Japan's spot electricity price surges 20% as temperatures drop

Spot prices traded on the Japan Electric Power Exchange surged 19.6% for Nov. 19, with the 24-hour day-ahead price soaring to Yen 15.31/kWh from Yen 12.80/kWh for Nov. 18, as power demand picked up due to dropping temperatures, particularly in eastern and northern Japan.

The Nov. 19 JEPX spot price rose on the back of higher contracted prices for the Tohoku, Tokyo, Chubu, Hokuriku, Kansai, Chugoku areas. It was the highest since Oct. 18, when it stood at Yen 15.98/kWh.

The Nov. 18 JEPX price rose from Yen 10.59/kWh for Nov. 17, during the weekend when power demand is typically lower than on weekdays.

"The reason for the jump in JEPX is a cold spell tomorrow in Japan," a power trader said, adding that demand will decrease again as temperatures are forecast to rise above average after the cold spell.

According to the Japan Meteorological Agency, Tokyo's maximum temperatures are forecast to be about 16 C on Nov. 18, compared with the 30-year average of 16.2 C for that day, and 23.8 C on Nov. 17.

According to the JMA, Tokyo's maximum temperatures are expected to remain below the 30-year average at least until Nov. 18, hovering at 13 C on Nov. 19, 12 C on Nov. 20 and 15 C on Nov. 21.

The arrival of winter air pressure distribution effectively picked up heating demand particularly in the east to northern Japan, boosting demand for city gas for heating as well as thermal power generation fuels such as LNG.

Traders said that despite a drop in temperature, Japan has not seen an incremental demand for extra spot LNG cargoes.

"It started getting colder, but each company planned its winter LNG procurement, expecting a cold winter," a trader said. "We still don't know if the demand is even higher than they planned."

The Ministry of Economy, Trade and Industry said Nov. 13 that Japan's LNG stocks held by major power utilities extended a 4.2% gain on the week to 2.21 million mt Nov. 10, marking the second consecutive week-on-week increase.