Can Japan Keep the Lights On? The Ukraine War Upends a Big Energy Bet.

However, the sudden surge in prices in early 2021 blindsided the company, which had not prepared for the possibility of a major jump in costs, according to a statement it released when it declared bankruptcy.

Masaru Tagami, who is in charge of facilities procurement for the central Japanese city Hida, one of Hope Energy’s former clients, said it had been caught off guard by the company’s “sudden” collapse and the rise in costs as its business was handed to another firm.

The city’s annual electric bill is expected to rise 40 percent, he said, adding that the situation had played havoc with its budget. “I am seriously worried about how long these circumstances will continue,” he said.

Power companies hit hard by the pandemic-related spike expected that prices would abate by this March as the effects on supply chains wore off, said Junichi Ogasawara, a senior research fellow at the Institute of Energy Economics Japan.

“But with Russia’s invasion of Ukraine, the situation has changed to one where the current conditions will drag on,” he said.

Since then, the precariousness of Japan’s energy situation has only become clearer. In March, after an earthquake near Fukushima knocked out part of the electrical grid, a cold snap pushed Tokyo to the brink of rolling power outages. In the past, coal-fired power stations could have been called upon for cheap backup energy, but inefficient old plants have been taken offline.

In a disaster-prone country like Japan, “we’re still in a position where these kinds of things can happen again” unless the government fixes the issues introduced by deregulation and the patchwork shift to renewables, said Dan Shulman, the chief executive of Shulman Advisory, a firm analyzing Japan’s power industry.