Japan’s heatwave, now in its fourth day, has broken a near 150-year-old record. The risk of power disruptions has led to official warnings on tight power supply. But this is not a reason to buy shares of local utility companies.
Tokyo’s electricity reserve ratio is expected to fall below 5 per cent this year, dangerously close to the minimum of 3 per cent. At this threshold blackouts are a risk. Measures to conserve electricity, including government offices turning off lights, are unlikely to be enough.
Japan suffers from fundamental power shortage threats. Before the 2011 Fukushima disaster more than 50 nuclear reactors supplied about a third of the country’s total energy. That has since fallen to less than 5 per cent.
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