Japan’s power prices climb to highest since 2023 on heat wave

Japanese power prices surged to their highest level in over three years following a heat wave, which increased electricity demand and raised fuel costs due to disruptions in Middle East energy supply. The nationwide next-day power price surged 20% on Monday, reaching ¥25.18 ($0.16) per kilowatt-hour, the highest level since January 2023, according to the Japan Electric Power Exchange.

The Japan Meteorological Agency issued a warning for unusually hot weather across the country, with temperatures reaching 35 degrees Celsius in the Tokyo and Kansai regions on Tuesday and Wednesday, and 37 degrees in Nagasaki on Wednesday. The rise in power prices is attributed to the cost of liquefied natural gas (LNG) in Asia, which has more than doubled following the U.S. and Israel's attacks on Iran in late February.

This has significantly increased the cost of Japan's primary source of power. Additionally, visible shipments of LNG through the Strait of Hormuz have been halted since an Iranian attack on a Qatari-owned tanker in July, further exacerbating the situation. The economic isolation of Iran due to Washington's actions has also diminished the likelihood of a complete reopening of the waterway, which previously carried about a fifth of the world's LNG before the conflict.