Japan Offshore Wind Plans Under Scrutiny
February 3, 2025
Mitsubishi Corp. is reviewing how to proceed with its offshore wind projects in Japan given a "significantly changed" business environment, showing that the country is not immune to rising costs across offshore wind projects globally.
Japan, which imports nearly everything for its energy needs, has bet on renewable energy to raise its energy security and decarbonise the economy by 2050. Mitsubishi leads consortia that won Japan's first state-run offshore wind auctions in 2021.
The government started to auction sites for future offshore wind farms - of which Japan wants to have 10 gigawatt (GW) by 2030 and 45 GW by 2040 - only in 2020.
A year later, consortia led by Mitsubishi were selected to operate three projects in the Akita prefecture in the north and the Chiba prefecture to the east of Tokyo with total projected capacity of 1.76 GW and a target start-up of 2028 to 2030.
"We will consider the appropriate next steps after thoroughly examining the results of our review," Mitsubishi said in a statement, without providing other details.
Mitsubishi is "essentially threatening" to walk away from their projects, hinting that it needs more support and putting the government in a very awkward position, said Yuriy Humber, CEO of K.K. Yuri Group, a Tokyo-based research and consulting firm. "But if the government helps, other past auction winners and future bidders will have to assume that bids can be re-negotiated. It also begs the question around how much the state should compensate for global macro risks," he said by email.
Officials at Japan's industry ministry's section which oversees wind power generation were not immediately available for a comment.
So far, Japan has held three offshore wind auctions, with winners including western companies RWE, Iberdrola and BP. Last week, the government relaxed some of the auction rules to address soaring costs.
(Reuters)
