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Energy

Japan scrambles to avoid blackout as cold wave grips East Asia

Utilities ask consumers to conserve energy as electricity and LNG prices spike

Electricity is in short supply in Japan in the midst of an unseasonably cold winter. (Source photos by Kyodo and Reuters) 

TOKYO -- Amid high electricity demand due to unseasonably cold weather and tight liquefied natural gas supply, Japan is scrambling to prevent a national blackout by calling on power companies to generate more and the public to use less.

Peak electricity demand in the country is about 90% more than expected supply on Tuesday and as high as 97% in the northern Tohoku area, according to OCCTO, a Japanese organization that coordinates and oversees power transmission in the country. This unusually cold winter, combined with short supply of solar energy and LNG for thermal power plants, are all factors that have led to such a dire shortage.

The Federation of Electric Power Companies of Japan announced that electricity demand reached a decade high by Friday in seven of the 10 areas across the country. On Sunday, the group called for homes and businesses to cooperate by conserving electricity, as heating demand surged.

The last thing the country needs now is a power outage that could further damage the economy already struggling with a state of emergency brought on by another wave of the coronavirus pandemic.

Members of the federation, formed by major utility companies such as Tokyo Electric Power Company Holdings and Tohoku Electric Power, are expanding their capacities by generating from power plants still under construction and those in testing mode. They are also increasing generation from thermal power plants above their normal capacities.

To this end, power plant operator Electric Power Development will start operating its coal-fired power plant using oil from Thursday. The Matsushima thermal power plant in western Japan had halted operation on Jan. 7 due to a malfunction in coal handling equipment.

A federation spokesperson said it was the first time the group was asking residents nation-wide to conserve energy since the Great East Japan Earthquake in 2011 that also led to a devastating tsunami. The earthquake caused a nuclear accident in the Fukushima prefecture which in turn forced all nuclear power plants to stop production.

In Japan's day-ahead energy market which trades over the Japan Electric Power Exchange, the price of electricity topped 100 yen ($0.96) per kilowatt-hour in the past few days. Also, LNG spot prices in Asia have spiked as Japanese electricity companies raced to buy cargoes.

The number of nuclear power plants in operation in Japan has fallen due to strong opposition over safety fears after Fukushima. Japan has since relied more on LNG-, coal- and oil-fueled plants.

But over the next few years, some of those old power plants that came into operation after 2011 to replace the decommissioned nuclear power plants are themselves set to be phased out.

"Between 2021 and 2023, there is an expected drop in the supply of electricity," said Junichi Ogasawara, senior research fellow at the Institute of Energy Economics, Japan.

Until new power plants have been set up, Japan still faces risks of electricity shortage in the future. "Improvement is not guaranteed in the long term, because of [pressures on the use of] coal and diminishing plans for new thermal power plants," Ogasawara added.

Takeshi Kaneda, president of consultancy Universal Energy Research Institute said that "LNG becomes the only option" for Japan in terms of alternatives that provide the same volume of energy facing pressures on using coal.

He said that the dependence on LNG makes Japan vulnerable to energy shortages because the gas cannot be stored for long periods since it evaporates. Imports also have to travel through geopolitical choke points such as the Panama Canal and the Persian Gulf.

There is a worldwide shortage of LNG now due to traffic jams in the Panama Canal and malfunctions in an LNG plant in Australia, a key producer.

China, the world's second-largest LNG importer, is also buying more LNG because demand is rising as the pandemic-hit economy stages a quick recovery. Demand in South Korea, the world's third-largest LNG importer, too has risen due to the cold spell in East Asia.

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