Eneos Warns on Skyrocketing Costs fo Offshore Wind

Eneos Screenshot | Copyright GT

Eneos Holdings, Japan's top oil refiner which has been expanding into renewable energy, on Wednesday warned of the surging cost of developing its offshore wind project, with its CEO saying returns were difficult to achieve.

Eneos unit, Japan Renewable Energy, won a government auction to develop the Happo-Noshiro 375-megawatt offshore wind project in Japan's northern Akita prefecture together with Spain's Iberdrola and Tohoku Electric Power Co in March 2024. Construction is set to begin next year, with operations due to start in 2029.

"At this point, we haven't made any clear decisions such as quitting or postponing it for two or three years," Eneos CEO Tomohide Miyata told a press conference, adding that there were currently no major changes to the development plan.

"But project costs have surged while green electricity prices do not match the costs, making returns more difficult to achieve than before," he said.

In August, a Mitsubishi-led group quit three offshore wind development projects awarded in 2021, citing high costs, forcing the government to step up talks on support measures with remaining players to ensure the industry's continued development.

Mitsui & Co 8031.T, which teamed up with Germany's RWE  and Osaka Gas for a 684 MW project in northeastern Niigata prefecture, also warned of rising costs last week but said it was in talks with the government to address the issues.

Japan is looking to have offshore wind capacity of 10 gigawatts by 2030 and 45 GW by 2040 to bolster energy security and make power cleaner, and has held three major auctions so far.

Japan's Electric Power Development (J-Power), a partner with JERA, Itochu 8001.T and Tohoku Electric for a 315 MW project in Akita prefecture, aims to start operations in 2028, the J-Power president said last month.

(Reuters)