Offshore wind industry representatives are seeking better auction and fiscal terms from the Japanese government to help companies develop the wind industry potential offshore Japan, industry sources have told Reuters.
Japan has a plan to have offshore wind projects with a total capacity of 10 GW developed by 2030 and 30 GW-45 GW by 2040. The country has held three auctions to award capacity so far, but major developers have been reviewing their options in Japan amid headwinds in the sector globally with surging costs and supply-chain delays.
The Japanese government is considering extending the duration of the projects to 40 years from 30 years now, and allowing non-Japanese vessels to operate in offshore wind areas, according to multiple industry sources who spoke to Reuters.
The industry also seeks capacity auctions for multi-year power contracts, and fiscal relief in the form of either subsidies or tax relief for the large industrial users to encourage them to sign long-term power purchase agreements (PPAs) with wind project developers.
The offshore wind industry has already backed off previously ambitious plans in Japan.
Earlier this year, Mitsubishi Corporation said it is reviewing its business plans for Japanese offshore wind power generation projects “due to material changes in the macroeconomic environment.”
In December 2021, Mitsubishi won in a Japanese auction projects in three Japanese sea areas.
“However, in the wake of the pandemic and the Ukraine crisis, the business environment for offshore wind power has significantly changed and is continuing to change worldwide due to factors such as inflation, the depreciation of the yen, tight supply chains, and rising interest rates,” the Japanese corporation said in February 2025.
Orsted, the world’s biggest offshore wind project developer, said last year it was “deprioritising development activities in Japan.”
Earlier this month, Orsted warned of a continued challenging environment for the industry with mounting near-term headwinds globally.
By Tsvetana Paraskova for Oilprice.com
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