JEPX Spot Price Hits Three-and-a-Half-Year High Despite Adequate Summer Reserves

Despite record-breaking heat this summer so far, the Ministry of Economy, Trade and Industry (METI) has refrained from issuing electricity conservation requests as reserve margins from July through September are expected to remain above the 3% minimum required for stable supply across all regions of Japan. The availability of fuels needed for power generation, including liquefied natural gas (LNG) and coal, despite heightened tensions in the Middle East, also contributed to METI’s decision. The expansion of renewable energy (solar) and the reactivation of nuclear power plants have also helped secure sufficient supply capacity to some extent, although concerns remain over evening hours when solar generation declines.

Meanwhile, the wholesale power market remains alert to the risk of tightening supply-demand conditions amid the extreme heat, and spot prices on the Japan Electric Power eXchange (JEPX) reached their highest level in three and a half years. The nationwide average price for July 23 delivery rose 12% from the previous day to JPY 24.78/kWh, its highest level since late December 2022 following Russia’s invasion of Ukraine. On the evening of July 22, the Tokyo area’s wide-area reserve margin temporarily fell below the 3% benchmark for stable supply. The Tokyo area imbalance price, which settles discrepancies between planned and actual supply and demand, also reached the regulatory cap of JPY 200/kWh on the same evening. Imbalance prices also exceeded JPY 140/kWh in other areas, including Kansai.

🔍 Shulman Commentary:

Although Japan’s summer power supply remains highly dependent on thermal generation, nuclear power and renewables, particularly solar, are becoming increasingly important. The growing role of solar could increase intraday price volatility, creating further opportunities for energy arbitrage and supply-demand balancing.

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