In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices for Nov 15-19 delivery stretched gains from the previous week in both East Japan and West Japan. The temperatures were relatively mild for most of the week, but spot prices were bolstered by ongoing output controls from thermal units tied to the spike in fuel costs. Besides that, buyers often cast higher bids in a bid to avert the imbalance burden, another factor that pegged spot prices in the high range. Especially, the strength in night time prices was remarkable, with the Yen 20 level glued in several windows. For Nov 17 delivery, spot prices hit an irregular high of Yen 65.00 during 07:00-07:30 hours in eight areas except Hokkaido. In West Japan except Kyushu, the average price during Nov 15-19 strengthened above Yen 20, a level that was not seen in November in the past.

The actual highest price during the week was at Yen 65.00 in eight areas from Tohoku to Kyushu for Nov 17 delivery. The actual lowest price during the week was at Yen 0.01 in Kyushu for Nov 15-19 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 15.96 in Hokkaido, up Yen 0.13 from the previous week, Yen 17.25 in Tohoku, down Yen 0.45, Yen 18.45 in Tokyo, up Yen 0.75, Yen 20.10 in Chubu and Hokuriku, up Yen 0.64, Yen 20.04 in Kansai, Chugoku and Shikoku, up Yen 0.50, and Yen 17.86 in Kyushu, up Yen 0.69.

Power demand in nine areas of Japan during Nov 15-19 was a combined 11,673.36 mil kWh, up 1.9% from 11,457.25 mil kWh during Nov 8-12. The figure was up 3.8% from the corresponding period a year earlier. Demand during Nov 16-20, 2020 after day of week adjustment was 11,245.06 mil kWh.

In the JEPX forward market, no transactions were reported during Nov 15-19.

Deals reported on TOCOM (Tokyo Commodity Exchange) during Nov 15-19 were as below.

Deals reported on EEX (European Energy Exchange) during Nov 15-19 were as below.

In the fourth week of November, spot prices are expected to stay in the current high range. The weather on Nov 22 after the weekend was forecast to be rainy across Japan. Little scope for solar power generation is likely to push up day time prices. Meanwhile, the weather is forecast to change for the better from Nov 23, but the highest temperature in West Japan is widely expected to drop below 15 degrees. A possible pickup in heating demand will underpin spot prices.

Furthermore, the key will be on price trends from Nov 24 onward. Tohoku EPC will cast offers based on its new methodology of marginal costs starting the same day, and market players closely watch how the decision by Tohoku EPC will affect spot prices. Mega power producers voluntarily offer all the surplus in power supply that arises from their supply and demand balancing based on marginal costs. Tohoku EPC so far calculated marginal costs by adopting the weighted average price of already-procured cargoes from term contracts and spot purchases. But in the new methodology, Tohoku will take additional procurements including spot purchases into consideration to set marginal costs. The new methodology will reflect the latest supply-demand fundamentals in the fuel markets more clearly. Based on the new methodology, a rise in fuel prices will result in higher offers in a timely manner and vice versa when fuel prices drop. With the current spike in gas and coal prices, the new methodology is expected to push up Tohoku EPC's offers and could accelerate the rally in spot prices.