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Rising Japanese power prices sound alarm for rest of Asia

January 29, 2021

Quartz ($):

Households across Japan are likely to get hit by massive electric bills this month, after the price of wholesale electricity there spiked from about 13 cents per kilowatt-hour in December to an unprecedented peak of more than $1 on Jan. 7. (The average Japanese household uses about 250 kWh per month. In the US, prices are typically 3-4 cents per kWh). By the week of Jan. 25, the price had fallen back to its previous level.

What happened? The spike was partially a pandemic-related anomaly. But it was also an ominous sign of things to come for Asian countries working to curb their carbon footprints.

But as more Asian economies put more of their eggs in the LNG basket, they become increasingly exposed to sudden wild price swings. Supply disruptions in LNG exporting countries appear likely to continue in the near future as the global economy recovers from the pandemic, said Bruce Robertson, an Australia-based LNG finance analyst with the Institute for Energy Economics and Financial Analysis. Utilities in lower-income countries could be forced to shut off services if gas becomes too expensive; during the recent spike, Bangladesh and Pakistan both canceled orders for LNG because of the cost.

“Those are price-sensitive markets,” Robertson said. “They can’t sell electricity at any price like utilities can in Japan.” 

[Tim McDonnell]

More: Japan’s surging electricity prices are a warning for Asian countries

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