Japan electricity prices hit four-year high amid rising energy costs

Electricity prices in Japan have reached a four-year high, with spot prices increasing by more than 25% week-to-week. According to data from the Japan Electric Power Exchange (JEPX), the nationwide spot price reached 31.15 yen ($0.19) per kilowatt-hour on Monday.

The surge is driven by rising costs for liquefied natural gas (LNG) and coal, alongside supply disruptions. Conflict between the US and Iran has impacted fuel supplies, particularly affecting LNG shipments through the Strait of Hormuz. Additionally, competition for winter supplies with Europe has pushed Asian spot LNG prices to their highest levels since late 2022.

Coal prices have also risen, with Newcastle futures increasing approximately 30% compared to pre-war levels, partly due to supply constraints in Indonesia. The situation is further compounded by a 12% decrease in Japan’s available electricity production capacity compared to the previous month, as several power plants undergo scheduled maintenance ahead of the winter season.