Mitsubishi to review its offshore wind projects in Japan amid rising costs

• Mitsubishi is reviewing its three offshore wind projects in Japan due to increased costs and recent regulatory changes. The new rules allow developers to raise electricity prices but also increase deposit requirements for project delays by over 50%.
• Experts suggest Mitsubishi may withdraw from these projects unless the Japanese government provides more support, which could lead to broader renegotiations for other offshore wind developments.
• Chubu Electric Power Company, a partner in the projects, is also reassessing its involvement after reporting a loss of over $116 million from April to December 2024.

Mitsubishi has announced a review of its three offshore wind projects in Japan, citing changing economic factors and domestic governmental policy related to such developments. The decision follows recent changes in Japan’s offshore wind regulations, which come amid rising material costs and construction delays affecting this renewable energy sector worldwide.

“The business environment for offshore wind power has significantly changed and is continuing to change worldwide,” Mitsubishi said in a statement. “As a result of these unexpected changes, we are currently reviewing the business plans for these projects. We will consider the appropriate next steps after thoroughly examining the results of our review.”

What do Japan’s new offshore wind rules entail?

Under the new regulations, developers can offset some costs by hiking electricity prices. However, the Japanese government has also raised the required deposit for covering potential project delays by more than 50%, with forfeited amounts increasing based on the length of delays.

What does Mitsubishi’s move mean for the Japanese power sector?

Experts suggest Mitsubishi’s move signals a threat, and potentially a withdrawal, from its offshore wind commitments unless the Japanese government provides additional support. With Japan relying heavily on offshore wind to reduce its roughly 90% dependence on energy imports, the government may intervene, though analysts warn this could lead to broader renegotiations of other offshore wind projects in the country.

“In Japan, where energy self-sufficiency is low, offshore wind power is an important power source to help provide a stable supply of energy,” Mitsubishi said.

What happens next?

Chubu Electric Power Company, a partner in Mitsubishi’s offshore developments, is also reassessing its role in these projects after reporting a loss of over $116 million on them between April and December 2024.