Power prices in Japan hit 9-month highs

TOKYO • Electricity prices in Japan rose to nine-month highs this week as gains in global prices of oil, liquefied natural gas (LNG) and coal are starting to feed through to the country's US$150 billion (S$203 billion) power market.

Energy prices worldwide are hitting records or multi-year highs as economies from Asia to Europe recover from the coronavirus pandemic but are facing lingering supply chain and other disruptions.

For Japan, which imports all but a tiny amount of its energy needs, higher oil, gas and coal prices are bringing back inflation, with wholesale prices at 13-year highs.

Elevated electricity prices are also reviving memories of last winter when prices hit record highs and Japan's grid nearly failed in the worst energy crisis for the country since the Fukushima disaster in 2011.

Yesterday, spot prices for peak hour delivery of electricity reached 50 yen (S$0.60) per kilowatt hour (kWh), just shy of the 50.01 yen/kWh hit the day before, which was the highest since January.

Like last winter, rising costs for LNG and coal are driving the gains in prices and, with colder temperatures just weeks away, Japan's big utilities companies have been taking steps to avert a similar crisis.

Inventories of LNG have been topped up and are now above 2.4 million tonnes, around 600,000 tonnes higher than the four-year average for this time of the year, Japan's industry ministry said.

That represents about 12 days of supply, based on last year's imports of 74.4 million tonnes of LNG.

REUTERS