Japan’s electricity price hits highest in over 3 years on triple blow

A triple whammy of blistering heat, yen weakness and escalating fuel costs has pushed Japan’s spot electricity price to its highest in three and a half years.

The nationwide day-ahead spot price surged to ¥24.78 (15 cents) a kilowatt-hour on Wednesday, up 24% this week and the highest since January 2023, according to the Japan Electric Power Exchange.

Temperatures will be much-above normal across a swath of Japan on Wednesday, with parts of Kanto, Chubu and Kansai set to hit highs of 40 Celsius, according to the Japan Meteorological Agency. Tokyo is set to see a high of 36.8 C, more than 6 C above normal, according to Vaisala, a weather intelligence company.

The unusual heat is forecast to briefly subside over the weekend around the capital, then gradually rise to abnormal levels next week, models show. Both the Kansai and Kanto regions will again see much-above normal temperatures from late next week into the first days of August, according to the JMA.

Rising fuel costs have also boosted power prices, with the benchmark Japan-Korea Marker for spot liquefied natural gas settling at $21.61 per million British thermal units on Tuesday, the highest since late March, according to traders.

Meanwhile, the yen slid past 163 per dollar for the first time since 1986, further driving up costs given Japan’s heavy dependence on imported gas and coal for power generation.