery.
2-2. Alternative technologies for electricity storage
The development of new batteries including the NAS battery was sought as a means to
7

Kilowatt shows the unit for electric power. One kilowatt is equal to 1,000 watts.
There is an opinion to include another reason for the need of electric power storage. It points out adifficulty for nuclear power generation to generate power in accordance with load, thus, its low
flexibility to adjust electricity generating capacity (Nikkei Sangyo Shimbun, October 29, 1981).
9
As an attempt to overcome such locational limitations, R&D on seawater pumped-storage power
generation that uses the ocean for the lower reservoir is also being conducted (Tanaka, 1995).
10
Nikkei Sangyo Shimbun (April 3, 1987).
86

replace pumped-storage because of the lower loss of electric power compared to othermeans of storing electricity, and the possibility of installing them close to the demand dueto their small size. In addition, compared with traditional lead acid storage batteries,
those new batteries had high theoretical values for electricity storage capacity per unit.
They were expected to provide an alternative to pumped-storage from the standpoints ofeconomic efficiency and durability.
Electric power storage technologies to replace pumped-storage power generation arebroadly of two types. One is batteries that store electricity by converting electric energy
to chemical energy, such as lead acid storage batteries, which is proven but oldtechnology, and NAS batteries. Other type is technologies similar to pumped-storage
power generation that convert energy into other forms for energy. Typical examples of thelatter technologies, that convert energy into another form and store electricity, include
flywheels, compressed air energy storage (CAES) and superconducting magnetic energy
storage (SMES) 11 .
The flywheel is an energy-storage technology whose principle has been longunderstood. Surplus electricity is used to spin a disk, and when power is needed again,
this rotating force is used to generate electricity. The electrical energy is stored byconverting it into the kinetic energy of the rotation. Some have been put to practical use
for short-term storage of small amounts of electricity, such as uninterruptible powersystems and supplemental electric power for trains. As for longer-term high-power
storage, R&D efforts have been undertaken to combine superconducting technology withflywheel in recent years 12 . CAES involves using surplus electricity to compress air that isstored in bedrock; when power is needed, electricity is generated by recovering thecompressed air and using it to burn natural gas to spin a gas turbine. The first practicalapplications using rock salt strata with hardness suitable for storing compressed air wereintroduced in Germany at the end of the 1970s and in the United States in 1991. In Japan,
having no rock salt strata, R&D activity with various adaptations has been conductedusing abandoned mines 13 . SMES is a technology to store electricity as magnetic energy,
using superconductive coils whose electrical resistance is eliminated when the coils’
temperature is lowered to some extent. A “dream technology” with no theoretical loss ofelectric power, this technique allows high-quality, large-scale electricity storage to be
anticipated. For this reason, power utilities, electric machinery and electric wire
manufacturers and other entities have conducted vigorous R&D activities since the 1980s,
when the high-temperature superconducting phenomenon was discovered, despite theenormous scale of the equipment and the economic and technical difficulties of thedevices 14 . Verification tests with an eye on commercialization have been performed inrecent years at several facilities, including a liquid crystal panel manufacturing plant 15 .
All of the electricity storage technologies described above are technologies to store
11

Superconductivity is also sometimes referred to as “superconductive wiring” (Iwanami Shoten,
Koujien Fifth Edition, 1998).
12
Nikkei Sangyo Shimbun (July 26, 1983) and Nihon Keizai Shimbun (June 15, 2005).
13
Nikkei Sangyo Shimbun (August 29, 1991; March 5, 1992; December 28, 1995).
14
In 1986 the Research Association of Superconducting Magnetic Energy Storage was formed by 49
companies (Nikkei Sangyo Shimbun, December 27, 1995).
15
Nihon Keizai Shimbun (August 9, 2005) and Nikkei Sangyo Shimbun (July 27, 2007).

7

electric power by converting it into forms of energy other than chemical energy. While theanticipated times required until practical application and the development challenges ofthese respective technologies vary, they all share the characteristic that energy is lost by
conversion of the power during input and output. Because the emphasis of the TEPCO
and NGK project was placed on the electricity charge and discharge efficiency of thepower storage device, devices that might experience a large conversion loss were
eliminated from the development options considered 16 . Moreover, despite the strong
possibility for technologies such as CAES and SMES to provide large amounts of powerfrom a single device, there is a high probability of power loss through transmission.
Because the equipment fundamentally is large-scale, it is difficult to locate near the siteof electric power demand, just as in the case of pumped-storage power generation. In
both the TEPCO/NGK project and programs under the Moon Light Project, the focus wason batteries small enough to install in the vicinity of demand, such as substations, under
the development objective of an alternative to pumped-storage 17 .
Table 1. Key characteristics of batteries considered applicable for electricity storage
Item/battery
Theoretical energy
density (Wh/kg)
Open circuit voltage (V)Reactant
Reactant utilization
Electrolyte
Operating temperature
Circulation system

Sodium sulfur

Zinc chlorine

Zinc bromine

Redox flow

Lead acidstorage battery

780

828

428

103

167

2.1
Na (liquid)/S(liquid)85%
Solid electrolyte(β-alumina)
300～350°C
Not required

2.1
Zn (solid)/Cl2
(gas)
100%

1.0
Cr2+ (liquid)/Fe3+3(liquid)80-90%

2.1
Pb (solid)/PbO2(solid)30%

HCI solution

H2SO4 solution

60～80°C
Required

5～50°CNot required

1.8
Zn (solid)/Br2(liquid)100%
ZnBr2 solution
ZnCl2 solution(KCL added)
20～50°C
20～50°C
Required
Required

Source) From Ozawa (1983), p. 14; partially revised.

On the other hand, firms and government identified some sort of large-scale batteries
to be developed in the early 1980s, at the time when TEPCO and NGK began theirproject. Those new batteries, shown in Table 1, were targeted for development as analternative to lead acid storage batteries. Those include the NAS battery, zinc chlorine
batteries, zinc bromide batteries and redox flow batteries. Let us take a look briefly at thecharacteristics of four rechargeable batteries that might provide alternative technologies
to the NAS battery.
Lead acid storage batteries have been used over many years from the 19th century
right up to the present. They have long been known as an existing technology that in
16

Although this point hints at the technological development issues for reducing the losses
accompanying conversion to a level that will support practical use, this was not what decided theabsolute superiority or inferiority of the technologies and their selection based on a comparison. There
are a number of companies including power utilities that are conducting R&D activities into bothstorage technologies that involve conversion of the energy form, such as SMES, and the rechargeable
batteries discussed below.
17
The “Advanced Battery Energy Storage System” program under the Moon Light Project was aneffort to develop an “urban-type power supply of the future” which is capable of distributing installationnear sites of demand like urban areas, maintaining the same functions as pumped-storage-typehydroelectric power” (Nikkei Sangyo Shimbun, January 19, 1982: February 16, 1983).

8principle might be used for large-scale electricity storage. A lead acid storage battery
uses lead dioxide and spongy lead for the plates and diluted sulfuric acid for theelectrolytic solution. It discharges electricity when the sulfuric acid in the electrolytic
solution is transferred to the plates, and charges when the sulfuric acid is transferredfrom the plates into the electrolytic solution. Lead acid storage batteries have foundwidespread use, because they can be manufactured cheaply for the main material is lead,and because they do not ignite easily and very safe. However, the electricity storage
capacity per volume is low. Accordingly, to ensure large capacity needed to store electric
power generated at a power plant, large number of individual batteries would have to beconnected and an extensive installation area would be needed. Such an arrangement isinferior to pumped-storage power generation from a cost perspective 18 . It has also been
pointed out that when lead acid storage batteries are used for large-scale electricity
storage, they have a short lifespan of about 2.7 years, i.e. a problem with durability 19 .
In addition to providing an alternative to pumped-storage power generation, the newbatteries viewed as development candidates at that time were expected to possesscharacteristics not easily achieved by existing lead acid storage batteries. That is,
besides offering economy and safety, they were expected to provide greater electricity
storage capacity per volume plus excellent durability.
As their name indicates, zinc chlorine batteries use zinc and chlorine for their plates
and a zinc chloride solution for the electrolyte 20 . These devices function as a battery bygenerating chlorine through electrolysis when charging, and the chlorine being absorbed
when electricity is discharged. The theoretical energy density per weight of thesebatteries is 828Wh 21 per kilogram. This energy density is the highest among the four new
rechargeable batteries discussed here 22 . In addition to high energy density, zinc chlorine
batteries have some other benefits. They have high-quality electricity due to small
voltage fluctuations during charging and discharging, and ability to withstand high output
power and high loads. Low material costs are another benefit, although the chlorine
generated when charging requires safety measures. However, because electricity isstored using liquids known as hydrates, energy efficiency is greatly reduced and external
storage tanks are required 23 . Like the zinc bromide batteries and redox flow batteries we
18

Nikkei Sangyo Shimbun (July18, 1989; July 17, 1991; January 16, 1992). The cost per kW ofelectricity of normal or improved lead acid batteries was well above the pumped-storage power
generation cost of 200,000-300,000 yen, although the former varied from 500,000 yen to 1.5 million
yen depending on articles, and thus its date of issue (Nihon Keizai Shimbun, February 28, 1983; Kikkei
Sangyo Shimbun, September 27, 1985; June 18, 1988). The charge and discharge efficiency of suchbatteries in these articles also varied from 67% to 87% (Nikkei Sangyo Shimbun, July 25, 1983; June
18, 1988; November 8, 1989).
19
Nikkei Sangyo Shimbun (March 11, 1999).
20
For technical explanation of these batteries, see Agency for Natural Resources and Energy (1995),
Nihon Keizai Shimbun (February 28, 1983 and December 5, 1989), Nikkei Sangyo Shimbun (May 10,
1983; July 12, 1983; July 25, 1983; April 23, 1984; April 18, 1986; November 30, 1990; January 13,
2000; November 2, 2003), and the ULVAC Corporate Center Ltd. (2005).
21
The electric power unit is shown in “watts”. For example, 828Wh indicates a battery can output 828
watts of electricity for one hour, or one watt of electricity for 828 hours.
22
Each value for the theoretical energy density per volume of the four types of batteries differeddepending on the proponent. In this paper, theoretical energy density per weight, that was adopted inpress releases and so forth, was used as a measure. Every value for the measure here were described
originally in Ozawa (1983) of the Ministry of International Trade and Industry’s ElectrotechnicalLaboratory (at that time).
23
Nikkei Sangyo Shimbun (May 10, 1983; January 14, 1986; July 22, 1986). With development of the9will look at below, these batteries charge and discharge by circulating electrolytic
solution.
Zinc bromine batteries use zinc and bromine for the plates and a zinc bromide solution
for the electrolytic solution. The electrolytic solution is circulated by a pump between thebattery tank and two tanks isolated by a microporous membrane that selectively passes
bromine ions. The batteries use the electrical charge and discharge properties generated
by causing the bromine zinc solution to react chemically. At 428Wh per kilogram, thisbattery’s theoretical energy density per weight ranks third among the four new
rechargeable batteries. The zinc bromine battery’s benefits are a high degree of safety
because they operate at normal temperatures and do not require temperature control
devices. They also have another benefit that inexpensive plastic can be used for thecontainer and electrode plate materials. However, safety precautions are necessary forthe bromine, and devices such as pumps to circulate the electrolytic solution must be
installed.
Redox flow batteries are batteries that charge and discharge electricity using two typesof redox solution (chrome ions and iron ions), partitioned by an ion-exchange membrane,
as electrolytic solutions; electrons are exchanged between the two solutions 24 . Theirstructure is divided into an electrolytic cell where an electrochemical reaction occurs
between carbon fiber electrodes and a tank from which redox solutions are supplied tothe electrolytic cell. Redox flow batteries charges and discharges by circulating thesesolutions with a pump. Electricity output can be increased if the electrolytic cell isenlarged, and an electric current can be generated for an extended period if the tank’s
capacity (electrolytic solutions volume) is expanded. Benefits include the ability toincrease capacity for long-term use, simple safety management due to the normal
temperatures operation, and long life with little chemical change inside the battery.
However, the battery’s theoretical energy density per weight is 103Wh per kilogram, thelowest among the four new rechargeable batteries. There is also a tendency for batteries
to grow in size like chemical plants, because they need to circulate large amounts ofelectrolytic solution as capacity is enlarged.
2-3. The NAS battery as the target for development
Among new batteries, TEPCO and NGK chose NAS battery as a target fordevelopment. Decisive factors behind their choice were NAS battery's technicalproperties. NAS battery has high theoretical energy density, and no need for moving
parts such as pumps. However, considering enormous technical difficulties to overcome,the prospect for commercialization of NAS battery was not necessarily promising as withother new batteries.

“solvent method” to replace the traditional “hydrate method,” energy efficiency was later improved
more than 70%.
24
The size of the batteries was reduced and the output power of them was enhanced later, using asulfuric acid aqueous solution, yielding vanadium ions in, as the electrolytic solution (Nikkei Sangyo
Shimbun, December 5, 1996; January 13, 2000).

10Figure 3. NAS battery structure and operating principle

Source) Taken from NGK website(http://www.ngk.co.jp/english/products/power/nas/principle/index.html).

Figure 4. Structure of an NAS module battery

Source) Taken from NGK (2005), p. 7.

The heart of an NAS battery is the electric cell shown in Figure 3 25 . Sodium is used forthe negative pole, sulfur is used for the positive pole and an ion-conducting ceramiccalled “beta alumina” is used for the electrolyte. To form the structure, sodium is placed
inside a tube made of beta alumina (β alumina) and sulfur is placed around the outside of
the tube, and these components are enclosed entirely within a metallic cylinder. Whenthe electric cell is heated to about 300° centigrade, the β alumina will pass sodium ions.
During discharge, the negative pole sodium is changed into ions, passes through the βalumina and reacts with the positive pole sulfur to form sodium polysulfide. During
charging, the sodium polysulfide in the positive pole breaks down and the sodium ions
return to the negative pole. Because the electromotive force of the electric cell is low and25

The technical explanation of the NAS battery provided here is based on TEPCO & NGK (2004;
2006).

11

the capacity for electricity storage also is small, to operate a storage system multiple
electric cells are combined in module batteries like the one shown in Figure 4. Because
the operating temperature is about 300°C, module batteries are set inside insulated
containers equipped with electric heaters used to raise the battery temperature. Becauseof the adiabatic characteristics of the containers, which are hermetically sealed, heatinsulation is highly effective and the heaters are used mainly when starting operations.
The first strength of the NAS battery is its high theoretical energy density, which isroughly 4-5 times that of lead acid storage batteries. If the theoretical energy density perunit area is large, batteries can be installed in comparatively small spaces 26 . Second,
because pumps, valves and other movable parts to circulate the electrolytic solution inother new rechargeable batteries are unnecessary, ease of battery maintenance is a big
plus. Moreover, in contrast to the liquids adopted as an electrolyte for the other newbatteries, because solid β alumina was adopted, self-discharge is not a problem, and it
appears possible for NAS batteries to achieve high charge and discharge efficiency. In
addition, as with other dry batteries, the battery structure is completely sealed, and unlike
other new batteries no gas is generated. Finally, mass-production and low-cost supply
can be anticipated because the sodium and sulfur used as materials are readily available
resources and expensive materials are unnecessary.
Like other rechargeable batteries, however, NAS batteries have some characteristics
that are also considered to be drawbacks. First, heaters are needed as an accessory
because the batteries must be operated at 300°C to improve conductivity of the βalumina ions and break down the sodium polysulfide. Second, the sodium and sulfur
materials are highly chemically active. Third, because it is a type of ceramic, the βalumina solid electrolyte cracks easily. Under the high operating temperature of about
300°C, the β alumina can be damaged easily because it is under various thermal andmechanical stresses; this is dangerous because the sulfur will react directly with thesodium if the electric cells are damaged 27 . This meant that elaborate security measures
were necessary. In fact, as we’ll see later, the frequent occurrence of fires experienced
as a result of β alumina damage led many entities to abandon NAS battery development.
The issues that had to be overcome to achieve practical application of the NAS battery
presented a high degree of technical difficulty. For this reason, at the beginning of thedevelopment project in the early 1980s, the battery’s absolute dominance over other newbatteries was not assured. The difficulty of confirming the absolute technologicalsuperiority or inferiority at that time can be identified from the fact the development of all
four new batteries in parallel was encouraged under the government’s Moon Light
Project.
2-4. NAS battery development entities
Development of these new batteries including the NAS battery gathered steam during
the 1970s, primarily in Japan, the U.S. and Europe, with support from each country’s
government. The main applications envisaged for new battery development were26

In a comparison of per unit volume, the theoretical energy density was said to be four times that oflead acid storage batteries (Nikkei Sangyo Shimbun, February 10, 1986).
27
Nikkei Sangyo Shimbun (December 16, 1989).

12

electricity load leveling (as an alternative to pumped-storage power generation) andelectric vehicles (as an alternative to the internal combustion gasoline engine).
In the United States, companies such as Ford Motor Company, General Electric (GE)and Dow Chemical were tackling NAS battery development for electric power load
leveling and electric vehicles under the auspices of national projects implemented byinstitutions such as the Department of Energy (DOE) 28 . These development activities by
U.S. firms were discontinued in the 1980s, however. Although Ford, the NAS battery
pioneer, was achieving high-level development results at that time, together with theother two companies it withdrew from this battery development in the latter half of the
1980s owing to cutbacks in government support 29 .
Because the electric power load factor was relatively high in Europe, NAS battery
development there was undertaken mainly for electric vehicles 30 . In Europe the two firmsthat had pursued NAS battery development the most energetically were Chloride Silent
Power Limited (CSPL) 31 in Britain and Brown Boveri & Cie (BBC) 32 in Germany. Bothcompanies continued development pursuits until the late 1990s with government support
in Germany, the U.K. and the United States, achieving commensurate progress 33 . They
withdrew from NAS battery development, however. In the UK, government financial
support was cut as part of the liberalization of the electricity business and CSPL waspurchased by RWE of Germany. BBC withdrew from NAS battery development when BBC
rationalized its business portfolio following the formation of ABB 34 . The transfer of BBC’s
development results to NGK through Nastech Corporation, a joint-venture establishedwith ABB, however, had a significant influence on the progress of the TEPCO and NGK
project.
Development of new batteries including the NAS battery was encouraged in Japan aswell from the 1970s through two national projects. These were the Large-scale Project forElectric Vehicle Research and Development in the first half of the 1970s, which

28

The DOE promoted the development of new batteries for electricity load leveling and electric carsfrom the 1970s under its national Research Project for Electrochemistry Energy Storage, and in the
1980s encouraged verification tests of these batteries in cooperation with the Electric Power ResearchInstitute (EPRI) (Nakahara, 1983; Nikkei Sangyo Shimbun, May 10, 1983).
29
Futamata and Takahashi (1986). However, Ford and GE’s development results were probably
succeeded to by Chloride Silent Power Limited (CSPL) in the U.K. Ford had set up Beta Power, Inc.
jointly with Ceramatec, which was supplying Ford with β alumina tubes, to carry out development ofNAS batteries for electric power load leveling. Later, Beta Power was acquired by CSPL. In 1980, GE
also moved to a joint development with CSPL.
30
Iwabuchi and Kimura (1980), Nakahara (1983).
31
CSLP became a subsidiary of Germany’s RWE in 1992 and was renamed SPL (Silent Power
Limited).
32
BBC merged with the Swedish heavy electric machinery firm Asea in 1988, and the new entity was
renamed ABB (Asea Brown Boveri). Depending on the time period, the names BBC and ABB wereused.
33
CSPL pursued development of an NAS battery for automobiles with funding support from the ECRC
(Electricity Council Research Center), an agency of the British government. From 1985, CSPL
undertook development on consignment of an NAS battery for electric power storage under the ETD(Exploratory Battery Technology Development and Testing) Project and the Sodium Sulfur Battery
Engineering for Stationary Energy Storage Program) implemented by the U.S. Department of Energy(Koenig and Rasmussen, 1996; Braithwaite and Koenig, 1993). In addition, BBC pushed into NAS
battery development with support from the West German federal government, and in 1992 announced
a business plan to start mass production (Nihon Keizai Shimbun, June 20, 1991; June 13, 1992). Thisplan, however, was never realized.
34
Hamer (1996).

13

encouraged the development of electric vehicles and power supplies 35 , and the Moon
Light Project from the late 1970s to promote development of energy-saving technologies,
including electricity storage batteries. These two projects, which the government pursued
by outsourcing development to multiple firms, achieved respective results in the form of
test runs of electric vehicles, and verification testing of a 1,000kW-class pilot plant. But
the participating firms were unable to turn the results into viable businesses.
Four types of new battery including the NAS battery, and three types of improved lead
rechargeable batteries, were developed through the large-scale electric vehicle project,which was carried out between fiscal 1971 and 1976 36 , and Yuasa Battery took charge ofNAS battery development 37 . Maintenance problems and stabilization of oil prices, inaddition to the technical difficulties, were major obstacles to practical application of theelectric vehicles and batteries developed by these projects38 .
Subsequently, the Advanced Battery Energy Storage System development project was
carried out under the Moon Light Project between fiscal 1980 and 1991. The project wasformed to pave the way for future replacement of pumped-storage power generation withnew batteries installed at substations in urban neighborhoods. Four types of batteries –the NAS battery, the redox flow battery, the zinc chlorine battery and the zinc bromine
battery – were selected for development 39 . The objective to be reached was a “practicallevel” that provided energy efficiency and economic efficiency equivalent to or greaterthan pumped-storage power generation, with a ten-year useful life. The effort wasundertaken with Yuasa Battery handling NAS battery development, NGK Spark Plugproviding the β alumina tubes and Kansai Electric Power Co., Inc. providing theverification test locations. Although verification tests of a 1,000kW-class plant wereconducted for the NAS batteries and zinc bromine batteries 40 , economic efficiency,
durability and safety issues remained as problems to be solved. Because it wasrecognized that a significant amount of time would be required until practical application
to be realized, the electric power industry was requested to take over the research
efforts 41 .
35
In addition to Yuasa Battery, a participant in this project that had begun pure research in 1968,
basic research was carried out separately from this project at Toyota Central R&D Labs., Inc. andJapan Storage Battery Co., Ltd. (Chiku et al.,1975; Iwabuchi and Kimura, 1980). Furthermore,large-scale production of β alumina was attempted at NGK Spark Plug Co., Ltd. in the 1970s (Nikkei
Sangyo Shimbun, October 3, 1978).
36
The three types of improved lead rechargeable batteries were, respectively, the multi-layer positiveelectrode-type, porous film electrode-type and circular thin multi-layer structure lead battery. The newbatteries that became the subject of development were batteries with a theoretical energy density
higher than lead acid storage batteries and which could be produced using inexpensive materials. In
addition to the NAS battery, new battery types targeted for development were the solid electrolyte-type
and circulating electrolyte-type zinc-air battery, the iron-air battery and the iron-nickel battery (Agency
of Industrial Science and Technology, 1974; Ishikawa, 1998).
37
Yuasa Battery Co., Ltd. changed its company name to Yuasa Corporation in 1992; it merged withJapan Storage Battery Co., Ltd. in 2004, and adopted its current name of GS Yuasa Corporation in2007. To avoid confusion it is referred to below as Yuasa Battery.
38
Ishikawa (1998). The maintenance problems were caused by the fact that the new batteries otherthan the NAS battery were not sealed and had open casings. However, several thousand electricvehicles that used conventional lead acid storage batteries were supplied for factories, delivery use,etc. (Nikkei Sangyo Shimbun, May 7, 1993).
39
New Energy and Industrial Technology Development Organization (1992), Ohashi (1987), Nihon
Keizai Shimbun (September 19, 1983).
40
Nikkei Sangyo Shimbun (June 14, 1989), Nihon Keizai Shimbun (May 22, 1987).
41
Nikkei Sangyo Shimbun (March 9, 1992; April 3, 1992; May 11, 1992). The joint research by the14

Soon afterward, Distributed-type Battery Energy Storage Technology Development
project under the government’s New Sunshine Program (the name of the comprehensive
technology development promotion plan for the energy and environmental sectors) was
carried out in the 1990s 42 . In place of NAS batteries, this project focused on developing
lithium-ion batteries as next-generation batteries for household electric-load leveling andelectric vehicles.
As TEPCO and NGK had undertaken development of NAS battery independently of theMoon Light Project, they remained active to develop the battery even after the Advanced
Battery Energy Storage System program had ended in the 1990s 43 . While CSPL and ABB
continued development in Europe and the U.S., and the Japanese electric power industry
also took over the Moon Light Project’ research, both efforts had virtually ended by themid-1990s. Even Yuasa Battery, which had pushed NAS battery development through thetwo national projects and had continued vigorous activity announcing a mass production
plan 44 , turned its focus to lithium ion batteries in the New Sunshine Program 45 .
In addition to each company’s unique circumstances, the following have been cited asreasons why many firms have found it difficult to maintain NAS battery development 46 .
First, firms found it difficult to expect they could lower the product introduction cost to alevel that would encourage product acceptance. Second, it was expected to require moretime to ensure NAS battery safety, for the product was susceptible to fire accidents
caused by vibrations or impacts. In other words, from the standpoints of economic
efficiency, durability, and safety, firms believed practical application would take time.
With such circumstances as a backdrop, it is little wonder firms thought it difficult tocontinue development over an extended period in the face of cutbacks in government
assistance, adjustments to resource allocations in conjunction with changes in operating
results, and the appearance of promising alternative technologies.
3. Development and Practical Application of the NAS Battery by TEPCO and NGK 47
As development activity stretched out over time, difficulties many of the firms working
electric power industry continued from 1992 to 1995.
42
New Energy and Industrial Technology Development Organization and the National Institute ofAdvanced Industrial Science and Technology (2002), and Nikkei Sangyo Shimbun (April 7, 1992;
December 18, 1992; May 9, 1996).
43
Redox flow battery development also was continued for many years, not by Mitsui Engineering &Shipbuilding Co., Ltd., which took charge of this under the Moon Light Project, but by a joint research
entity of Kansai Electric Power Co., Inc. and Sumitomo Electric Industries, Ltd. Kansai Electric Powerand Sumitomo Electric Industries had elected to develop a battery on their own, apart from the national
project (Tokuda, 1995).
44
Iwabuchi and Kimura (1980) and Nikkei Sangyo Shimbun (October 1, 1985; March 18, 1986;
November 17, 1989).
45
Yuasa Battery’s withdrawal from NAS battery development and commercialization could not be
confirmed clearly. Following the end of the Advanced Battery Energy Storage System project under theMoon Light Project, there have been few articles touching on the company’s NAS battery development.
According to the Nikkei Sangyo Shimbun (February 29, 2000), however, as of 2000 the company wasdeveloping a hybrid power supply system combining NAS batteries with wind and solar power
generation for uses such as emergency power supply and nighttime lighting. Therefore, NAS battery
development can be thought to have been continued in some form at this company, even if on a
reduced scale, until at least 2000.
46
Nikkei Sangyo Shimbun (July17, 1991; September 30, 1994; August 29, 2001).
47
The description in this section is based mainly on the following sources: TEPCO and NGK (2006)
and interviews by the author at both companies (February 9, 2007; February 21, 2007), andNakabayashi Takashi (2004a; 2004b).

15

on the NAS battery confronted, influenced the continuation of development efforts.
Despite encountering difficulties, however, the TEPCO-NGK project reinforced its
development organization over a 20-year period, continued development, and finallycommercialized the technology. Let us examine the NAS battery business development
process the two companies experienced.
3-1. Beginnings of the project
NAS battery development drew TEPCO’s attention because of its consistent needs as
an electric power utility to find a means of storing electricity in place of pumped-storage
power generation. Driving the search were the various restrictions on pumped-storage
power generation and rapidly growing electricity demand. Looking at the effort needed
until practical application of the technology, it was thought the electric utilities themselves,rather than the government, ought to shoulder the development. While Hitachi, Ltd. waschosen as a development partner because of its strong desire to develop the batteries
and its ample resource capacity, cooperation with a manufacturer possessing strengths inceramics technology was considered essential. Ceramics manufacturers rejected therequest for cooperation, however, owing to the NAS battery’s technical difficulties. The
reason NGK finally accepted TEPCO’s request for cooperation was that NGK thought therelationship it had cultivated with TEPCO in electric power materials over many years
might help NGK diversify its business. NGK foresaw the approaching maturation of its
core insulator business, and decided it should try to pursue diversification into new
businesses.
The TEPCO and NGK project was launched at the beginning of the 1980s. The project
got its start when TEPCO decided, in 1982, to aim at NAS battery commercialization
separately from the Moon Light Project. Although participation in the Moon Light Project
also was contemplated by the company 48 , ultimately it undertook development on its own
in cooperation with manufacturers 49 .
The primary reason NAS battery development was initiated at TEPCO was the
expectation that the company would, like the Moon Light Project, be able to achieve ameans of storing electricity to replace pumped-storage power plants. For an electric utility,
having an alternative to pumped-storage power generation as a means of storing
electricity was recognized as a clear need from the viewpoint of controlling capital
investment and reducing costs. The number of pumped-storage power facilities cannot be
increased easily because of location restrictions and the investment amount required.
Besides, because of their geographic distance from the area of demand, such facilities
were viewed as a source of power transmission loss. In addition, the early 1980s when
the project was initiated was a period when electricity demand was rising rapidly, and thishad stimulated the desire to develop an alternative means of storage. Yoshiharu
Tachibana 50 , who was involved in the project at TEPCO from the earliest stage as chief48

Nikkei Sangyo Shimbun (April 2, 1982; February 10, 1986).
On the other hand, TEPCO participated in the High Performance Gas Turbine Development Projectthat was carried out from fiscal 1978 through fiscal 1987 under the Moon Light Project.
50
A TEPCO Fellow as of February 2007. Until June 2006 he was Executive Officer and Director of the
Research and Development Center subsequently. The following quotes are taken from the interview
records (February 9, 2007).
49

16

researcher and later became director of the Electricity Storage Division and head of the
Research and Development Center subsequently, commented on this point as follows.
For electric utilities, the desire to develop batteries as a means of electricity
storage had long been a definite business necessity. It was wanted
continuously for many, many years. What kicked us off then was the situation
around the pumped-storage power generation. You may be familiar with thistechnology. Electric utilities have a means of electricity storage in the form of
pumped-storage power station. For this technology, we have to find amountainous location appropriate for pumping water up from a lower reservoir
to a higher one. When we started our project many forecasted that the utilities
would probably not be able to build as many pumped-storage power stations
as needed. That forecast actually turned out to be wrong, but we only learned
that later. At the time of the commencement of the project, the forecast was allthat serious. On top of that, it was the time when electricity demand was
growing rapidly. These two combined factors formed an absolute desire to findsome method to store electricity that could replace pumped-storage power
generation. This was a kind of challenging situation we faced 51 .
The main reason why an independent development organization was formed
separately from the government project was a thought that it was not just for anelemental technology development but also for the future practical application. Electricity
utilities had to, therefore, undertake development and establish the technology bythemselves 52 . Such opinions, championed at the time by TEPCO president Gaishi Hiraiwa
and the top management, strongly supported the project continuously. Tachibana
described this as follows 53 .
I heard that, given that we absolutely had to succeed the project because
this technology was so extremely important, the top management at that time
had judged that the batteries would never be successfully developed if we –that is, the electric power utilities – didn’t develop the technology byourselves. . . . And looking back on what transpired afterwards, I appreciatethat we always had a strong support of the top management, especially from
Mr. Hiraiwa… who I recall was president at the time we began. He later
became chairman, and is now acting as a company executive advisor. To mymind, that consistent support of the top management, championed by Mr.
Hiraiwa, was surely the greatest resource that enabled us to continue theproject 54 .
51

Quoted from the interview record (February 9, 2007).
According to the article on Nikkei Sangyo Shimbun (February10, 1986), practical application was
expected by the “first half of the 1990s” at that time.
53
Hiraiwa was TEPCO’s president from 1976 until 1984 and chairman until 1993, after which heserved as an advisor until 2007. TEPCO’s presidents after Hiraiwa were Sho Nasu (1984-1993),
Hiroshi Araki (1993-1999), Nobuya Minami (1999-2002), and current president Tsunehisa Katsumata(2002-2007).
54
Quoted from the interview record (February 9, 2007). An omission was made by the author.
52

17

The project begun by management instruction went through alternative technology
evaluation and NAS battery selection in 1982, then moved to the development partner
selection phase. TEPCO’s basic stance at that time on technology development activities
was to identify a cooperating manufacturer, split the development funding and undertake
joint development. Hitachi, Ltd. was selected as the battery manufacturing partner.
TEPCO selected the manufacturing partner that had not lost its development ardor evenafter the passage of 18 years since the announcement of the NAS battery principle byFord and also had not joined the government’s project. There were only a few
manufacturers which could meet the criteria. Because Hitachi was an eminent heavy
electric machinery company, Hitachi’s resource capacity was also considered reliable. As
a result, an NAS battery development team was formed at the Hitachi plant that was
responsible for nuclear power generation facilities at Hitachi. Since the division of Hitachi
was already responsible for fast breeder reactor research, it was accustomed to working
with the sodium raw material. And since it had a comparatively large R&D budget, it wasconsidered capable of handling development risk. Joint development of the NAS battery
was begun by TEPCO and Hitachi in 1983.
Despite having begun joint development with Hitachi, TEPCO continued to search for aceramics manufacturer as a development partner. The reason for the search was given
by TEPCO vice president Kazuo Fujimori. He argued that collaboration with a specialized
producer of ceramics was essential for development because the NAS battery would use
ceramic for the electrolyte. Consequently NGK and several other manufacturers wereasked to cooperate, but every firm replied that it could not cooperate. All of thecompanies gave as their reason the substantial development risk stemming from the NASbattery’s technical difficulties. In fact, NGK had surveyed the feasibility of NAS battery
commercialization in 1979, independent of the joint development proposal from TEPCO.
Its conclusion at that time was that practical application would be difficult.
NGK, which had expressed disapproval, was persuaded eventually to begin the joint
development project by following events and reasoning. The first was a visit by Managing
Director Tsuneo Mitsui, head of TEPCO’s Research and Development Center, who calledon Noboru Yamamoto, an Executive Director and manager of NGK’s Research andDevelopment Laboratory and fervently explained the project 55 . The fact that TEPCO was
an important customer for NGK’s electricity business, especially insulators, and that thetwo firms had built a relationship of mutual trust and knowledge sharing based onlong-term transactions, was implied in this episode.
Second, as NGK considered participation in the project, it surveyed the state of thetechnology of NAS batteries, particularly at European and U.S. firms to reevaluate theAccording to this interview, because the Moon Light Project was a framework under which “thegovernment requested development directly from manufacturers and power utilities provided thelocations for verification tests,” firms could not participate in the project if they were not asked by thegovernment.
55
In 1986 TEPCO’s Mitsui held the position of Managing Director, Executive General Manager of theEngineering R&D Division, where he led TEPCO’s technology development activities until being
appointed Senior Executive Advisor in 1991. Noboru Yamamoto, NGK Executive Director serving
concurrently as Director of Research and Development Laboratory, became the first president of
Nastech Corporation, the NAS battery joint venture with ABB, in 1987. In the following year heassumed the position of Technical Advisor to NGK Insulators Ltd.

18

feasibility of practical application. After receiving the joint development proposal fromTEPCO, Kokuji Kito, General Manager of the engineering department in the PowerBusiness Group, was sent to Europe and the U.S. to investigate the state of thetechnology first-hand. The results of this survey were part of the materials that led to
NGK’s participation in the project.
Finally, the fact that NGK was eager at the time to diversify through the developmentof new businesses greatly influenced its judgment. Initially NGK participated in the project
as the development entity for the β alumina tubes, a key NAS battery component. As wewill see later, however, in 1987 NGK formed a technical tie-up on NAS batteries with ABB,
and in the following year established Nastech, a joint venture with ABB, to conduct NAS
battery R&D. In other words, within three years from their participation, NGK decided it
would participate not as a parts supplier but as a “battery manufacturer.”
According to Masaharu Shibata, NGK’s president from 1994 to 2002, NGK foresaw thematuration of the insulator business, its mainstay since the 1950s, and had adopted“transformation through diversification” as the company credo 56 . Sooner or later, thehigh-voltage lines that used NGK’s insulators would reach every corner of Japan, andgiven insulators’ excellent durability, replacement demand was expected to be minimal.
NGK has since expanded into ceramics materials for automobiles such as vehicle
exhaust emissions and filters, piezoelectric ceramics for printers, incineration plants,
materials for semiconductor fabrication devices, and materials for mobile phones like
SAW filters and beryllium copper connectors. While the policy of diversification throughnew business development and a relatively large R&D investment to pursue this goal
sometime run up against NGK’s reorganization of its businesses 57 , it has been followedby successive generations of NGK managers. Toshihito Kohara, who was NGK’spresident from 1986 to 1994, set an objective of generating one-third of net sales throughnew businesses by 1996 58 . Shunichi Takemi, who gave the go-ahead for participation in
the NAS battery project and was NGK president from 1977 to 1986, is also known for his
aggressive diversification of NGK into areas such as materials for automobiles andcommercialization of incinerators for sewerage treatment facilities. Takemi commented on
NGK’s diversification and the development of the NAS battery business as follows.
I again realized the extent of the effect of “increased management
efficiency through new business development” from the fact that establishing
our HONEYCERAM 59 business for automobiles had enabled us to absorb
surplus employees whose jobs were eliminated by the withdrawal from
unprofitable divisions. For me as well, encouraging development, especiallydevelopment in the markets and technical fields we specialize in, was a major
issue during my tenure as president. Looking back, I think the fact we began
R&D on the sodium-sulfur (NAS) battery for electricity storage was a smart
decision. . . . Given the amount of time required for development, the sizable
56

Based on an interview with Shibata published in the Nikkei Sangyo Shimbun (December 18, 2001).
Nikkei Sangyo Shimbun (September 28, 1993).
58
Nihon Keizai Shimbun (January 27, 1986).
59
HONEYCERAM is NGK’s ceramic catalyst carrier product for exhaust gas purification.
57

19

cost and the human resources we invested, there were some hesitant voices.
However, it was a promising future business, and I decided that if we could
also win TEPCO’s support based on the trust we had earned from the electric
power industry in the electricity market, where NGK is strong, we had thepotential to handle the R&D. . . . The NAS battery had seen ten years ofdevelopment. And practical application was not so far away. Now you might
be tempted to say, ‘What, ten years and still no product?’ But in NGK, many
products have a long development period, and in most instances even when
we do R&D, we have to entrust commercialization to the next generation. As amanagerial judgment, deciding on the R&D priority is quite difficult andrequires courage. I don’t think it’s any easier to judge just because someone
has come up through a technical field 60 .
The 1980s when the project was initiated was also a period when NGK had decided tozealously pursue diversification 61 . The NAS battery was positioned within the flow of new
business development for diversification with the backdrop of proposals from key
customers in NGK’s main business.
3-2. Joint development by the three companies
Two NAS batteries were made by Hitachi through the collaborative project among
TEPCO, Hitachi and NGK. One used β alumina tubes made by Hitachi, and the otherused NGK's. TEPCO set the battery development goals and evaluated the batteries’
performance. The project development goals were set based on the assumption thebatteries would replace pumped-storage power generation and be installed near thesource of electricity demand. In particular, effort was poured into enhancing β alumina
tube durability, a problem many development entities struggled with. The development
teams at Hitachi and NGK held contrasting approaches to manufacture.
The NAS battery project begun by the two firms in 1983 became a joint development
organization among the three companies in the following year when “development andjoint research on solid electrolyte tubes” was started by TEPCO and NGK in 1984. This
was the final group formed as the NAS battery development entity. At TEPCO, the three
engineers led by Tachibana, the chief researcher at the Engineering R&D Division’s R&D
Center, were given responsibility for the NAS battery project in a form that left themconcurrently handling other development themes. At NGK Takashi Isozaki, generalmanager of the R&D department in the Research and Development Laboratory, had
responsibility for the project and led eight experts in materials research, ceramics andperformance evaluation. General Manager of the Research and Development Laboratory
was Yamamoto at that time.
The joint development entity by the three companies started in the following form.
TEPCO set development goals and specifications, along with verifying field performance60

Quoted from Takemi’s My Personal History, published in the Nihon Keizai Shimbun (June 22, 1994).
According to the Nihon Keizai Shimbun (February 8, 1985), before NGK began the project withTEPCO in 1984, a “New Business Sector Study Team” was organized under Noboru Yamamoto,Executive Director and manager of the Research and Development Laboratory. The mission given to
the team was to “search for new revenue sources.”61

20

at the substations and having overall control of the research. However, two development
lines were outlined and the project moved forward in the form of a competition between
the two lines. For the first line, Hitachi made both the battery and the β alumina tube
components that comprised the batteries. For the second line NGK made the β alumina
tubes and Hitachi used these to produce the batteries. TEPCO assessed the results ofthe two lines.
Like the new battery development under the Moon Light Project, the aim of the project
initially was to install the batteries at demand locations as an “alternative to
pumped-storage.” As shown in Table 2, the development objectives were (a) realize a
1,500 electrical charge/discharge cycle corresponding to durability of ten years, (b)reduce the power generation cost to 300,000 yen per kW (equivalent to that ofpumped-storage power generation) and (c) ensure compact size and safety. However,during the 1980s, the focus was mainly on overcoming the durability issue 62 , because
NAS batteries were “expected to suffer damage to the β alumina when electrical charging
and discharging was repeated over only several hundred cycles at most, and there weredifficulties to improve durability”.
Table 2. TEPCO-NGK NAS battery development objectives
Item

Objective

Durability

At least 1,500 cycles (10 years)

Energy efficiency

At least 75% (electrical charge and discharge every 8 hours – AC end)

Economic efficiency

Equivalent to or exceeding pumped-storage power stations

Compact size
SafetySmall enough to install in cramped spaces in Tokyo metropolitan area
(at least 70kWh/m 3 ; at least 175kWh/m 2 )Damage doesn’t expand at times of external, internal irregularities

Source) Prepared by referring to Okuno (1993) and Harada (1993).

Since Ceramatech, Inc. in the U.S. was selling the highest quality β alumina tubes in
1984, NGK sought to achieve performance equivalent to this product. The team firstbegan by studying the characteristics of β alumina, and worked to clarify the mechanismthat damaged the material. It also undertook research on technology that could address
this issue thoroughly, even going so far as to investigate the composition of the raw
material powder.
To improve the β alumina tubes, NGK’s know-how related to the manufacture ofceramic products including insulators was used. NGK improved the β alumina tube
performance through countless cycles of creating and destroying prototypes, thencreating and destroying them again, until “there was a mountain of defective products inthe backyard.” Since ceramics products tend to exhibit variations in performance, andproducts for electric utility require high level of stability and quality not to lead disastrous
accidents, optimization through such an empirical approach was considered to be
essential. Hitachi’s approach to NAS battery development, on the other hand, could besaid to have been a contrast to NGK’s. For nuclear reactors, making and destroying
62

Okuno (1993).

21

prototypes like insulators wasn’t suitable. Optimization is achieved based on exhaustingly
repeated computer analysis, and a nuclear reactor is built just once, based on the results.
As the NAS battery development team was part of the nuclear power division at Hitachi,
the development was undertaken using a method similar to the approach for nuclear
reactors.
3-3. The establishment of Nastech and changes to the development organization
NGK’s proposal to develop the main body of the battery itself modified the project’sorganization so the two NAS batteries made by Hitachi and NGK would compete on
performance. In a step that clarified it would diversify into the electricity storage battery
business, NGK formed Nastech, a jointly managed NAS battery R&D firm, with theGerman company BBC. At NGK, top engineers of the organization were brought onto the
NAS battery development team, and the size of the team was expanded. Technology
exchange with BBC of Germany through Nastech improved NAS battery performance
significantly, and it was decided to take the project to the next phase. In 1992, a
50kW-classsystemwascompletedasa“practical

prototypeinstallation,”andsubsequently the project worked on enlarging the system. Hitachi exited the project in thenext year, and continued the development of its own independently.
In 1989 the joint development organization came to change when TEPCO and NGK’s“development and joint research on solid electrolyte tubes” ended. In the same year,
NGK proposed to TEPCO to begin “development and joint research on electric cells”
while implementing “module battery and related control technology development” on aparallel track. TEPCO accepted this proposal, and decided on a policy that both Hitachi
and NGK producing β alumina tubes and batteries and pitting their results against eachother 63 . The proposal from NGK and the development organization change were meant tohighlight the fact that NGK was not just a vendor of ceramics components in the form of βalumina tubes and that it intended to diversify into the electricity storage battery businessas a battery manufacturer. Besides, the technical interdependency between the β alumina
tubes and batteries can be said to have been another factor behind NGK’s proposal.
When the β alumina tubes suffered damage during operation, it was also necessary to
study the battery structure in order to determine the cause. To perform this investigationsmoothly, carrying out the study internally is more desirable than a division of labor
between firms.
The groundwork for NGK’s entry into the battery business through the NAS battery isthought to have actually been laid from several years prior to this period, however. For
starters, in 1986, two years after participation in the project, three engineers from Yuasa
Battery and other battery manufacturers were invited to join NGK. The purpose was tointroduce know-how from technical and business perspectives on batteries, with which
the company until that time was unfamiliar. This was followed by the technical tie-up for
NAS batteries with BBC of Germany in 1987 64 . In 1988, this technical tie-up evolved into
63

According to the Nikkei Sangyo Shimbun (28 August, 1989; January 6, 1990), the battery
development group for the project had already been divided between NGK and Hitachi in August 1989,
and the 10kW system evaluation at TEPCO in March 1990 targeted the units developed respectively bythese two companies.
64
Isozaki et al. (1998).

22the establishment by NGK and BBC of the jointly managed R&D firm Nastech, which had
a major impact on the success of the project.
Although NGK had produced NAS batteries experimentally before it entered thetechnical tie-up with BBC, it was not thought to have a sufficient level of technology toproceed to actual manufacturing and commercialization of a product. This was the reason
it decided, after surveying NAS battery R&D conditions overseas, to form the technicalalliance with BBC, which possessed state-of-the-art technology. The technical tie-up andestablishment of Nastech were undertaken to introduce NGK’s functional ceramics
materials technology into BBC and bring BBC’s NAS battery manufacturing technology
into NGK 65 . NGK took a 60% stake in Nastech for 320 million yen 66 . Despite theagreement with BBC confined NGK’s sales rights for NAS batteries to Far East 67 , thetechnology exchange through Nastech resulted in enormous improvement to NGK’s
battery processing technology and enabled the project to make great strides forward.
With the establishment of Nastech, NGK’s NAS battery development activities moved
into high gear. Nastech’s head office was opened within NGK’s headquarters 68 and adevelopment group of about 40 individuals took up NAS battery development by being
seconded to Nastech. Noboru Yamamoto, who as head of the laboratory at NGK served
as the technology leader, assumed the position of Nastech’s first president, and was
succeeded by Kokuji Kito, who had served as Deputy General Manager of NGK’s ElectricPower Business unit, in 1991 69 . When development of the mass production technology
was decided in the same year, the best engineers were gathered from among the top
people throughout the entire company, and by the time Nastech was dissolved in 1997
the development team would grow to about 100 people. Nastech was in reality NGK’sstronghold for NAS battery development 70 . On the other hand, TEPCO had also attracted
engineers from ceramics manufacturers, and in 1989 changed the organizational positionof the development team. NAS batteries had been merely one of the research themes of
the Electric Energy Laboratory of the R&D Center, and three or four people had been
responsible for this research. But in 1989, the group was set up as an independent“Electric Energy Storage Laboratory” as part of a reorganization of Technical ResearchInstitute. Although the Electric Power Storage Laboratory was initially launched with fouror five individuals, following development of the 50kW prototype machine the staff
increased to about seven people.
The mission assigned to the NGK development team at Nastech was to apply the NASbattery technology BBC had developed for electric vehicles to electric-load leveling. As
shown in Figure 5, electric cell development overlapped development of the β alumina
tubes, and in the 1990s the production of modules based on aggregation of the electric
cells and system verification tests were begun. Although the module systems were
65

Nihon Keizai Shimbun (December 23, 1991).
NGK Insulators (1997).
67
Takayama (2004).
68
Nihon Keizai Shimbun (January 12, 1988).
69
Nihon Keizai Shimbun (January 12, 1988) and Nikkei Sangyo Shimbun (July 2, 1991).
70
In conjunction with a reorganization of the Power Business Group in July 1990, the NAS
Development Division was set up within this business unit, and Takashi Isozaki was appointed the NAS
Development Division’s first general manager (Nikkei Sangyo Shimbun, July 3, 1990). Nastech’s NAS
battery development team was also put under the Electric Power Group’s NAS Development Division.
66

23

created initially using batteries based on the BBC design (but manufactured by NGK),
capacity enlargement and optimization of the design for load leveling proceeded
subsequently. This is because the specifications for batteries for electric load levelingdiffer from the specs for electric vehicles.
Figure 5. Main schedule of the TEPCO-NGK project

Source) Prepared by referring to TEPCO (2007), TEPCO-NGK (2006) and records of interviews at bothcompanies.

First, a 10kW module battery using the BBC-designed “A-04 type” electric cell wasbuilt for trial purposes. From March 1990, a 10kW class system using the same module
was evaluated at the electricity storage testing installation at TEPCO’s Kawasaki
substation 71 . In competition with a system made by Hitachi, a 10kW system configured by
NGK that used 1,320 electric cells was put through verification testing of the method forconnecting electric cells. In the following year, a 100kW class system for trial purposes
was fabricated by connecting twenty five 4kW modules that used the A-04 electric cells
and the “B11 type” insulation container designed by BBC, and verification testing was
begun from October 1991 72 . The purpose was to verify the control method when themodules were aggregated.
The “T3 type” NAS electric cell for electricity storage manufactured by NGK and a
12.5kW module produced by aggregating these cells were completed in 1991. In
December of the same year a 50kW class system comprised of four 12.5kW modules was
put through operational testing at NGK headquarters, and verification testing of the cells
connected to the electric power system at a TEPCO substation was begun the following
year from December 1992 73 . As the minimum NAS battery system unit to connect to the71

Nikkei Sangyo Shimbun (July 30, 1991).
Nikkei Sangyo Shimbun (January 27, 1992).
73
Nihon Keizai Shimbun (23 December, 1991; December 22, 1992).
72

24

electric power system, the 50kW class system was considered optimal from theviewpoints of cost, ease of maintenance and transport efficiency by truck. Moreover, thedevelopment of β alumina tube processing technology was advancing at NGK, and NAS
battery longevity was rapidly improved by introducing BBC’s basic battery structure. As aresult, the 50kW system, which had been moved to verification testing at the end of 1992,
was positioned as the “practical prototype” in which the basic elemental technologies
were established. In the subsequent development process, priority was placed on system
enlargement and overcoming incidental technical issues. Akiyasu Okuno, who wasinvolved consistently in NAS battery development at TEPCO since 1988 and who now in2007 is manager of the electricity storage research group, described the activities asfollows.
I’d say that by 1991, the technologies, the elemental technologies had been
established. Then in 1992, we conducted the first real field tests, byconnecting to the grid in the actual field at our substation and running theinitial inter-connected testing. That was just the 50 kilowatt practical prototype,though. Everything until then, I think, was pretty much at the basic elemental
technologies development stage 74 .
Furthermore, Tachibana made comment on the progress of development following thetechnology introduction from BBC and the transition of the development phase.
The number of continuous charge-and-discharge cycles without failure
improved immediately after the technology from ABB was introduced. Whenyou see a historical chart of the NAS battery’s technical development, you
would notice that at first the batteries failed after 100 cycles or less, and thenat a certain point they just suddenly improved. That sharp jump occurred when
NGK introduced ABB’s technology. The battery’s structure was totally different
from Hitachi’s. It was different from Yuasa’s structure either. It’s ABB’s
proprietary structure. I cannot emphasize more the significance of the uniquestructure of ABB’s. What I mean is that if it weren’t for this structure, the NASbattery technology would never have been commercialized in the world. . . . I
only understood later, after having observed how Hitachi and Yuasa struggled,that NGK had bought time. The ABB’s basic structure was as suchoverwhelmingly excellent. On the other hand, ABB recognized its limitations
on the ceramics technology, including, perhaps, thermal compression bonding
technology as well. This is the technology for joining metal and ceramics. . . .
Thus, ABB decided to work together with NGK at that time through such agive-and-take relationship for its development of NAS battery for EV. NGK, on
the other hand, decided to develop a large battery for electricity storage based
74

Quoted from the interview record (February 9, 2007). In 1993 Okuno was Senior Researcher at the
R&D Center’s Electric Energy Storage Laboratory; as of 2007 he works as manager of electric power
storage solutions at the Research & Development Center group of TEPCO’s Engineering Research &Development Division.

25

on ABB’s basic structure. Since then, our major battle field of the development
has been ensuring reliability and performance whilst enlarging the size of acell 75 .
On the other hand, Hitachi, which had a competitive relationship with NGK for the
supply of batteries during the joint development project, began electrical charge anddischarge testing of a 10kW module comprising 200 electric cells in March 1992 76 .
Hitachi and TEPCO terminated their joint development arrangement in the following year,
however, and Hitachi decided to pursue independent research thereafter. An engineering
center to expand the electric power system business within the Power Systems Division
was established at Hitachi in 1997, and a program to develop a one million kW classsystem by putting the center in charge of NAS battery development and channelinginvestment through the center was announced 77 . Hitachi’s plan was to develop a power
supply system combining 12.5kW of NAS batteries with wind power and solar generation
capacity and begin verification testing at its Electric Power and Electric Equipment
Development Group in Hitachi City in March 1998.
3-4. Progress of joint development and declining cost of pumped-storage
TEPCO’s role as the customer that would actually operate the NAS batteries increased
once the project entered the verification test phase. Through various exchanges that
accompanied the verification tests, the NGK and TEPCO development teams bounced
their know-how on electric power equipment quality control and quality improvement off
each other and boosted the NAS battery performance. On the other hand, the cost to
introduce pumped-storage power generation declined significantly during this period in
anticipation of future electricity deregulation. It threatened the continuation of the NASbattery project that had sought to replace such systems. Yet the project had the supportof both companies’ management, and the investment in NAS batteries was maintainedeven under TEPCO’s policy of curtailing its R&D budget. The project focused on lowering
the cost by developing technology to enlarge electric cell capacity that would lead to
reducing the number of components. Because the verification tests were conductedassuming NAS battery commercialization, efforts to seek easing of regulations that might
restrict NAS battery installations were also pursued in cooperation with other companies.
Furthermore, it was decided to carry out verification testing of the system installed incustomers’ properties, in addition to the system for substations, which until that time wereconsidered to be the main site for NAS battery installation. This decision proved to be an
important gambit when NAS battery commercialization was begun later on.
Following completion of the 50kW prototype, enlargement of electric cell capacity andmodule improvements were achieved by NGK and TEPCO from around 1993. Conducting
verification tests of a system connected with the electric power grid, the project aimed forenlargement of the system. Although the basic elemental technologies for the 50kW
75

Quoted from interview record (February 9, 2007).
Nikkei Sangyo Shimbun (March 23, 1992). According to this article, battery life at the time in 1992
was about two years and the system construction cost was about 100 times that of pumped-storage
power generation.
77
Nikkei Sangyo Shimbun (August 22, 1997) and Nihon Keizai Shimbun (December 25, 1997).
76

26

prototype device were established at that time, it took 11 more years until mass
production was begun in 2003. During this 11-year period, the joint development
organization comprised of the manufacturer (NGK) and customer (TEPCO) can be said tohave had a major influence on the progress of the development activity.
Electricity storage using NAS batteries is accomplished by joining electric cells intomodules, then combining these modules to make a system to connect with the electric
power grid. In the development process, various problems occurred during testing at themodule phase and at the system verification test phase, although the NAS batteries
operated normally as electric cells. During each phase, it was necessary to analyze theproblems and plan countermeasures. Material leaks and β alumina tube damage occurredas the result of factors not predicted at the design and fabrication stages, partly because
NAS batteries operate at high temperatures. The development teams at TEPCO and NGK
made it a practice to meet not only when trouble occurred, holding a “reporting session”
once a month. At these reporting sessions, troubles were confirmed and problems wereanalyzed getting back to fundamental principles of quality control. To solve problems,issues to be addressed, such as tests and inspections, were discussed and decided forthe next.
TEPCO and NGK’s know-how concerning electric power equipment quality control andquality improvement was combined through the process of addressing these problems. It
was one of the biggest factors that supported the progress of the development activity.
One wellspring of knowledge and experience that TEPCO enjoys as a power utility is thatit analyzes, pursues and adopts measures to address, together with manufacturers, thecauses of accidents originating in electric power equipment. Since Japanese customers
could demand stricter electric power quality than in other countries, it’s said that, throughtheir routine activities, engineers at power utilities are thoroughly trained in electric power
equipment quality control, investigation into the causes of accident, and quality
improvement. NGK, which has continuously supplied electric power insulators, similarly
possessed know-how and a corporate culture that is meticulous regarding thoroughquality. Based on its business relationships over long years, NGK was accustomed to theideal approach to quality control at power companies. In this project, manufacturer andcustomer worked closely together to overcome and improve the problems arising fromenlargement of the NAS battery system. This proved effective for ensuring the quality that
had to be achieved eventually as a product.
To develop a system for practical use, they had to act on three major issues 78 . These
were the cost to introduce the NAS battery, the government regulations, and the
product’s applications. In particular, the cost to launch the product was a significant issue
for all entities developing battery-based system of storing electric power that sought toreplace pumped-storage. The cost issue cast a shadow over the TEPCO and NGK project
as well until after commercialization. The issue was one of the two major difficulties thatthreatened the project’s continuation in the 1990s.
Development had been undertaken by envisaging the installation of NAS batteries atsubstations in urban neighborhoods, just like other battery-based electric power storage78

Based on Okuno (1993), Shito (1995) and Tachibana (1996).

27

systems, to replace pumped-storage power generation. This was the reason why one of
key development goal was set as lowering the cost to introduce the system to less thanthe pumped-storage power generation cost of 300,000 yen per kW. Over the ten years
from the project start, however, the “build and operate” cost of a pumped-storage power
station continued to decline, falling to about 200,000 yen per kW in the latter half of the
1990s. The drop in the target cost, which was the project’s “rival,” made achievement of
the goal difficult. Assuming the goal could not be reached, however, would call into doubt
the necessity of the project itself.
Originally, the cost to introduce pumped-storage power generation was high and cost
reduction was seen as the main issue. It was the reason development of a battery electric
power storage system was planned. In addition, as the difference between domestic andforeign electricity rates gained growing attention in the 1990s, people began to discuss
how Japan might proceed with reforms similar to the earlier deregulation of the electricity
business in Europe and the U.S. In 1995, as the first step of the deregulation known aselectricity liberalization, the Electricity Business Act was amended for the first time in 31
years. Owing to the amendment, IPP (Independent Power Producers) were permitted toenter the power generation business. Under Hiroshi Araki, who was company president
from 1993 to 1999, TEPCO anticipated the progress of electricity liberalization anddecided to implement a serious company-wide cost-cutting effort 79 . Based on its
company-wide cost reduction policy, power plant construction and operating procedures
were reviewed, and significant cost reductions were achieved by introducing a separate
order system and expanding overseas procurement of materials 80 . As the result of
introducing new works to shorten operations for steep gradient channel excavation anddam surface treatment, TEPCO was able to slash the construction cost by 15 billion yen,while further cost reductions were achieved in pumped-storage power station construction
by introducing new night-time electric power conditioning technologies 81 .
Spurred by the increasing difficulty of achieving the project goals in the wake of thedeclining cost of pumped-storage power generation and the prolonged development
period, voices questioning allocation of the resources and personnel for the NAS battery
project began to be heard within TEPCO around the year 1995. They complained, “Howmuch are we going to have to throw at this project before we get a product?” orcommented, “If we waste money and have nothing to show for it, we’re just doing it forour complacency.” Although a large fuel cell development project had been pursued at
TEPCO since the 1980s in parallel with the NAS battery, it was unable to achievetargeted results, and was recognized as a case “that did not go well” 82 . The example offuel cells generated distrust toward large projects like the NAS battery, and was brought
up whenever resources for the NAS battery were mobilized.
To cope with the issue of reducing the NAS battery cost, it was decided to proceed
79

Nikkei Sangyo Shimbun (April 7, 1994; June 15, 1995; December 17, 1996).
Nihon Keizai Shimbun (January 7, 1995; March 5, 1996).
81
Nikkei Sangyo Shimbun (June30, 1994; January 17, 1994; February 7, 1995).
82
Because they are less likely to cause air pollution problems and require limited installation space,
and their waste heat can be used for heating, an effort was undertaken to develop fuel cells as a
“distributed urban power plant” that can be installed in neighborhoods near the source of demandsimilar to the NAS battery. (Nikkei Sangyo Shimbun, March 17, 1983).
80

28

with development centered on enlarging the electric cell capacity. To apply the electric
cell Nastech had developed for electric vehicles to electric-load leveling, the electric cell
capacity had been enlarged. The 160Ah T3-type electric cell had been developed in 1991,
followed by the 320Ah T4 in 1996 83 . The cost to introduce the NAS battery at this time,
however, was about 3.0 million yen per kW. Because of the growing demand from themid-1990s to lower the cost, the focus was set to achieving a further enlargement of theelectric cell capacity from this time forward. The electric cells were the key component of
the modules that would constitute the power storage system. Since enlarging the electric
cell capacity would reduce the number of modules and system components, this was anefficient cost reduction measure. There was a trade-off, however, in that enlarging theelectric cell capacity lowered the energy efficiency. Consequently, technical progress
went back and forth between enlargement of electric cell capacity and enhancement ofenergy efficiency on the trade-offs.
TEPCO’s Tachibana offered the following observation about the difficulties resulting
from declining pumped-storage power generation cost and the prolonged development
period, and the support of the top management.
Pumped-storage had also become cheaper. This was one of the major
impacts of the liberalization of electricity supply industry in Japan. The
liberalization meant we could only win the competition by lowering our costs
as quickly as possible. Reduction of all power plant costs became the primaryissue of the management. We had assumed a pumped-storage power station
cost of 300,000 yen per kilowatt, but now it is one hundred and several tens of
thousands yen per kilowatt. Because civil engineering works are the heart ofpumped-storage, the civil engineering division slashed cost by making a
frantic effort. We had assumed the pumped-storage cost of 300,000 yen per
kW as our target. We worked very hard to achieve that goal, assuming that thebatteries would be commercially used once we could make them cheaper thanthat. But, the pumped-storage had become cheaper very quickly. . . . The only
thing we could do against this was to enlarge the size of a cell. I think this wasa big decision making for NGK as well, because enlarging the size of a cell
meant shouldering that much development risk. The possible use of thebatteries remained an open question. The target of cost fell very quickly.
Things became really severe. As such, the period, when we couldn’t see whenat all we would be able to put the batteries to practical use, was pretty tough. I
think the effort would have collapsed if the top management hadn’t continually
supported us during this hard time 84 .
Under TEPCO’s company-wide cost reduction policy, the R&D spending also peaked at
75 billion yen in fiscal 1993, and then continued to shrink until the first decade of the new83

Ah shows the unit Ampere-hours, which indicates battery capacity. A 160Ah battery can supply 160
amperes for one hour or 1 ampere 160 hours. An ampere is a unit of electrical current. Electric power
can be shown using watts (W) as a unit, electrical current using amperes (A) as a unit and electric
potential using volts (V) as a unit.
84
Quoted from the interview record (February 9, 2007).

29

century 85 . The reason R&D investment in the NAS battery was continued amidst the
declining budget was that the battery was positioned as “one of the main themes for
restraining investment in plant and equipment” at TEPCO. 86 It had been decided that
restraint of R&D spending would take the form of focused investment in “technologies
that would be effective in curbing plant and equipment investment.” 87
The second issue at this time was deregulation that would enable installation of theNAS battery. Since the sulfur and sodium used as raw materials in the NAS battery weretreated as hazardous goods in the Fire Service Act, permits based on the Fire Service
Act and the Building Standard Law would have to be obtained when installing the NASbatteries. It was believed the procedures based on laws and regulations that were
expected to be necessary for installation might become a factor restricting NAS battery
demand. Therefore, the central government was asked to ease its laws and regulations
from 1993.
Invigorating the activity to deregulate installation were the collaborative research by
the electric power industry, which continued until 1995 as the follow-up to NAS battery
development under the Moon Light Project, and the existence of rival manufacturers suchas Yuasa Battery and Hitachi. Deregulation based on a request submitted independently
by a specific development entity contradicted government principles, and was expected
to be difficult. Therefore, an “LL Procedure Response Study Committee” comprising nine
Japanese power utilities led by TEPCO, NGK, Yuasa Battery and Hitachi as
manufacturers and NTT as a customer was established in January 1994 88 . Highlighting
the NAS battery’s safety, the LL Procedure Response Study Committee sought
deregulation at the Fire and Disaster Management Agency and Ministry of Land,
Infrastructure, Transport and Tourism. As a result, a deregulation notification based onamendment of the Fire Service Act was issued in June 1999. Although the Fire Service
Act set products' safety as the condition for deregulation, the NAS battery produced by
NGK was certified as safe by the Hazardous Materials Safety Techniques Association in
2000. Furthermore, amendment of the Building Standard Law was approved in December
2003, greatly easing restrictions concerning implementation of open hearings, which had
been obligatory for any installation of NAS batteries. Cooperation by not only TEPCO andNGK but by other power companies and battery manufacturers as well was vital for therealization of such deregulation.
To address the third issue of NAS battery uses, in 1994 the companies decided todevelop and test units for customer installation in addition to the units for installation atsubstations, which had been the focus so far. Up to this point, NAS batteries had been
assumed to be installed at electric power suppliers’ substations. Now, in addition to this,the possibility that electricity customers have the means for electric power load levelingwas examined and became a target of development. The individual who gave instructions
to consider a system for installation at customers was Gaishi Hiraiwa, the president who
had decided to begin the project and was chairman at that time. After completing the85

Nihon Keizai Shimbun (May 31, 2000).
Nikkei Sangyo Shimbun (April 24, 1996).
87
Nikkei Sangyo Shimbun (April 19, 1995).
88“LL” is an abbreviation for Load Leveling.
8630

50kW prototype, the NAS battery development team wanted to start verification testing ofan even larger substation installation system. Nevertheless, when the development teamproposed a 1,000kW substation installation to TEPCO’s management, Hiraiwa instructed
the team to devote half of their effort to systems for installation at customers, noting that“the future of the business resides in distributed power system.” In fact, development of
distributed battery energy storage technology was underway in the government’s New
Sunshine Program and cogeneration equipment using city gas and oil as fuels was also
expected to come into widespread use as a distributed power system with the push forelectricity deregulation at that time 89 .
The project received Hiraiwa’s proposal and in 1995 began verification testing of a
500kW class substation system, a 250kW class system for customers that could serve as
an emergency power supply, and a 50kW class system for office buildings, all using a
12.5kW module comprised of T3 electric cells 90 . The cost of these verification tests
including the battery construction cost was about three billion yen 91 . In 1996, thefollowing year, together with the completion of a 25kW module based on T4 electric cells,
the project installed a 200kW class system for customers that could serve as anuninterruptible power supply, and began verification tests of a 50kW system delivered toNTT, the first customer that was not an electric power utility 92 . In 1998, verification
testing of a 200kW class system for customer installation using the same 25kW modules
was begun, and the actual load leveling effect and operating and maintenanceperformance were verified by modeling operating patterns of customers 93 . At this time,
however, systems for substations were still regarded as the main application. Tests on
the long-term reliability, construction methods, operation and maintenance of a 6,000kW
class system, the practical size for substation installations, were performed in 1997.
As a result of having added systems for customer installation to systems for substation
installation as a subject of the verification tests, the TEPCO development team, which
was moved to the R&D Center in October 1994, increased its staff significantly. From aseven-member team when the 50kW power supply model was developed, staffing wasboosted up to over 20 individuals as verification test locations multiplied and the teamfound itself short-handed. The organizational position of NGK’s development team wasalso changed. The NAS Development Department to which the development team was
assigned was renamed the NAS Development Division, and it became the NAS Business
Promotion Division in 1995. In conjunction with the withdrawal of ABB (the successor toBBC) from NAS battery development in 1996, the NAS Business Promotion Division waselevated to the NAS Battery Division. The development team, which had grown to roughly
100 people, was reassigned to this division. Takashi Isozaki, who had led thedevelopment team since the start of the project, became the first NAS Battery Division
general manager, and was succeeded in 1997 by Yoshihiko Kurashima. Kurashima, the89

In addition to the expected diffusion of cogeneration equipment, the Nikkei Sangyo Shimbun (May 5,1994) cited another reason for this kind of examination. That is, systems for customers could be madeready even with the technology level at that time because they would need less than 10% of theelectric power capacity of a system for substation installation.
90
Nishimoto and Terasawa (1996).
91
Nihon Keizai Shimbun (March 8, 1995).
92
Nihon Keizai Shimbun (August 17, 1996) and Nikkei Sangyo Shimbun (November 18, 1996).
93
Sato (1998).

31

former NAS Business Promotion Division general manager, led the team until 2001 94 .
ABB’s withdrawal from NAS batteries also eliminated the restriction preventing NGK fromselling NAS batteries overseas beyond the Far East.
When NGK later turned to NAS battery commercialization phase, the 1994 decisionand subsequent verification tests concerning the system for customer installation proved
to be critical foundations.
3-5. A second round of difficulties and redefinition of uses
With the completion of the T5-type electric cell and 50kW module, the NAS battery
reached its technical practical performance and the introduction cost was greatly reduced.
Because pumped-storage power stations had excess capacity by the end of the 1990s,
however, two new positions for NAS batteries were contemplated as alternatives topumped-storage. One was a distributed power source for installation at customers thatwould bind customers to power utilities after deregulation, based on cheap electricity
rates and stable electricity quality. NAS batteries were expected to supplement andprotect the consistent electric power supply operations power utilities had traditionallymanaged. The second was a device to stabilize the intermittent output from clean energy
power generation, which was increasingly demanding in this world. NGK decided toannounce its NAS battery business plans, and promote these additional battery functions
to its customers while putting more focus on the development of overseas markets.
The completion of the “T5” electric cell in 1998 provided an opening to solve theproblem the project encountered in the mid-1990s, that is, the decline in the target
introduction cost accompanied by a decrease in construction and operating cost of
pumped-storage power generation. The T5 successfully boosted battery capacity to
632Ah, 2.5 times greater than earlier batteries, and the 50kW modules and systems
produced by clustering these achieved a significant cost reduction. The cost to introduce
the NAS battery system was lowered from three million yen per kW to 1.2 million yen 95 .
Compared with the older T4, the T5 not only enlarged capacity but also improved energy
density by 20% and reduced the space required for installation to three-quarters thespace previously needed. Reduction of electric cells necessary for the system was madepossible because repeated development efforts solved the problem of trade off between
capacity enlargement of cells and energy efficiency up to certain level.
In 1999, a 6,000kW system for substation installation and a 200kW system for
installation at customers were fabricated using 50kW modules consisting of T5 cells andsupplied for verification testing. These were verification tests for the “practical application
phase” of systems for installation at substations and customer locations. The projectcontinued efforts to cut the cost by establishing the mass production technology,
rationalizing the design and finding alternative, inexpensive raw materials. At this point,
however, the project was thought to have reached the “region of technically practical

94

Nikkei Sangyo Shimbun (July 2, 1996; June 30, 1997; March 26, 2001). Takao Totoki, who was
general manager of the NAS Battery Division Manufacturing Department, served as the division
manager from 2001, and was followed by Taku Oshima, who was the division’s technology generalmanager, from 2004 (Nikkei Sangyo Shimbun, March 26, 2001, March 24, 2004).
95“Prospects for Large-scale Practical NAS Battery Application”, Koken, Vol. 36 No. 6, June 1998.

32

application” and the basic technology completed 96 .
However, as the 1990s drew to a close, the project faced with the second majordifficulty. Because pumped-storage power stations were holding excess capacity at thistime, doubts about the need for alternative devices began to be expressed. The
possibility that strong demand could no longer be anticipated for an alternative to
pumped-storage power generation, the main application considered at the start of the
project, had to be contemplated. From the 1970s through the 1990s, power utilities had
proceeded with pumped-storage power station construction owing to the growth in power
demand. Because pumped-storage power station construction and survey techniques had
progressed during these 20 years, site restrictions had been eased, and construction
costs had declined as well. Moreover, the rate of growth in maximum power demand has
slackened. As a result, after bottoming out in 1994, the electric power annual load factor
had followed a rising trend, as shown in Figure 2 97 . Consequently, with regard to the
maximum demand for electric power, people began wondering, “Won’t we be unable torespond sufficiently by the current pumped-storage facilities?”
Overcoming this crisis and commercializing the NAS battery therefore required thedevelopment of new uses to take the place of pumped-storage. At the instruction ofsenior management, TEPCO created an “Advisory Committee on Measures for Practical
Application of NAS Batteries” and encouraged a company-wide push to develop uses.
Eventually, the distributed power source installed at customers was set to one of main
applications of the NAS battery.
As deregulation of electric power moved forward, amendment of the Electricity
Business Act authorized new entrants into power generation business in 1995, andelectricity retailing in 1999 subsequently, selling to large-scale electric power customers
such as large-scale plants and supermarkets. It became possible for customers who had
been buying electricity from power utilities before this time to purchase electric powerfrom other sources, and to cover demand using private power generation. Customers
wanted less expensive electricity rates, and were expected to halt purchases from power
utilities. At TEPCO, this deregulation created a serious need to establish a plan tocounter the supply of electric power by other companies or by customers themselves.
By installing NAS batteries, customers themselves could perform electric power load
leveling and use inexpensive night-time power effectively. Moreover, since NAS batteries
can serve as an electric power backup system which has multiple functions of an
emergency power supply, uninterruptible power supply or power supply in the event of amomentary voltage drop, users can obtain stable electricity quality. The NAS battery was
positioned as a “device to provide customers with lower electricity rates and stableelectricity quality, while maintaining the unified supply business encompassing power
generation, power transmission and electric power supply managed until now by power
utilities.”
This pivot, from pumped-storage replacement based on installation at power utility
substations to maintaining customers under electricity deregulation, was made possible
96

Nikkei Sangyo Shimbun (May 27, 1998).
The annual load factor has been declining again since 2001. When the annual load factor until 2005
is examined, however, it appears to be on a long-term improvement trend.
97

33

by the verification testing decision taken in the mid-1990s. Because verification testing ofsystems installed at customers had been undertaken since five years earlier, the project
was able to proceed smoothly to shift the market target when it became necessary.
Besides, growing demand from the 1990s for reducing carbon dioxide (CO 2 ) gas
through clean energy use thought to have spurred the spread of NAS batteries. Since theoutput from clean energy sources such as solar and wind power generation varies greatly
depending upon the weather, their instability as a power supply was regarded as aserious problem. If these sources could be coupled with NAS batteries, it would bepossible to stabilize power supply through electricity storage at low loads. Hence, NASbatteries were also positioned as a “supplementation device to stabilize clean energy
power generation output” for which demand would increase.
At NGK as well, which had established the NAS Battery Division in 1996, continuing
the project by focusing mainly on installation at customer sites such as factories wasaffirmed from the standpoint of keeping the battery technology in-house, and by TEPCO’s
indication of its intention to carry on. Although the need to install NAS batteries at power
utility substations had been lessened by the construction of pumped-storage power
stations, demand for inexpensive, stable electric power at electricity customers was
expected to grow 98 .
In its “EXCEL-01” Five-Year Medium-Term Management Plan in 1997, NGK announced
it would begin operations at its NAS battery mass production plant in fiscal 1999 andseek to expand the business to 30 billion yen in five years 99 . The plan was revised insubsequent years, and NGK announced it would begin mass production of NAS batteriesin 2002 as a “key next-generation product in the electric power sector” and seek toachieve annual net sales “to regular companies,” i.e. customer firms other than electricutility, of 30 billion yen 100 . One factor behind the accelerated commercialization of NAS
batteries might have been the drop in domestic sales of insulators, NGK’s core product,
as power utilities restrained capital investment because of electricity deregulation 101 .
NGK’s sales in its power-related business centered on insulators peaked at 99.5 billion
yen in the fiscal year ended March 1993, then traced a downward trend, reaching 67.6
billion yen in the fiscal year ended March 2000 102 .
As shown in Table 3, starting with Chubu Electric in October 1995, NGK delivered NAS
batteries to power utilities other than TEPCO, including Tohoku Electric, Hokuriku Electricand Chugoku Electric, for the purpose of verification testing. Until about 1998, the main
customers were power utilities in Japan 103 . However, once the basic technology forpractical application was considered to have been achieved with completion of the T5
electric cell, NGK announced plans to sell to large-scale customers through theintroduction and verification testing of a 500kW system, using itself as a customer 104 .

98

Nakabayashi (2004a).
Nikkei Sangyo Shimbun (April 11, 1997).
100
Nikkei Sangyo Shimbun (July 15, 1998).
101
Nikkei Sangyo Shimbun (December 8, 2000).
102
Based on NGK’s Annual Securities Report.
103
Nakabayashi (2001) and Nihon Keizai Shimbun (November 23, 1998).
104
Nikkei Sangyo Shimbun (July 15, 1998).
9934

Table 3. Main verification tests of NAS batteries made by NGK

Source) Prepared from secondary reference materials.

As NAS battery sales in 1999 were weak 105 , domestic and overseas market
development activities began earnestly in 2000 106 . First, although up until then customers
had been solicited by NAS batteries’ peak power control function, it was decided tohighlight their additional functions, namely, emergency power supply and uninterruptible
power supply functions. Second, NGK came to emphasize overseas market development.
Due to ABB’s withdrawal from NAS batteries, more aggressive overseas deployment was
now possible because restrictions on sales were removed. Business development in the
U.S. market began to be considered, following receipt in 2000 of an order for NAS
105
106

Nihon Keizai Shimbun (October 27, 1999).
Nihon Keizai Shimbun (December 7, 2000).

35

batteries for verification testing from American Electric Power (AEP), a large powercompany in the United States 107 . In the United States, unstable electricity quality due toexcess rationalization following electricity liberalization was seen as a serious problem,as symbolized by the California electric power crisis, and demand for uninterruptible
power source equipment had increased owing to the expanding use of computers.
Moreover, the use of renewable energy had grown along with heightened environmental
awareness in Europe and America. All of these circumstances were seen as creating
business opportunities for NAS batteries.
With this redefinition of applications, final verification testing for customer installationand installation with wind power generators was begun around 2000, moving the project
closer to commercialization. At TEPCO, internal R&D spending excluding personnel
expenses was reduced by six billion yen down to 36 billion yen in fiscal 2001 because of
a cutback in NAS battery verification test investment 108 . On the other hand, 5.2 billion yen
was allocated for purposes such as “research to enhance NAS battery convenience as aservice for customers.”
3-6. Technology development activities for reducing introduction cost
Following completion of the 50kW prototype in 1992, lowering the cost incurred tocustomers at introduction of the NAS battery continued to be a major issue for the project,along with ensuring durability and safety 109 . During NAS battery commercialization, theintroduction cost was consistently a thorny problem for the project. While the spread ofelectricity liberalization provided the opportunity for NAS battery commercialization, it
made the unit price level demanded by customers even more severe 110 . Just as a large
reductionintheintroduction

cost

was

neededasanalternativetoreplacepumped-storage, a large reduction in the introduction cost was also necessary as a
distributed power source installed at the customer. Although the initial cost was expected
to fall as a result of mass production, various technical developments were carried out forcommercialization additionally. Because enlargement of the electric cells for lowering thecost reduced energy efficiency, many efforts were put into increasing the energy
efficiency.
As for the β alumina tubes, energy efficiency was improved by lowering the sodium ion
conduction resistance. Moreover strength of the tube was also improved not to bedamaged by the temperature rising and cooling process during operation of the enlarged
batteries. For this purpose, technology to control the composition and crystalline structureof the raw materials, and inspection techniques to detect impurities and minute defects,
were developed 111 .
For the electric cells as well, greater energy efficiency was achieved by lowering theresistance of the cathode, which together with the β alumina tube accounts for 86% of the107

Takayama (2004).
Nikkei Sangyo Shimbun (April 20, 2001).
109
Ohara, who succeeded Takemi as NGK president in 1986, also spoke in an article in the Nihon
Keizai Shimbun (December 8, 1991) about the difficulty of cutting the cost of installing NAS batteries,
noting that “even if the cost drops in theory, cost reductions are difficult in reality.”
110
Based on the words by NGK president Atsune Matsushita in the Nihon Keizai Shimbun (January 13,2005).
111
Isomura and Kajita (2004).
108

36

battery’s resistance. In addition, anti-corrosion technology was developed to reduce thedecline in battery capacity. Since the batteries could be damaged by the stress stemmingfrom components’ differed rates of thermal expansion and contraction during battery
operation, a design to relieve the stress was adopted, and the strength of both the βalumina tube and the glass joint region was improved 112 . Furthermore, because the dropin the battery temperature activate the heater to maintain the operating temperature, thus,
decrease energy efficiency of the module, radiation of heat from the insulating container
was reduced by adopting a vacuum insulation design and an insulation mat.
To ensure safety, a “multiple protections” approach was adopted. The approach was toprotect against damage to the electric cells, prevent active material from leaking if a cellis damaged, and finally prevent a cascade of failures if there is a leak by sealing the leakwithin the module. A safety tube to prevent active material from leaking was placed in theelectric cells and a fuse to prevent excessive current was attached. The modules were
designed to ease external stress from outside, and the spaces between the electric cells
were filled with dry sand to limit the amount of oxygen and heat of reaction 113 .
In addition to using inexpensive raw materials, and simplifying and standardizing parts,
thorough efforts were made to shorten and automate mass production operations,because the batteries would be “fabricated from the most complex operations among anyof the products handled by the company as a single product. 114 ” For the β alumina tube
manufacturing process, a direct synthesis method that greatly shortened powder
processing from the 30 steps developed by Ford in 1977 to four processes, and acontinuous synthesis furnace that shortened synthesis time by more than 85% weredeveloped. For both the batteries and modules the manufacturing process was tweaked
repeatedly, and an automated sodium filling machine, automated sulfur mold forming
machine, and automated wire connecting machine were developed. The assembly andinspection processes were also automated by introducing robots.
For the system as a whole, development was undertaken to add an emergency power
supply function, momentary voltage drop prevention function and an uninterruptible
power supply function to NAS batteries. Besides, an easy-to-operate interface that would
avoid most dangers for general customers was designed 115 . Finally, the equipment andinstallation construction costs were reduced by installing a battery control function to thebattery packages to be delivered to general customers, and designing the packages witha prefab unit structure.
In addition to technological developments above, the ramp-up of production helped
reduce the introduction cost. The opportunity to increase NAS battery production camewith the start of TEPCO’s activities to market the system to customers.
3-7. The final stage: start of sales activities and mass production
112

Yoshida et al. (2004).
NGK experienced a fire in a module battery during a voltage-resistance test at its NAS battery
plant in Komaki City, Aichi Prefecture, on February 7, 2005 (NGK press release dated February 10,2005). Because the safety measures based on the multiple protections concept had been adopted,
however, the fire was not serious, and except for part of the inspection facility, operations wererestarted in the following month (NGK press release dated March 24, 2005).
114
Yokoi et al. (2004).
115
Abe (2004).
113

37

NAS batteries were finally commercialized assuming two types of uses. First,
customers are able to use them to lower electricity rates and stabilize electricity quality,
while giving consideration to the environment. Second, customers are able to utilize thebatteries to stabilize output from renewable energy power generation. Commercialization
proceeded through the start of sales activities by TEPCO and the start of mass
production by NGK. TEPCO strove to reduce customers’ introduction cost by handling the
NAS battery leasing, and contracted operation monitoring and maintenance services forthe battery system. Other power utilities also began NAS battery sales activities in areas
outside TEPCO’s jurisdiction. As a result, NAS batteries began to be delivered to users
such as sewerage treatment facilities, research institutions, factories, retail facilities andhospitals. Owing to the sales effort led by TEPCO and the start of mass production at
NGK, NAS battery production rose and the introduction cost fell. Nonetheless, until 2005,
as it was frequently pointed out that sizable initial cost prevented wide adoption of NAS
batteries, further cost reduction efforts such as automation of manufacturing operations
and standardization of parts were done. Signs of improvement in this situation were firstevident in fiscal 2006.
The NAS battery project had moved to the commercialization phase through thereexamination of applications and target customers carried out around 2000. Sales ofNAS batteries were encouraged by highlighting the following points. To begin, thebenefits to electric power customers were divided roughly into three points. First, by
installing NAS batteries, electric power customers would be able to achieve electricity
cost savings without having to begin generating their own power or entering newtransactions with electric power retailers other than power utilities. Second, while
installation of NAS batteries required a considerable introduction cost, they eliminated theneed for customers to separately prepare an emergency power supply function,
momentary voltage drop prevention function and an uninterruptible power supply function,
because the batteries provided these functions in addition to their basic load leveling
function. Third, unlike other generating equipment, NAS batteries do not generate CO 2 orother gases and have a low environmental load because of their completely sealed
structure. Accordingly, they can provide low electricity rates, and ensure high electricity
quality, while addressing environmental problems. NAS batteries were seen as helping
power utilities to maintain their unified electricity supply business using existing powerlines and counter customer loss stemming from deregulation.
On the other hand, although the instability of output from renewable energy sources
such as wind power had become a bottleneck hindering the diffusion of these alternative
power sources, this could be overcome by installing NAS batteries in combination withsuch systems. Because countries were beginning to require power companies to use acertainpercentageofrenewableenergy,

it

could

be

expectedtoproduceacommensurate amount of demand for NAS batteries as devices to supplement thesepower sources.
Commercialization based on this clarification of users and selling points led to the startof development through two activities. These were the formation of sales and marketing
team by TEPCO, and the construction and operation of a mass production plant by NGK.
Around September 2001, TEPCO, decided to begin selling NAS batteries to its regular38

customers in 2002 116 . Because until that point the NAS battery project did not have any
point of contact with the sales division, the sales division had initially doubts about thepracticality of the batteries. Nevertheless, as the sales people recognized the product’s
merits, they turned to aggressive sales of the NAS battery to electric power customers.
Satoshi Yabe, who served as the manager of the development planning group in theDevelopment Planning Department at TEPCO’s Engineering Research & Development
Division, acted as the liaison between the project and the sales division. Since making
the most use of developed technology in products or processes was recognized by thedevelopment planning group as one of its missions, successive managers of the groupfocused considerable effort on identifying NAS battery customers.
Spurred by aggressive encouragement from the Development Planning Department, aten-member NAS battery sales team under manager Koji Tanaka was organized in
October 2001 within TEPCO’s Corporate Marketing & Sales Department. Five individuals,
or half of the sales team, were transferees from the development group. The sales teamwould grow to about 25 people by 2007. TEPCO announced that it would begin selling
NAS batteries in April 2002 for about 200,000 yen per kW to large-scale customers suchas semiconductor fabrication facilities that use 500kW or more of electric power 117 . The
initial cost to a customer to introduce 1,000kW of NAS batteries was about 200 million
yen. The sales target for first year of business was sales of three billion yen based onorders for 15,000kW. TEPCO planned to not only sell NAS batteries but also provide
after-sale battery operation monitoring and maintenance services.
Furthermore, three months before the start of sales in January 2002, the decision to
begin an NAS battery leasing business was made 118 . This was a measure to prevent thesizable initial cost of the batteries from becoming an obstacle to their purchase. TEPCO
would purchase NAS batteries from NGK, lease them to customers and provide battery
operation monitoring and maintenance services. This was a mechanism to enable
customers to use NAS batteries simply by paying the leasing fee each month, provided
they signed a lease agreement with TEPCO for ten years. This leasing operation evolved
into a business of batch leasing to customers’ energy supply systems that minimized
electricity rates by combining NAS batteries with equipment such as the “Eco-ice” 119 ice
thermal storage air conditioning system 120 . TEPCO also worked to provide NAS batteries
through the integrated energy supply business that TEPCO developed through a
subsidiary in partnership with trading companies 121 .
Following the establishment of the sales and marketing organization at TEPCO,TEPCO and NGK inked an agreement concerning sales, as they jointly had developed
NAS battery and its business. The content of the agreement are as follows. First, TEPCO
116

Nihon Keizai Shimbun (September 2, 2001).
Nihon Keizai Shimbun (October 20, 2001).
118
Nikkei Sangyo Shimbun (January 18, 2002).
119“Eco-ice” is a thermal storage device developed by power utilities in Japan and companies such as
Daikin Industries, Ltd., Hitachi, Ltd., Mitsubishi Electric Corporation and Toshiba Corporation. It uses
inexpensive nighttime electricity to make ice that can then be used for daytime air-conditioning.
120
Nihon Keizai Shimbun (December 5, 2002).
121
Japan Facility Solutions, Inc., a company formed by TEPCO and Mitsubishi Corp., manages anenergy conservation support business, and NAS batteries are incorporated into this business (Nikkei
Sangyo Shimbun, May 7, 2003). The business provides integrated systems, as a project entity at eachcustomer, for handling activities from receipt of electricity to maintenance checks.
117

39

would act as a window to sell the NAS batteries manufactured by NGK, and supply themas a system combined with other electric power equipment, within TEPCO’s power supply
jurisdiction. Second, TEPCO would provide services of monitoring operation andmaintenance after NAS batteries were sold. In this case, NGK would earn the NASbattery sales revenue, while TEPCO would obtain the system sales revenue and income
from the monitoring and maintenance services and thus could expect the buyers toremain with it as electric power customers. On the other hand, NGK could engage in bothNAS battery manufacturing and sales activities outside of TEPCO’s jurisdiction. Because
commercialization had been achieved through the joint development system, however,TEPCO would receive a set royalty fee on such NAS battery sales. In the jurisdictions of
power utilities other than TEPCO, the batteries were provided by power companies as acustomer service in most cases, because the NAS battery benefits were related toelectric rates 122 .
Although sales through TEPCO eventually accounted for the largest percentage ofsales, power utilities other than TEPCO also began preparations to sell NAS batteries
from about 2001. Tohoku Electric Power Co., Inc., for example, had pursued the
distributed power supply business including cogeneration equipment in those days aswell as other power utilities. As it was assumed to use NAS batteries in this business,
Tohoku Electric Power began verification tests at group companies aimed at installing thebatteries at customers 123 . Moreover, at the end of 2001, Kyushu Electric Power Co., Inc.
announced it would sell NAS batteries manufactured by NGK to its large-scalecustomers 124 . This was a plan to “foster solution-oriented sales approach as core” tomaintain large customers, as part of them had begun to terminate their dealing with thecompany taking the opportunity of deregulation. Kyushu Electric began the verification
tests assuming their NAS battery business at the Fukuoka City Waterworks Bureau in
2002, then started an NAS battery leasing business in 2003, expecting annual orders of
4,000kW 125 .
The start of sales operations centered on TEPCO would greatly expand NAS battery
shipments. Although full-fledged sales operations began from fiscal 2002, some customer
deliveries were made during fiscal 2001. A 1,000kW NAS battery was introduced
experimentally at Asahi Breweries’ Kanagawa Plant in July 2001, followed by a delivery
as the first “completed product” to the Tokyo Kasai Water Recycling Center at the end of
the year 126 . Although the central government bore half of the introduction cost of 400
million yen, this transaction was not a verification test but a sale for which actual
operation as a product was warranted. The Tokyo Metropolitan Government prepared aplan to continually introduce NAS batteries at sewerage system-related facilities, making
Tokyo one key customer for the project’s NAS business. As shown in Table 4, from 2003
through 2007, deliveries were made continuously to Tokyo for installation at the
Shinmachi Water Supply Station, Koto Water Supply Station, Morigasaki Water
Reclamation Center, Sunamachi Water Reclamation Center, Miyagi Water Reclamation
122

Nakabayashi (2004b).
Nihon Keizai Shimbun (February 14, 2001; November 2, 2001).
124
Nihon Keizai Shimbun (December 26, 2001: January 30, 2002).
125
Nihon Keizai Shimbun (February 7, 2003).
126
Nihon Keizai Shimbun (July 27, 2001).
123

40

Center and Kita-Tama Ichigo Water Reclamation Center. Especially large-capacity NAS
battery complex totaling 8,000kW was delivered to the Morigasaki Water Reclamation
Center. Urban sewerage-related facilities have a high electric-load leveling need because
the quantity of electricity used varies intensely depending on rainfall, and water treatment
for Tokyo’s 23 wards alone consumes electricity corresponding to 1% of total electricity
use in the Tokyo metropolitan area. Tokyo decided to continue introducing NAS batteries
in order to save on its electric bill and reduce its CO 2 emissions volume 127 . From fiscal
2002 NAS batteries continued to be sold to research facilities, factories, retail facilities,
universities, hospitals and other institutions, primarily within TEPCO’s marketing territory.

127

Nihon Keizai Shimbun (December 8, 2001; April 8, 2002).

41

Table 4. Examples of deliveries of NAS batteries manufactured by NGKYearInstalled capacity(kW)

EntityInstalled location

Application

Reference

2001

1,000

Tokyo Metropolitan Government

Kasai Water Recycling Center

Customer

Nihon Keizai Shimbun (July 27, 2001; December 8, 2001; April 8, 2002; May 15, 2002)

2002

1,000

Fujitsu Limited

Akiruno Technology Center

Customer

Nihon Keizai Shimbun (June 12, 2002; July 17, 2002)

1,000

Ito-Yokado Co., Ltd.

Two large Kansai Region stores

Customer

Nikkei MJ (February 5, 2002)

1,000

Fuji Xerox Co., Ltd.

Ebina Office

Customer

NGK press release (December 16, 2002)

800

Takaoka Electric Mfg. Co., Ltd.

Koyama office

Customer

NGK press release (December 16, 2002)

2,000

Pacifico YokohamaInternational Broadcast Center

Customer

NGK press release (December 16, 2002)

400

City of Yokohama, Kanagawa Prefecture

Imai drainage basin

Customer

Nihon Keizai Shimbun (June 28, 2002); Yokohama website: “Environmental Preservation Efforts”

1,000

Meisei University

Hino campus

Customer

Meisei University (2007)

1,000

TEPCO

Chichibu substation

Substation

NGK press release (July 21, 2006)

200

Tokyo Metropolitan Government

Shinmachi Water Supply Station

Customer

Nihon Keizai Shimbun (March 6, 2003)

300

Tokyo Metropolitan Government

Koto Water Supply Station

Customer

Nihon Keizai Shimbun (March 6, 2003)

1,000

Tokyo Dome Corporation

LaQua

Customer

Nihon Keizai Shimbun (May 17, 2003)

1,000

TEPCO

Kamiyama substation

Substation

Nikkei Sangyo Shimbun (August 15, 2003)

1,000

TEPCO

Matsuo substation

Substation

Nikkei Sangyo Shimbun (August 15, 2003)

8,000

Tokyo Metropolitan Government

Morigasaki Water Reclamation Center

Biomass power station support

Nikkei Sangyo Shimbun (March 27, 2003)

500

Saga City

City Hall office building

Customer

Nihon Keizai Shimbun (June 11, 2003)

na

City of Yokohama, Kanagawa Prefecture

Kaminagaya water supply pond

CustomerCity of Yokohama press release (April 12, 2004)

500

Taiyo Pharmaceutical Co., Ltd.

Takayama Plant

Customer

Nikkei Sangyo Shimbun (May 10, 2004)

4,000

Japan Tobacco, Inc.

Kita-Kanto Factory

Customer

Nikkei Sangyo Shimbun (August 3, 2004); Energy Conservation Center, Japan website

8,000

Hitachi, Ltd.

Automotive System Group

Customer

NGK Fiscal 2004 Business Report (June 2005)

1,400

Tokyo Metropolitan Government

Kasai Water Recycling Center

CustomerTokyo Metropolitan Government, “Status Report on the Progress of Key Projects” (FY2004 interim report)” (October 29, 2004)

250

Mochida Pharmaceutical Co., Ltd.

Otawara Plant

Customer

Nikkei Sangyo Shimbun (May 28, 2004)

2,000

Tokai University

Tokai University Hospital

Customer

Nikkei Sangyo Shimbun (May 7, 2003)

1,000

Canon Inc.

Hiratsuka Plant

CustomerHeat Pump and Thermal Storage Technology Center of Japan (2005), “COOL & HOT”, no. 23

2,000Canon Inc.

Yako Office

CustomerSame as abovena

Fujitsu Limited

Aizu Wakamatsu Plant

Customer

Nikkei Sangyo Shimbun (August 25, 2006); Fujitsu Limited “Plant Environmental Management Report Fiscal 2005”

na

Mitsubishi Chemical Corporation

Tsukuba Plant

Customer

Nikkei Sangyo Shimbun (January 13, 2005)

500

TOTO

Oita Plant

Customer

Nikkei Sangyo Shimbun (February 21, 2005)

2,000

Tokyo Metropolitan Government

Sunamachi Water Reclamation Center

Customer

The outer area of Tokyo waterworks bureau'Environmental guide in drainage'(http://www.city.yokohama.jp/me/suidou/kyoku/torikumi/kankyo-hozen/nas.html)

2003

2004

(http://www.eccj.or.jp/succase/07/G/kan07.htmI>(http://jp.fujitsu.com/microelectronics/environment/factory/2005/index-p2.html)
2005(http://www.gesui.metro.tokyo.jp/kanko/kankou/kankyou/guide03.htm)
2,000

Fujitsu Limited

Mie Plant

Customer

Chubu Electric Power Co., Inc. press release (April 27, 2005)

na

Tamagawa Academy

Tamagawa University campus

CustomerTamagawa Academy, “2005 Self-Review and Evaluation Report” (March 2006)

500

City of Yokohama, Kanagawa Prefecture

Chubu Water Reclamation Center

CustomerCity of Yokohama website, “ISO Pilot Project (Excellent Examples) Report”(http://www.city.yokohama.jp/me/kankyou/mamoru/iso/pilot/1708.html)

42

2,000

Ito-Yokado Co., Ltd.

Ario Kawaguchi

CustomerHeat Pump and Thermal Storage Technology Center of Japan (2006),”COOL & HOT”, no. 26

2,000Sankyo Co., Ltd.

Research & Development Center

CustomerHeat Pump and Thermal Storage Technology Center of Japan (2005), “COOL & HOT”, no. 23

1,500

Kirin Brewery Co., Ltd.

Toride Plant

Customer

Nikkei Sangyo Shimbun (March 8, 2006)

1,000

Tokushima Bunri University

Tokushima campus

CustomerTokushima sentence reason university press release (June 14, 2006)

750

ITOCHU Techno-Solutions Corporation

Data Center

Customer

CTG Data Center website, “Advanced Efforts for the Environment”

1,000

AEP

West Virginia

Substation

TEPCO press release (July 21, 2006); Nikkei Sangyo Shimbun (July 24, 2006)

1,000

Fujitsu Limited

Mie Plant

Customer

Nikkei Sangyo Shimbun (August 25, 2006)

2,000

Ito-Yokado Co., Ltd.

Ario Kameari

CustomerHeat Pump and Thermal Storage Technology Center of Japan (2006),”COOL & HOT”, no. 26

2,000

Fujifilm Corporation

Advanced Research Laboratories

Power supply and emergency power supply

Heat Pump and Thermal Storage Technology Center of Japan (2006),”COOL & HOT”, no. 26

2,000Tokyo Metropolitan Government

Miyagi Water Reclamation Center

CustomerTokyo Metropolitan Government Bureau of Sewerage, “Sewerage Environmental Guide”

2007 orna

Tokyo Metropolitan Government

Kita-Tama Ichigo Water Reclamation Center

Customerlater

12,000Honda Motor Co., Ltd.

Automobile R&D Center Tochigi

Customer

Honda Motor Co., Ltd., “HONDA Environmental Annual Report 2007” (June 26, 2007)

34,000Japan Wind Development Co., Ltd.

Futamata Wind Power Station

Wind power supplementation

Nihon Keizai Shimbun (January 30, 2007; April 20, 2007); Distributed Power Generation News (April 4, 2007)

6,000

AEP

West Virginia, Ohio

Substation and wind power supplementation

Nihon Keizai Shimbun (October 4, 2007)2006(http://www.crc.ad.jp/datacenter/nas.html)(http://www.gesui.metro.tokyo.jp/kanko/kankou/kankyou/guide03.htm)
Tokyo Metropolitan Government, “Status Report on the Progress of Key Projects” (FY2004 interim report)” (October 29, 2004)

Source) Prepared by the author based on references shown in the table.

43

Together with the establishment of a sales and marketing organization by TEPCO,
NAS battery commercialization was aided by the creation of a mass production system by
NGK. NGK invested five billion yen to construct an NAS battery plant with annual
production capacity of 65,000kW in Komaki City in Aichi Prefecture, which it began
operation in fiscal 2003. A goal of increasing annual sales to about nine billion yen wasset, with plans to expand annual production capacity up to 200,000kW within several
years 128 . The increase of production volume with the start of mass production was
expected to help lower the introduction cost of NAS battery as shown in Figure 6 129 .
Figure 6. Change in estimated introduction cost per kW of NAS battery assemblies(1,000kW)
（ ％）

100
90
80
70
60
50
40
30
20
10
0
97

98

99

00

01

02

03
（ year）

Note) The value for each year are indicated as a percentage with the value in 1997 as 100. Values arefor the battery units only; the cost of converters that are combined with the batteries andconstruction costs are not included.
Source) Prepared with reference to Nakabayashi (2004b) and Nikkei Sangyo Shimbun (May 27 1998;
February 9, 1999; December 38, 2001; January 18, 2002).

However, as lowering the introduction cost to the level customers demanded in the
midst of electricity liberalization was no easy task, efforts including further automation of
the production processes and standardization of components were made repeatedly evenafter commercialization 130 . The target value for the introduction cost of the battery alone
was 150,000 yen per kW, even lower than the amount aimed at pumped-storage
replacement. Until about 2005, slow diffusion of NAS batteries caused by the highintroduction cost had been noted frequently 131 . The full-scale introduction at thecompany’s substations announced by TEPCO in August 2003 was said to have had the128

Nihon Keizai Shimbun (December 8, 2001; May 17, 2003).
Nakabayashi (2004b).
130
Based on words by NGK President Atsune Matsushita in the Nihon Keizai Shimbun (January 13,2005).
131
See, for example, Nihon Keizai Shimbun (February 7, 2003; December 16, 2004; January 13,2005).
129

44

partial aim of reducing the NAS battery price through TEPCO’s own use 132 . Owing to thetwo companies’ cost reduction push and sales efforts, growth in demand could be
projected around fiscal 2006.
3-8. Outcome of the NAS battery project to-date
Let us look at business outcome of the NAS battery, TEPCO and NGK struggled over
20 years to commercialize. As of September 2006, about 80% of the two companies’ NAS
batteries have been installed mainly at electric power customers in TEPCO’s jurisdiction;
half are used for storage while concurrently serving added functions such as emergency
power supply. At NGK, since their electric power-related business, in which the project
was placed, had been strong in the market and some other diversified businesses had
been growing gradually, prolonged NAS battery development had been supported
financially. The company’s NAS business, though sluggish earlier, improved earnings
from fiscal 2006 and accounted for about 14% of all electric power-related businessrevenues in the same year. This was because overseas power utilities were beginning tothink cutting capital investment using NAS batteries, and domestic demand for wind
power generation was growing. TEPCO, on the other hand, has seen new market
entrants grab more than 4% of the market in its jurisdiction in recent years, despite its
efforts to maintain customers through price reductions based on investment controls. The
impact of the NAS battery business on TEPCO’s operating results is not affirmative. Still,
if we simplify the matter, it possibly kept 5% of the TEPCO customers who might haveswitched to new players in the business, besides earning from NAS business alone.
Despite the possible competition with various product technologies in the long run, as thefirst battery for electricity storage to be commercialized on a mass production scale,growth is expected for their NAS battery business.
We look first at the types of the customers and their uses of the NAS battery. By
September 2006, NAS batteries with capacity of 132,000kW had been delivered to 92
domestic locations for the customers shown in Table 4 133 . Of these, deliveries within
TEPCO’s jurisdiction were made to 71 locations for a total of 115,000kW, representing
77% of all delivery locations and 87% of total delivered capacity. In addition, 80% ofrevenues were from the use of leases, rather than from purchases. It appears that
customers introduce the NAS batteries with lowered initial cost using leases and thesystem of central government grants 134 . As so many customers are in the Kanto area, thesales by TEPCO adopting the leasing system is thought to have contributed to the growthin NAS battery sales.

132

Nikkei Sangyo Shimbun (August 15, 2003).
The NAS battery delivery record shown here is based on TEPCO-NGK (2006).
134
The government has implemented various support ptograms for projects that use energy resources
effectively; one program that made the NAS battery introduction project eligible for assistance, forexample, was the Advanced Load Leveling Equipment Introduction and Diffusion Model Project
implemented by the Ministry of Economy, Trade and Industry.
133

45

Figure 7. Percentage of NAS battery sales by customer category

15%
7%
11%

53%

14%
Factories
Shop p in g cen ters
N ation al research in stitutes
Service w ater and sew erag e treatm en t facilities
Other

Note) Cumulative through September 2006. Delivered capacity basis.
Source) TEPCO-NGK (2006).

Figure 8. Percentage of NAS battery sales by installed function

7%
49%

44%
Loa d levelingEm erg en cy p ow er sup p ly a n d p ow er sup p ly in even t of am om en ta ry volta g e d rop
U n in terru p tib le p ow er sup p lyNote) Cumulative through September 2006. Delivered capacity basis.
Source) TEPCO-NGK (2006).

46

NAS battery installation locations are overwhelmingly at electric power customers
rather than substations. When customers are looked at by business category, factories
account for half of the locations on a delivered capacity basis as shown in Figure 7,
followed by shopping centers, national research institutes and service water andsewerage-related facilities. According to surveys by TEPCO and NGK, the main reason
for introducing NAS batteries differs depending on the customer. The major reason givenby shopping centers such as supermarkets and department stores is “to reduce ourelectricity bill.” In contrast, “to achieve a highly reliable power supply” and “ease ofmaintenance” to stably receive a high-quality power supply were given as the main
reasons by service, water and sewerage treatment facilities, plants of semiconductor andprecision parts manufacturers, and hospital facilities. At firms and schools with active
environmental programs, “pollution-abatement measures are unnecessary” was cited as
the main reason. Such differences in needs seem to have been reflected in the installed
functions of the NAS batteries that were introduced. As shown in Figure 8, on a delivered
capacity basis, 49% of NAS batteries delivered were for load leveling to help reduce
customers’ electric bills, and 51% had ancillary functions as emergency power supply,
momentary voltage drop prevention, or uninterruptible power supply. This is attributed to
the fact that achieving a highly reliable power supply is considered vitally important atfactories, which account for half of customers on a delivered capacity basis.
Figure 9. Change in NGK’s sales (consolidated) and sales by business segment

Sales by business segment – 100 million
yen

1,200

Sales (consolidated)

Electric power-related

Ceramics

Engineering

3,500
3,000

Electronics and metals

1,000

2,500

800

2,000

600

1,500

400

1,000

200

500

0
82

84

86

88

90

92

94

96

98

00

02

04

Sales – 100 million yen

1,400

0
06 (Fiscal year)

Note 1) To confirm the long-term trend in the change in sales, sales from fiscal 1999 through fiscal
2002 of Asahi Tec Corporation, which was temporarily subject to consolidation accounting
during that period, have been excluded from “sales (consolidated).”Note 2) “Sales by business segment” are based on non-consolidated data until fiscal 1989 andconsolidated data after fiscal 1990, when NGK revised its presentation method. Moreover, the47

“electronics and metals” business is described in NGK’s Annual Securities Report as the“Metals” business until fiscal 1995 and as the “Electronics” business from fiscal 1996.
Ceramics components for printers are included in the “Ceramics” business until fiscal 1995
and reported in the “Electronics” business from fiscal 1996. There is a possibility reporting
business sectors for products other than these were also changed during the calculation
period.
Source) Prepared by referring to NGK’s Annual Securities Report.

Figure 10. Change in net sales by product in NGK’s electric power-related businesses

18.8%

18.0%

Net sales by product-100 mil. yen

800
700
600

102
33

61

612

585

16.0%
14.0%
12.0%
10.0%

10.2%
552

9.3%
615

649

650

8.0%
6.0%
4.0%

5.1%

100

2.0%
0.0%

0
(Fiscal year) 02

03
Insulators, other

Note)

63
63

9.4%

400

200

150

13.6%

500

300

20.0%
Percent of net sales from NAS batteries

900

04

05
NAS

06

07
Forecast

Percentage from NAS

Figures for fiscal 2007 are forecast values from NGK’s interim reporting period (period ended
September 2007).

Source) Prepared by referring to NGK’s financial briefing presentation materials (May 12, 2006;
October 30, 2007).

We next turn to examine the impact of the NAS battery business on the operating
results at NGK. First, looking at the change in the company’s sales, over the past 20
years total sales doubled to about 320 billion yen as shown in Figure 9. Looking intochange in sales by business segment, however, the electric power-related business,
including the insulator products indicated in the company’s name, peaked in fiscal 1992
and, despite an upturn in recent years, appears to have settled into a long-term maturing
trend. The ongoing restraints on plant and equipment investment at domestic power
utilities are one cause of the decline in sales in this business.
The businesses that drove NGK’s growth in place of the electric power-related
business were the ceramics business, electronics business, and engineering business, allof which enjoyed rapid growth during this 20-year period. Despite a lull in growth during48

the 1990s, the ceramics business, which includes vehicle exhaust emissions filters forautomobiles, achieved explosive growth in the 2000s, particularly with products fordiesel-powered

vehicles,ascountries

worldwide

toughenedexhaustemissions

regulations. The metals business centered on beryllium copper products, which NGK had
handled since the 1950s, was reorganized along with piezo-electric ceramics for printersand materials for mobile phones, which grew rapidly from the mid-1990s, into theelectronics business. The business expanded at a fast clip until about 2000. The
engineering business, established in the 1970s to develop sewage treatment equipment
and incineration plants, also continued to grow until the 2000s. Since these businesses
entered overlapping periods of growth, they created the time and resources to take off
the NAS business. Even the electric power-related business, which experienced adecreasing trend after 1992, maintained an operating profit margin of 11%-15% until
1998 135 and can be said to have supported NAS battery development located within thisbusiness.
Figure 11. Change in operating income (loss) by product in NGK’s electric power-related
businesses

Operating income (loss) – 100 mil. yen

80
60

NAS

40
20

71
35

70

42
23
7

0
-15

-7
-22

-20

-40
(Fiscal year) 02
Note)

5

Insulators, other

03

-23

-31

04

05

06

07 Forecast

Figures for fiscal 2007 are forecast values from NGK’s interim reporting period (period ended
September 2007).

Source) Prepared by referring to NGK’s financial briefing presentation materials (May 12, 2006;
October 30, 2007).

On the other hand, net sales for the NAS battery business per se showed anincreasing trend recent year, as in Figure 10, When full-scale sales were begun following
establishment of the sales and marketing organization in fiscal 2002, net sales were 3.3
135

Based on NGK’s Annual Securities Report.

49billion yen. Although this figure doubled to 6.1 billion yen in fiscal 2003 when mass
production was started, net sales remained at this level through fiscal 2005. In fiscal 2006,
however, NAS battery business net sales exceeded the 10 billion yen, level set as theinitial commercialization objective, and are expected to reach 15 billion yen in fiscal 2007.
The business’s improving trends from fiscal 2006 encompass not only net sales but also
operating earnings. As shown in Figure 11, after a peak of 3.1 billion yen in 2004,
operating losses began to shrink and the business is expected to turn a profit in fiscal
2007. This turnaround in the NAS battery business was made possible due to production
process rationalization, plus increases in overseas sales and demand for NAS batteries
to combine with wind power generation 136 .
NGK worked in cooperation with TEPCO to deliver a 12.5kW NAS battery system in2000 and a 100kW system in 2002 to AEP, a power company in the United States, forverification testing, and signed contract with the U.S. Dept. of Energy to monitor thetests 137 . The delivery contract at this time became the foothold for NAS battery businessdevelopment in the U.S. market. In 2006, a 1,000kW class NAS battery was installed at
an AEP substation in West Virginia. The NAS battery delivery to AEP received DOE
certification as a “model project for power storage,” making it eligible for a grant 138 . This
was the first sale to the overseas market. It was thought that tremendous amounts ofcapital will be required for spreading systems of power transmission and distribution overthe vast country like United States, besides clearing regulations for visual landscape 139 . If
overseas power utilities begin utilizing NAS batteries to control capital investment in
power transmission and distribution system infrastructure, they could become a major
NAS battery customer in overseas markets.
To capture such demand, NGK decided to develop sales activities in North America,
Europe and Australia. In 2007 it received an inquiry for a 1,000kW system for an outerisland in the French territory of Madagascar from Électricité de France (EDF), a major
power utility in France. EDF desired to supplement a vulnerable power generating facilityon the island with NAS batteries. In the same year, NGK received an additional order for
6,000kW worth approximately 1.5 billion yen from AEP. AEP placed the additional orderbecause it judged the 1,000kW system delivered in 2006 to have had an “excellent
electric power stabilization effect” 140 . AEP announced it would utilize 2,000kW of the
6,000kW for stabilization of output from wind power generation.
Demand for NAS batteries as a wind power generation supplementation device wasalso expected to grow both domestically and overseas. In recent years the introduction ofrenewable energy has been promoted as a policy in many countries, and in Japan as well.
The Special Measures Law Concerning the Use of New Energy by Electric Utilities, also
known as the RPS (Renewable Portfolio Standard) Law, has been enforced since 2003,
obligating electric power suppliers to use a certain proportion of renewable energy.
Because the output of renewable energy power generation including wind power varies
136

NGK’s fiscal 2006 Annual Securities Report, fiscal 2006 Report of Business Operations, fiscal 2007
interim report, settlement of accounts briefing presentation materials (May 8, 2007;October 30, 2007).
137
Norris et al. (2007) and AEP press release (614/223-1903, September 23, 2002).
138
TEPCO press release (July 21, 2006).
139
Nikkei Sangyo Shimbun (July 24, 2006).
140
Nihon Keizai Shimbun (October 4, 2007).

50

as a result of factors such as weather, however, stabilization of output is considered to bea major challenge for wide use of such sources. Accordingly, demand for NAS batteries
from entities such as wind power generation companies is expected to increase 141 . NGK
and TEPCO began a verification test of NAS batteries for wind power generation
supplementation at TEPCO’s Hachijojima Wind Power Station in fiscal 2001. This proved
effective and led to the receipt in 2007 of a large capacity order for 34MW from Japan
Wind Development Co., Ltd., a wind power generation firm. Japan Wind Development
adopted the NAS batteries for the Futamata wind power site it was building in Rokkasho
Village in Aomori Prefecture. Adoption of NAS batteries by wind power generation entities
was given a boost by the Wind Power Generation System Support Measures Grant
Project begun by NEDO in fiscal 2007 142 . NEDO decided to provide grants until fiscal
2012 for businesses that would newly construct wind power generators producing at least
2,000kW. The grants provide up to one-third of the installation cost of electric power
storage facilities, such as NAS batteries, redox flow batteries, lead acid storage batteries,
and lithium ion batteries 143 .
Owing to growing demand in overseas markets and for use to supplement wind power
generation, NGK expects the NAS business to swing into the black in fiscal 2007. The
company is planning to expand the area of its NAS battery plant, thus expand production
capacity after fiscal 2008 144 . As of 2007, the NAS business accounts 13.6% of net salesof NGK’s electric power-related business and 3.2% of net sales for the entire company asshown in Figure 10.
On the other hand, the influence of the operating results from TEPCO’s NAS battery
business on the company’s total operating performance is difficult to gauge directly.
Because TEPCO is an immense company with net sales in excess of five trillion yen, andits NAS battery business is so small for the company, TEPCO does not release therelevant information publicly. Therefore, we should try some other ways to assess theimpact of NAS battery business on TEPCO’s performance. We first look at the effectelectricity liberalization had on TEPCO’s operating results, and then roughly estimate thecontribution of the NAS battery business against the effect under simplified scheme.
As highlighted in Figure 12, TEPCO’s annual operating revenues had been around fivetrillion yen, of which about 90% is obtained from its domestic electricity business asshown by the revenues for power and lighting. Although not depicted in the graph, theratio for the power business, which accounted for 97% of revenues until about fiscal 2000,
has declined slightly in recent years. This reflects the progress of TEPCO’s diversification
into the information and communications business, the energy and environment business,best represented by liquefied natural gas (LNG), and the living environment andlifestyle-related business, including all-electric homes 145 .

141

Nihon Keizai Shimbun (January 30, 2007).
Japan Wind Development Co., Ltd., FY2007-2010 Medium-Term Management Plan Materials(September 26, 2007).
143
New Energy and Industrial Technology Development Organization (2007).
144
Nihon Keizai Shimbun (January 30, 2007; October 4, 2007).
145
TEPCO’s Annual Report and the TEPCO Factbook (April 2007).
142

51

Figure 12. Change in TEPCO’s operating revenues and operating income margin(consolidated), and revenues from power and lighting
16%
50,00015%
40,000100 mil. yen

14%
30,00013%

20,00012%

10,000

11%

0

10%
94

95

96

97

98

99

00

01

02

03

04

Operating revenues

05

06(Fiscal year)

Power and lighting revenues
Operating income margin (right-hand scale)Note) Operating revenues by type of electricity contract are divided roughly into lighting usedby small-scale users such as ordinary households and small stores, and electric power (highvoltage) used by large-scale facilities such as office buildings, factories and massmerchandising stores. The sum for revenues from both types of contracts is used here.
Source) Prepared by referring to TEPCO’S Factbook (April 2007)

Moreover, as can be seen from Figure 12, power business income has decreased
somewhat since fiscal 2001. Based on fiscal 2000, it dropped by 2% in 2001, and thedecrease was about 8% afterward. The operating income margin can also be seen to
trace a downward course since fiscal 2000 or the mid-1990s. Although lighting businessrevenue and operating income can vary depending on various factors, including theweather and socioeconomic conditions, we examine the effect of electricity deregulation
here.
The change in TEPCO’s lighting and power sales volume and change in average unit
price, determined by dividing revenue by sales volume, are shown in Figure 13.
Liberalization of electricity retailing has proceeded gradually expanding the scope ofliberalization in Japan. For the beginning, large-scale customers who purchase 2,000kW
or more were allowed to choose their supplier in 2000. The scope of liberalization was
expanded in 2004 to include contracts of 500kW or more, and expanded again in 2005 to
include contracts of 50kW or more. In 1995, private power generation was made possible52

by the deregulation of wholesale electric power (power generation), and after 2000 it
became possible for customers to buy electric power from a new market entrant referred
to as a Specified-Scale Electricity Utility (PPS: Power Producer and Supplier). In Figure
13(A), the volume of electric power sales to customers who were the target of electric
power retail liberalization is classified as Specified-Scale Demand.
Figure 13. Change in TEPCO’s lighting and power sales volume and average unit price

19.5

Sales volume – 100 mil. kWh

2500

19.0
2000

18.5
18.0

1500

17.5

1000

17.0
500
0

16.5

Average unit price (kWh/yen)

20.0

3000

16.0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 (Fiscal year)
Lighting
Power
Specified-Scale Demand

Average unit price (kWh/ yen)

2000

18.0

1800

17.5

1600

17.0

1400

16.5

1200

16.0

1000

15.5

800

15.0

600

14.5

400

14.0

200

13.5

0

Power average unit price – kWh/yen

Sales volume – 100 mil. kWh

(A)

13.0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 (Fiscal year)
Power

Specified-Scale DemandPower average unit price – kWh/ yen(B)
Note 1) Specified-Scale Demand is customers who were the target of electricity liberalization. The

53

scope of liberalization was contracts for 2,000kW or higher (extra-high voltage) from fiscal
2000, 500kW or higher (high voltage) from fiscal 2004 and 50kW or more (high voltage) fromfiscal 2005.
Note 2) The average in unit price (A) is the value calculated by dividing total power and light income
by power and light sales volume (kWh). The power average unit price in (B) is the value
calculated by dividing electric power rate income by electricity sales including Specified-Scale
Demand (kWh), and does not include light contracted by ordinary households and small-scale
stores, etc.
Source) Prepared by referring to TEPCO’s Factbook (April 2007).

From Figure 13 (A) one can see the total volume of TEPCO’s power and light sales has
not decreased since fiscal 2000 but rather shows a marginal rise, and that the average
unit price has declined since the 1990s, with a marked drop from fiscal 2002. The unit
price, which was under 20 yen per kilowatt-hour in fiscal 1992, had fallen to 16.4 yen in
fiscal 2006. The change in sales volume and average unit price for electric power
excluding light, which was not subject to electric power retail liberalization, is shown in
Figure 13 (B). This shows that while there was no great drop in electric power sales
volume after fiscal 2000, the electric power average unit price has fallen from the upper
17 yen level per kilowatt-hour in fiscal 1992 to the upper 13 yen range more recently.
Power utilities including TEPCO began lowering rates in response to the request of thegovernment, which viewed the price differential between foreign and Japanese electricity
rate in the 1990s as a problem, preparing for progress in electricity liberalization. Since
the deregulation of electricity retailing in 2000, power utilities have striven to maintaincustomers by successive rate cuts, restraining capital investment 146 .
Despite these efforts, however, some of TEPCO’s customers terminated their contracts
as a result of electric power retail liberalization. Since 2000 power utilities have continued
to lose customers, and as of April 1, 2006, a total of 1,943 customers, with contracts forabout 3.45 million kW of electricity, have switched their electric power purchases to
PPS 147 . As competition with PPS is especially intense in TEPCO’s jurisdiction, roughly
70% of the customers who switched to PPS until then are located in the area. According
to the Agency for Natural Resources and Energy, PPS had a 4.14% share of the sales
volume in TEPCO’s jurisdiction in fiscal 2005 148 . The total number of customers who had
switched from TEPCO to PPS by April 1, 2006 was 1,400, representing 2.4 million kW.
This number has continued to increase since electric power retail liberalization, as shownin Figure 14. Because the competitiveness of PPS has weakened against the backdrop of
the sharply rising price of fuel and the need to reduce CO 2 , the rate of customer loss has
seen a downward trend since fiscal 2005, viewed in terms of power generation
capacity 149 .

146

Nihon Keizai Shimbun (December 29, 1995; February 9, 1998; April 2, 2002; August 10, 2006;
March 26, 2007).
147
Nikkei Sangyo Shimbun (May 11, 2006).
148
Agency for Natural Resources and Energy, Advisory Committee for Natural Resources and Energy
Electricity Business Subcommittee (2006).
149
TEPCO Factbook (April 2007).

54

Figure 14. Change in number of customers who switched from TEPCO to a PPS andpower generation capacity for said customers
80

1,200
Generation capacity(Left-hand scale)
Number of customers(right-hand scale)

10,000kW

60

1,000
800

50
40

600

30

400

20

Number of customers

70

200

10
0
01.3

02.3

03.3

04.3

05.3

06.3

0
07.4
(Year and month)

Source) Prepared by referring to the Nikkei Sangyo Shimbun (February 16, 2006; May 11, 2006; May
10, 2007).

Against the customer loss resulted from electric power retail liberalization describedabove, what effect did the NAS battery business have? The impact of this business is notaffirmative. By simplifying conditions, however, we can estimate some provisionally. Let
us assume TEPCO was able to keep a customer from switching to PPS by installing NAS
batteries at the customer within TEPCO’s jurisdiction. As of September 2006, NASbatteries totaling 115,000kW were installed at 71 locations in TEPCO’s jurisdiction.
Moreover, as of April 2006, 1,400 customers with contracts for 2.4 million kW had
switched their purchases from TEPCO to PPS. If we assume no additional customers
switched their purchases between April and September, we can provisionally estimate thecontribution of NAS batteries to customer retention as a little less than 5% in terms ofboth the number of entities and electric power capacity 150 . This estimation, however, hasbeen made under a simplified framework that does not include privately generated andconsumed power. Moreover, to consider the whole impact on TEPCO’s operating results,
we should observe the earnings from the company’s NAS battery business itself, theeffect of battery installation on substations, the effect on adapting to the RPS Law andthe influence on TEPCO’s overseas business, although they were not possible toobserve.
As of 2007, few batteries for large-scale electricity storage other than the NAS battery
have been commercialized on a mass production scale. Viewed from a functional aspect,however, various product technologies patently or latently compete with NAS batteries.
150

Number of cases = 71 ÷ (71 + 1,400) × 100 ≈ 4.83%. Electric power capacity = 115,000kW ÷(115,000kw + 2.4 million kW) × 100 ≈ 4.57%.

55

The first is cogeneration equipment, which is widely installed and is the strongest
competitor if NAS batteries are viewed as a distributed power system. Superconducting
magnetic energy power storage facilities 151 and redox flow batteries 152 , which are in theverification test phase, could become direct rivals of NAS batteries provided they canovercome the issues of introduction cost and durability and are commercialized.
Development of fuel cells for use in mobile phones, notebook computers and automobiles
also is moving forward, and their use as an electric power storage facility is being
attempted in the United Kingdom 153 . In addition, although their use for large-scale
electricity storage is still considered difficult in terms of capacity as of 2007, Ni-MH
batteries and lithium ion batteries, which are increasingly used for electronics products,
are being developed by various entities as a power supply for electric vehicles 154 .
Capacitors with their electricity accumulation function are being developed for railway
systems and electric vehicles, and their use as a large-scale power storage facility or
device to supplement renewable energy power generation is being considered 155 . As of
2007, despite the possible competition with those various product technologies in the
future, the NAS batteries of NGK and TEPCO are expected to be popularized, since they
are effectively the only high capacity battery for large-scale power storage that is being
mass-produced and sold.
4. Conclusions
Finally, I would like to conclude this paper by discussing why commercialization of theNAS battery by TEPCO and NGK became possible. In terms of technology, NAS battery
commercialization is attributed to three factors. First is the discovery of the basic
principle by Ford Motor Company. This discovery of the basic principle became thestarting point for all NAS battery development entities including TEPCO and NGK.
Second is the establishment of a highly safe and durable basic structure by ABB.
Although this basic structure was originally designed for electric vehicles, it was applied
for electricity storage by TEPCO and NGK, producing significantly greater durability.
Third is development of battery enlargement and mass production technology through the
TEPCO-NGK project. This includes the development of various design and manufacturing
technologies that vastly boosted economic efficiency while further improving durability
and safety. Under the two companies’ “continuity of commitment,” it took 11 years fromcompletion of the prototype to the start of mass production. Besides technologicalrequirements, commensurate amount of demand and deregulation to permit installation
were needed for commercialization.
Might we say the TEPCO-NGK project was able to acquire these factors because of a
lucky break? As ABB withdrew from NAS battery development in 1996, it is seemingly amatter of good timing that the projects could introduce ABB’s basic structure prior the151

Nihon Keizai Shimbun (August 9, 2005) and Nikkei Sangyo Shimbun (July 27, 2007).
Ueno (2005). Like the NAS battery, redox flow batteries are eligible for grants under thegovernment’s Advanced Load Leveling Equipment Introduction and Diffusion Model Project and Wind
Power Generation System Support Measures Grant Project.
153
Nihon Keizai Shimbun (March 5, 2007; April 13, 2007) and Nikkei Sangyo Shimbun (August 29,
2001; April 20, 2007).
154
Nihon Keizai Shimbun (April 14, 2007; June 6, 2007).
155
Nikkei Sangyo Shimbun (January 23, 2006; July 3, 2007).
152

56

withdrawal. Conversely, NGK’s aggressive overseas development became possible
because ABB had withdrawn from NAS batteries as part of its business rationalization
effort. Had ABB withdrawn earlier, its NAS battery technology might not have beenreached, and if ABB had not withdrawn at all, NGK’s overseas development might have
faced greater hurdles. Moreover, just when realization of the scenario of replacing
pumped storage power generation looked difficult, electric power liberalization moved
forward and the demand for clean energy increased. Therefore the view that the timing
was perfect might be possible. Electric power liberalization created a need for power
utilities to counter the PPS and private power generation in Japan, while in othercountries power utilities focused on controlling capital investment. Each country’s
government strengthened regulations to promote clean energy use, causing firms toposition the reduction of CO 2 emissions volume as a key management challenge. Suchchanges in circumstances helped spur NAS battery demand. The situation competitors
actively developed the battery and power utilities jointly took over the Moonlight Project’s
research, contributed to the relaxation of regulations on NAS battery installation.
Pursuing this cooperation with other company might have been difficult, if the start ofderegulation activity had been so delayed that other company terminated thedevelopment.
We could attribute NAS battery commercialization to excellent timing or fortune, if weonly emphasize those points above. However, if we look into the matters, we will findcauses and effects behind them. The deliberate decision taken at NGK to pursue thebattery business led to NGK’s technical tie-up with ABB and the establishment of Nastech.
Management at both companies maintained support for the project over 20 years. Even
when pumped-storage replacement scenario, the project’s raison d’être, became difficult,they allocated the necessary capital and made efforts to find new one. As an
indispensable condition, the deregulation of NAS battery installation required steadyevidence of safety obtained through the continuous development activity and verification
tests. Development of the mass production technology required an effort lasting 11 years.
The ongoing commitment of the two companies led to the project’s commercialization.
Why were the two companies able to maintain their commitment to develop the NASbattery business? For a project stretched over a long period due to its high difficulty ofcommercialization, as the NAS battery, the passage of time itself can be a major sourceof obstacles. Although ABB established an excellent basic structure for the NAS battery,it eventually withdrew when it came to need rationalization of business portfolio. In thesame way, CSPL dissolved against the backdrop of electricity liberalization in the United
Kingdom, in spite of their long-term development with U.K. and U.S. government support.
Yuasa Battery turned its concentration on the lithium-ion battery following the New
Sunshine Program, though it had actively continued NAS battery development
participating in two national projects. In the earlier stages, other companies developing
the NAS battery withdrew in succession, driven out by the technical difficulties as well as
the change in various circumstances that accompanied the prolonged development period.
Changes in the economic, social, and organizational environment are likely to alter the
logic and significance of the development effort.
The TEPCO and NGK project also experienced various changes in circumstances as57

the development period lengthened. In NGK’s electricity related businesses, the insulator
business funding for NAS battery development began to shrink around 1993. During the
1990s, TEPCO cut down the cost widely and the R&D budget was reduced along withcapital investment in preparation for the progress of electricity liberalization. As theconstruction and management costs of pumped-storage power stations gradually fell andannual load factors rose, voices indicating excess capacity began to be heard. To assert
the significance of the NAS battery business and continue development, the productneeded to be repositioned as other than an alternative to pumped-storage. While theadvance of electricity liberalization and increase in demand for clean energy gave theproject a new market opening, it made the cost target that had to be reached moredifficult. In spite of these various changes in circumstances attended on prolonged
development, why did the project continue to seek commercialization? Let us consider
the reasons.
For both TEPCO and NGK, the other party’s commitment was indispensable forcarrying on with the project. For TEPCO, the basic battery structure from ABB that was
eventually introduced by NGK was indispensable, and NGK’s ceramics manufacturingknow-how played a critical role for development of the mass production technology. But
why did NGK maintain its commitment to the project? One possible explanation might bethat TEPCO, which was a main customer for NGK’s traditional business, used its positionand exercised its power to compel NGK to maintain its commitment. While this might beplausible in the abstract, here I want to discuss a different explanation. On the one hand,
NGK actually showed an initial intention to refuse TEPCO’s request to participate in the
project, and only decided to take part after being persuaded by Tsuneo Mitsui of TEPCO.
However, within only a few years, NGK virtually declared it would get into the battery
business beginning the technical tie-up with ABB. It appears that while the request fromTEPCO gave NGK its NAS battery-related opportunity, NGK’s continuation of the project
and the way of involvement strongly reflected NGK’s own intent.
NGK’s ardor to diversify is explicitly the biggest reason it continued the NAS battery
business development project. The company has proceeded to diversify its businesses
from an early date in anticipation of the maturation of its insulator business, and eachsuccessive president had taken on new business development as a key mission. In
addition, NGK was able to secure development funding until the long-term project nearedcommercialization. The Power Business Group under which the project was placed
continued to grow until 1992, with rising revenues and earnings. When the powerbusiness lost momentum, growth in the engineering business and electronics businessoffset the slowdown, and after 2000 the ceramic products business that handles
automobile exhaust filters grew rapidly. Along with its strong intention to diversify, NGK
had the resource to endure and execute long-term development activities.
Moreover, the organizational position in which the NAS battery business development
project was placed probably reflected NGK’s aggressiveness toward the project, and it inturn strengthened its commitment to the project. The project was set within the PowerBusiness Group, so-called “main stream” of the company. The electric power-related
business was the business since foundation, centered on the insulator products for which
NGK is named, and had long been dominant as a source of earnings. The NAS battery

58

project might have been expected to overcome the maturation of the insulator businessand revitalize the core electric power-related business. In addition, the organizational
condition that ex-CEOs who decided active participation in the project remained NGK asa chairmen and advisors possibly had a positive influence on the project. Shunichi
Takemi worked as company president of NGK until 1986, then filling the role of chairman
until 1993, and advisor to NGK until 2002, besides served as vice-chairman of the Japan
Federation of Employers’ Associations and chairman of the NHK Board of Governors.
Toshihito Kohara, who succeeded Takemi and worked as president until 1994, also
served as chairman until 2002 and as an advisor thereafter.
Furthermore, until NGK established the NAS Battery Division, management itself led
the NAS battery project. Noboru Yamamoto, who was head of the laboratory when the
project was launched, also had the posts of executive director and R&D Division generalmanager. When he retired from these positions in 1987, Yamamoto held the positions offounding president of Nastech and technical advisor to NGK. Kokuji Kito, who was a
director and deputy general manager of the Power Business Group, succeeded
Yamamoto as president of Nastech in 1991. Kito had studied the status of NAS battery
development, primarily in foreign countries, when NGK decided to participate in the
project. Takashi Isozaki, who led the development team from the start of the project andwas general manager of the NAS Development Department from 1990, had overall
responsibility for the project after being promoted to director in the following year, and as
a managing director became the first general manager of the NAS Battery Division in
1996. The organizational position in which the NAS battery business development project
was placed reflected NGK’s aggressiveness toward the project and is thought to havebeen contributed to resource allocation and continuity.
On the other hand, TEPCO’s commitment was also indispensable for NGK. Along withbeing an important “prospective customer” for NGK’s NAS battery business, TEPCO wasa partner who provided development funds. As noted by NGK’s Takemi, who decided theparticipation in the project, the relationship cultivated in the past with TEPCO throughelectric power components transactions reduced the development risk to NGK from thehighly difficult NAS battery business. Not only the capital burden but also the provision of
the verification testing locations by TEPCO, and the information the teams exchanged
there, were no doubt effective for moving the development activity forward.
Why, then, TEPCO was able to maintain its commitment to the NAS battery project?
For the start of the project to the latter half of the 1990s, the reasons were the obvious
need for TEPCO to develop a means of storing electric power to replace pumped-storage,
and a certain sense of mission that development by power utilities themselves wasindispensable for the practical application. Because TEPCO is a huge enterprise with
operating revenues around five trillion yen, TEPCO probably believed that it could
manage the risk of highly difficult development together with the partner manufacturer.
When it entered the 1990s, however, TEPCO began to shrink its R&D budget alongwith its investment in plant and equipment expecting electricity deregulation to move
forward. The problem of a gap between electric power rates overseas and in Japangarnered increased social attention in those days. Nevertheless, it continued allocating
required resources to the NAS battery project for the reason that the project had been59

positioned as a technology that would help restrain capital investment. Moreover, as the
scenario of replacing pumped-storage became difficult, commercialization of the project
was achieved by redefining its position taking advantage of deregulation. The newposition was a product to retain customers and defend TEPCO’s existing business. The
allocation of resources to the project and change in the project’s positioning were
supported consistently by the management like Gaishi Hiraiwa.
Hiraiwa, who decided to begin the NAS battery project at TEPCO, assumed theposition of chairman in 1984, and after retiring chairman in 1993, served as an advisor to
TEPCO until 2007. Besides taking on duties outside the company, including a stint as
Nippon Keidanren chairmen, he looked upon the project as TEPCO chairman and advisor.
In addition Tsuneo Mitsui, who as managing director in charge of TEPCO’s Engineering
Research & Development Division persuaded NGK to participate in the project, worked as
director and general manager of the Research & Development Center from 1986 to 1991
and served as Senior Executive Adviser to TEPCO afterwards. At TEPCO as well, theposition of the NAS battery business development project within the organization isthought to have had an influence on resource allocation and continuity.
If we focus on the relationship between TEPCO and NGK, the NAS battery project wasa joint development by a manufacturer and a prospective customer that grew out of abuyer-seller relationship of electric power materials based on insulators. Therefore
withdrawal by TEPCO would have meant the loss of a prospective customer and greater
development risk for NGK, and withdrawal by NGK would have meant sunk cost
amounted to billions of yen for TEPCO. For both companies, this project was in someways a fated partner relationship, and prolonged development period may have further
strengthened the two firms’ commitment. Moreover, the relationship of little distrust or
miscommunications, the two firms had constructed through their long-term transactions,likely to have positive influence on the project’s outcome. Distrust or miscommunications
might obstruct the joint development activity. Through their long-term transactions forinsulators

and

other

electricpowermaterials,

TEPCO

and

NGK

had

fosteredunderstanding and trust concerning each other’s technical capabilities, know-how andcorporate culture. Since two companies’ development teams with such a relationshipcommunicate frankly to solve problems in the repeated verification tests, the development
activity made good progress.
Finally, strong intent of the project to commercialize the business, at the very outset
and throughout the process, was definitely critical for the outcome. The intent ofcommercialization was reinforced by NGK’s decision to diversify into the battery and theprogress of electricity liberalization in Japan. We might say the joint development
organization of the two companies was in marked contrast to the joint development
system among multiple firms in the Moon Light Project and other national programs.
Unlike TEPCO and NGK, it might have been difficult for national projects under theframework set by the government to introduce technology outside the project or change
established division of labor. While development risk can be mitigated with government
support in a national project, well-devised design of framework will be required tomaintain flexibility like that seen in the TEPCO and NGK project .
Moreover, even when the goal of development is set to practical level, national projects

60

typically do not seek commercialization through cooperation among the participating firms.
Companies that engage in joint development under a national framework are basically ina temporary cooperative relationship, but are not business partners. To make exact
comparison, we should further inquire into the detail of communication between batteries
manufacturers and power utilities which provided verification test locations in the
Advanced Battery Energy Storage System development project under the Moon Light
Project. Unlike the TEPCO and NGK project, however, that national project fundamentallywas not a joint development activity set for joint commercialization. Since national
projects do not assume commercialization in general, the participants do not necessarily
strive by all means to commercialize the technology they take charge of in the projects.
On the contrary, companies can be even possible to participate in national projects justas a way to assess the potential of one of alternative technologies, thereby reducing risk
to commit “unpromising” one 156 . Even for the TEPCO and NGK project, we can think thatthe development risk was partly reduced in the form of NGK and Hitachi competing forthe results. The TEPCO and NGK project, however, had been sticking to commercialize
NAS battery. Although various changes in circumstances cause other development
entities terminate or reduce development efforts, both companies maintained their efforts.

156

The case of Yuasa Battery and Kansai Electric Power Co., Inc. may provide some insight regarding
this argument. On the one hand, they engaged in NAS battery development in the Advanced Battery
Energy Storage System development project under the Moon Light Project. On the other hand,according to Nobuyuki Tokuda, chief researcher (at the time of 1995) at the Energy R&D Laboratory of
Kansai Electric’s Technical Research Center, Kansai Electric evaluated various new batteries
independently of the Moon Light Project and found out that the redox flow battery would be a promising
electricity storage technology able to compete with pumped-storage power stations. Consequently, itbegan joint R&D of this battery with Sumitomo Electric Industries, Ltd. from 1985, separately from theMoon Light Project (Tokuda, 1995). According to Ueno (2005), this joint development was continuing
as of 2005, with verification tests aimed at practical application. Moreover, despite its active
development of the NAS battery from an early stage through two national projects, Yuasa Battery
turned the development focus to lithium ion batteries in the 1990s, perhaps continuing some effort on
NAS battery. In the 1990s, as lithium ion battery came to be seen as a sort of promising technology forelectricity vehicles and smaller scale electric storage, it was selected by the government to develop
under the New Sunshine Program (Nikkei Sangyo Shimbun, July 28, 1990, December 19, 1990, March
16, 1993, October 7, 1998, April 21, 2000). Since Yuasa’s main business is rechargeable batteries forautomobiles and manufacturing use, it also was active in improving traditional lead acid storage
battery technology and developing polymer batteries, fuel cells and Ni-MH batteries, in addition tolithium ion batteries (Nikkei Sangyo Shimbun, July 18, 1989; May 16, 1994; February 12, 1995; April
14, 1996; August 3, 1998; March 24, 1999; September 26, 2001; November 7, 2001; December 24,
2004; November 8, 2005).

61

< References >Abe, H. 2004. Systems Development. NGK Review, 60: 33-37.
Agency of Industrial Science and Technology. 1974. Electric Vehicle R&D: Centered on
R&D under the Large-Scale Project System. Japan Industrial Technology Association.
Agency for Natural Resources and Energy. 1995. Resources and Energy Yearbook, MITI
Material Reasearch Committee.
Agency for Natural Resources and Energy. 2007. Advanced Load Leveling Equipment
Introduction and Diffusion Model Business Expense Grant System Solicitation
Guidelines. Ministry of Economy, Trade and Industry Agency for Natural Resources
and Energy, Electricity and Gas Industry Department Electricity Infrastructure Division.
Agency for Natural Resources and Energy Advisory Committee for Natural Resources
and Energy Electricity Industry Subcommittee. 2006. System Reform Evaluation
Subcommittee Report Reference Materials. Agency for Natural Resources and Energy
Electricity and Gas Industry Department, May.
Binden, Peter J. 1993. Conceptual Design of a Sodium Sulfur Cell for U.S. Electric Van
Batteries. Sandia National Laboratory Contractor Report: SAND92-7331, May.
Birk, J.R. K. Klunder. J.C. Smith. 1979. Super Batteries: A Progress Report. IEEE
Spectrum, 16(3): 49-55.
Braithwaite, J.W. Koenig, A.A. 1993. Development of the Sodium/Sulfur Battery
Technology for Utility Applications. Technical Report Presented at International
Conference on Batteries for Energy Storage (Berlin, Germany, 29 Sep-10 Oct), Sandia
National Laboratory.
Chiku, T., T. Kogiso, K. Kojima. T. Yoshida., assignors to Toyota Central Research andDevelopment Labs. 1975. Sodium-sulfur storage battery. United States Patent, No.
3883367.
Ford Aerospace & Communications. 1985. Sodium-Sulfur Battery Development: Phase
VB Final Report for the Period October 1, 1981 Through February 28, 1985. DOE
Report, DOE/ET/25102-T1.
Fujii, K. 1983. New Battery Electric Power Storage Systems III. Status of New Battery
Development Chapter 2 Zinc-Chlorine Batteries. Journal of The Institute of ElectricalEngineers Japan, 103(8): 79-106.
Furata, K. A. Bito. Y. Kawamura. 2004. Development of NAS Batteries and Module
Batteries. NGK Review, 60: 10-24.
Futamata, M. Y. Takahashi. 1986. Status of Electric Vehicle battery Development 6.
Sodium-Sulfur Cells. Quarterly Journal of the Osaka National Research Institute,37(3): 255-270.
Hamer, Mick. 1996. Germans Pull Plug on Britain’s Batteries. New Scientist, 2032, 01
June: 6.
Harada, E. 1993. Development of New Electricity Storage Technology with NaS(Sodium-Sulfur) Batteries. Power, 43(218): 21-28.
Ishikawa, H. 1998. Introduction: Rechargeable Battery Development Advances. Energy
and Resources, 19(3): 213-215.
Isomura, N. M. Kajita. 2004. Solid Electrolyte Tube Development. NGK Review, 60: 4-9.

62Isozaki, T. Y. Kurashima. T. Kawaguchi. T. Miuma. S. Atsumi. 1998. Sodium-Sulfur Cell
Development. NGK Review, 57: 1-16.
Iwabuchi, S. S. Kimura. 1980. Present and Future of Sodium-Sulfur Cell Development.
Sulfuric Acid and Industry, 33(5): 91-103.
Japan Business History Institute. 2004. Japanese Electric Power Industry Historical
Database (http://www.jbhi.or.jp/toukei.html).
Kanazashi, M. 1983. New Battery Electric Power Storage Systems III. Status of New
Battery Development Chapter 3 Zinc Bromide Batteries. Journal of The Institute ofElectrical Engineers Japan, 103(8): 780-782.
Kinoshita, K. 1992. Exploratory Technology Research Program for Electrochemical
Energy Storage: Executive Summary Report for 1991. Lawrence Berkeley Laboratory
Contractor Report, LBL-32211, June.
Koenig, A. J. Rasmussen. 1996. Sodium/Sulfur Battery Engineering for Stationary Energy
Storage-Final Report,” Sandia National Laboratory Contractor Report, SAND96-1062,
Apri1.
Kummer, J.T. N. Weber, assignors to Ford Motor Company. 1968. Battery Having a
Molten Alkali Metal Anode and a Molten Sulfur Cathode. United States Patent, No.
3413150.
Meisei University. 2007. “Department of Electrical Engineering IBA Laboratory: ElectricPower Storage Technology using NAS Batteries. Research Laboratory Introduction
Panel (http://www.hino.meisei-u.ac.jp/rikouken/panel/ee/lba-Kenji-A.pdf).
Nakabayashi, T. 2001. Sodium-Sulfur Cell Development. NGK Review, 57: 1-16.
Nakabayashi, T. 2004a. Background to NAS Battery Development. NGK Review, 60: 1-3.
Nakabayashi, T. 2004b. NAS Battery Market Trend and Diffusion. NGK Review, 60:
38-40.
Nakahara, K. 1983. New Battery Electric Power Storage Systems 1. Development
Strategy and Characteristics, Chapter 2 Current Developments. Journal of The
Institute of Electrical Engineers Japan, 103(8): 759-760.
New Energy and Industrial Technology Development Organization. 1992. New Battery
Power Storage System Introduction and Diffusion Survey (Conducted by the Instituteof Applied Energy). New Energy and Industrial Technology Development Organization
Fiscal 1990 Survey Report, NEDO-P9026, March.
New Energy and Industrial Technology Development Organization and National Instituteof Advanced Industrial Science and Technology. 2002. Distributed battery energy
storage technology development. Post-Project Evaluation Report, New Energy andIndustrial Technology Development Organization.
New Energy and Industrial Technology Development Organization. 2005. New Energy
Guidebook 2005. New Energy and Industrial Technology Development Organization.
New Energy and Industrial Technology Development Organization. 2007. Wind Power
Generation System-related Measures and Grants Project Solicitation Guidelines Fiscal
2007. New Energy and Industrial Technology Development Organization.
NGK Insulators. 1997. ANNUAL REPORT 1997. NGK Insulators, Ltd., March.
NGK Insulators. 2005. Overview of NAS Battery for Load Management. CEC Energy
Storage Workshop, February 2005.

63

NGK Insulators. 2006. Current State of Sodium-Sulfur Batteries. Workshop Report
Materials Concerning Rechargeable Battery Technologies and Sectors of Use(February 1, 2006), New Energy and Industrial Technology Development Organization.
Norris, B.L. J. Newmiller. G. Peek. 2007. NAS Battery Demonstration at American ElectricPower:A Study

for

the

DOE

EnergyStorage

Program.

SANDIAREPORT,

SAND2006-6740, March.
Nihmura, A. 1983. New Battery Electric Power Storage Systems I. Development strategy
and characteristics, Chapter 1 Advanced Battery Energy Storage Systems under theMoon Light Project. Journal of The Institute of Electrical Engineers Japan, 103(8):757-758.
Nishimoto,W.

Y.

Terasawa.

1996.

DevelopmentofSodium-Sulfur

Batteryfor

Load-Leveling. Ceramics Japan, 31(8): 643-646.
Nomura, E. I. Matsui. K. Takashima. S. Iijima. Y. Matsuo. 1993. Development of a
1,000kW Sodium-Sulfur Battery for Electricity Storage. Electrochemistry, 61(8):968-971.
Nonoguchi, M. 1983. New Battery Electric Power Storage Systems II. System
Development Chapter 3 Improved Lead Batteries. Journal of The Institute of ElectricalEngineers Japan, 103(8): 771-773.
Okuno, A. 1993. Development of New Electricity Storage Technologies Based on
Sodium-Sulfur Batteries. Fuel and Combustion, 60(12): 914-920.
Ohtaka, E. 1987. Current Development and Future Issues in New Batteries for Electricity
Storage 1. R&D Plans for New Electricity Storage Batteries. Journal of The Institute ofElectrical Engineers Japan, 107(8): 785-787.
Ozawa, T. 1983. New Battery Electric Power Storage Systems I. Development Strategy
andCharacteristics,

Chapter

3

Electricity

Storage

Battery

Principles

andCharacteristics. Journal of The Institute of Electrical Engineers Japan, 103(8):761-764.
Sato, K. 1998. Sodium-Sulfur Batteries for Electricity Storage. Energy and Resources, 19(3): 42-45.
Shimizu, M. S. Yokota. 1983. New Battery Electric Power Storage Systems

II. System

Development Chapter 2 System Configuration and System Testing. Journal of The
Institute of Electrical Engineers Japan, 103(8): 767-770.
Shito, T. 1995. Sodium-Sulfur (NAS) Batteries. OHM, 82(7): 32-37.
Tachibana, Y. 1996. NAS batteries – Development of NAS Batteries at TEPCO for
Electric Power Load Standardization. Chemistry and Chemical Industry, 49(12):1639-1642.
Takayama, T. 2004 NAS Battery Overseas Development. NGK Review, 60: 41-42.
Tanaka, K. 1995. Seawater Pumped-storage Power Generation. OHM, 82(7): 27-31.
Tokuda, N. 1995 Redox Flow (RF) Batteries. OHM, 82(7): 38-42.
Tokyo Electric Power Co., Inc. 2007. NAS Battery System for Electricity Storage (productintroduction pamphlet). TEPCO Research & Development Center Electric Power
Storage Solutions Group.
TEPCO. NGK. 2004. Development and Practical Application of Sodium-Sulfur Batteries
for Electricity Storage. Fiftieth Okochi Prize Winner Operating Results Report, Okochi

64

Memorial Foundation.
TEPCO. NGK. 2006. Development and Practical Application of Sodium-Sulfur Batteries
for Electricity Storage. Hitotsubashi University Institute of Innovation Researchseminar materials (September 12, 2006). Tokyo Electric Power Co., Inc. and NGK
Insulators Ltd.
Ueno, K. 2005. Small Capacity Redox Flow Battery Demonstration Test. R&D News
Kansai, Kansai Electric Power Co., Inc., 424: 18-19.
ULVAC. 2005. NGK Ltd.’s Komaki NAS Battery Plant. ULVAC, 49: 10-13.
Weber, N. J.T. Kummer. 1967. Sodium-Sulfur Secondary Batteries. Proceedings of the
21 st Annual Power Sources Conference, Monmouth, NJ.
Yao, Y.E.Y. J.T. Kummer. 1967. Ion Exchange Properties of and Rates of Ionic Diffusion
in Beta-Alumina. Journal of Inorganic Nuclear Chemistry, 29(9): 2453-2475.
Yokoi, M. N. Isomura. M. Kajita. 2004. Development of NAS Battery Manufacturing
Technology. NGK Review, 60: 25-32.
Note: The newspaper articles and annual reports, reports of business operations,financial briefing presentation materials, factbooks and press releases of eachcompany that have been referred to are described in the footnotes.

65