TOKYO - Offshore wind power, seen as Japan’s key to achieving carbon neutrality, is facing a critical test following the withdrawal of major players such as Mitsubishi Corporation. While the government is preparing to reopen bidding for large-scale offshore wind projects, questions remain over what institutional reforms are needed to make renewable energy truly sustainable.
Rows of turbines stretch across the open sea—symbols of Japan’s renewable energy ambitions. The government had planned for wind power to supply up to 8% of the nation’s renewable electricity by 2040.
However, Mitsubishi Corporation President Katsuya Nakanishi stated at a financial results briefing on November 6th that keeping renewable energy costs low has become increasingly difficult, given today’s higher prices for materials and labor.
In August, Mitsubishi Corporation and Chubu Electric Power unexpectedly announced their withdrawal from Japan’s first-phase offshore wind power project, citing costs more than double initial estimates due to soaring materials and personnel expenses, making the project unprofitable.
With Japan’s renewable energy future now uncertain, the government has begun preparing for a rebid. Yet the core issues that led to the pullout—rising costs for materials and labor—remain unresolved.
Following Mitsubishi’s exit, subsequent Phase 2 and Phase 3 offshore wind projects were awarded to consortia including JERA. JERA Nex bp Japan CEO Masato Yamada warned that the situation has become increasingly precarious: “It’s no exaggeration to say we are at the brink of whether this business can continue or not.”
Like Mitsubishi, Yamada pointed to the changing business environment and cost inflation as the main causes of strain. “All costs have risen due to inflation. Offshore wind requires major investment and carries significant risk. We need a framework where the public and private sectors can properly share those burdens,” he said.
The government is now interviewing Mitsubishi officials to assess the reasons behind its withdrawal and is preparing a full review of the bidding system. It hopes to conduct a new tender early next year, though the details of the revised process have yet to be disclosed.
“Offshore wind represents Japan’s long-held goal of achieving domestic energy independence,” Yamada said. “Support measures such as incentives for consumers to buy renewable electricity will be essential.” He added that JERA may consider bidding again if the new terms are favorable.
As Japan pursues decarbonization, offshore wind remains an indispensable pillar. The challenge now is for the government to design a system that ensures such projects can be sustained over the long term.
