Japan Spot Power Surges to Three-Year High as War Boosts Fuels
(Bloomberg) -- Spot power prices in Japan surged to a three-year high, as the war in the Middle East boosts fuel costs for economies across Asia.
The next-day delivery price jumped to 23.15 yen (14 cents) per kilowatt-hour on Tuesday, up 32% from a week ago and the highest level since January 2023.
Japan relies heavily on fossil-fuel imports for power generation, and the conflict between the US, Israel and Iran has supercharged prices of crude oil and natural gas as key trade routes are shut and energy facilities damaged. The war has also triggered gains in alternative fuels such as coal.
The spot price may also have been boosted by the weather forecast, which points to cloud or rain across much of the country on Wednesday, according to the Japan Meteorological Agency. That could curb solar-power generation.
Eastern Japan’s solar output is forecast to peak at 10,537 megawatts at 10 a.m. on Wednesday, while in western Japan it is set to peak at 7,562 MW at 11 a.m., according to BloombergNEF data.
Less capacity could also put pressure on the spot price. Japanese power plants typically conduct regular maintenance during spring, when demand is low. The Tokyo area is set to see about 4 gigawatts less of gas-fired power generation between Tuesday and Wednesday, according to information on the Japan Electric Power Exchange website.
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