Key Facts
• Mitsubishi Corporation announced withdrawal from offshore wind projects in Akita and Chiba.
• Rising construction costs doubled initial estimates, making projects financially unviable.
• Losses include ¥52.4 billion already recorded and ¥20 billion in forfeited deposits.
• Projects were part of Japan’s first government-led offshore wind auction in 2021.
• Winning bid prices ranged from ¥11.99 to ¥16.49 per kWh, half the set cap of ¥29.
• Inflation increased material, labor, and interest costs, doubling construction expenses.
• Japan aims to raise renewable energy to 40-50% of total power by 2040.
• Offshore wind power is planned to grow from 1% to 4-8% of total energy.
• Fixed-price electricity purchase system for 20 years faces challenges in inflationary times.
• Local governments criticized Mitsubishi’s withdrawal as “irresponsible.”
Summary
Mitsubishi Corporation’s withdrawal from offshore wind projects in Akita and Chiba highlights significant challenges in Japan’s renewable energy strategy. The projects, part of Japan’s first government-led offshore wind auction, faced unsustainable cost increases, with construction expenses doubling due to inflation. Mitsubishi recorded ¥52.4 billion in losses and forfeited ¥20 billion in deposits. The company had won the auction with low bid prices, raising concerns about financial feasibility. Offshore wind power, considered a key to Japan’s decarbonization goals, is now under scrutiny, with doubts about future projects and the current fixed-price electricity purchase system. Local governments criticized the withdrawal, emphasizing the need for systemic reforms to support long-term renewable energy investments.
