Japan’s electricity prices spiked by over 25% at the start of this week, driven by soaring costs of liquefied natural gas (LNG) and coal. The nationwide power price climbed to $0.19 (31.15 Japanese yen) per kilowatt-hour (kWh) on Monday, according to data from Japan Electric Power Exchange.
The surge comes as Japan, a major LNG importer, has shifted from gas-fired generation to coal this summer due to elevated LNG prices. The switch to coal has been a regional trend, with Asian countries favoring coal for affordability and availability since the Middle East conflict began.
LNG prices in Asia hit a four-year high, with December deliveries assessed at $29.30 per million British thermal units (MMBtu) last week. This marks the highest spot LNG price for Asia since December 2022, up from $26.50 per MMBtu the previous week. The tight supply through the Strait of Hormuz and competition with Europe for winter supplies have intensified the price pressure.
Coal prices have also risen, with the global benchmark, Newcastle futures, jumping 30% compared to pre-war levels. Additionally, scheduled maintenance at some power-generating facilities ahead of winter has contributed to the rise in Japan’s power prices.