Japan Plans Offshore Wind Re-Auction After Mitsubishi Exit Leaves 1.76 GW in Doubt

Three abandoned projects put Japan's wind plans under pressure

Japan plans to re-auction three offshore wind sites in Akita and Chiba prefectures after Mitsubishi Corporation and its partners withdrew from projects described as having a combined capacity of 1.76 gigawatts (GW). The withdrawal threatens developments scheduled to begin operating between 2028 and 2030, while forcing the government to reconsider how it awards projects and how long developers can operate them.

Mitsubishi's decision carries an immediate financial cost. The company had already recorded a charge of 52.2 billion yen, about $354 million, related to the projects. Its partner, Chubu Electric Power, anticipated a loss of around 17 billion yen, or $115 million. The government will also retain 20 billion yen, about $136 million, in deposits from the Mitsubishi-led groups, which are barred from the next auction round.

Construction costs had more than doubled since the consortia won the sites in December 2021. Mitsubishi said that even after examining changes to supply chains and project schedules, the money required to build, operate and maintain the wind farms would exceed the revenue from selling their electricity.

As of August 28, 2025, the government's plan to offer the sites again depended on approval from local communities. No date was given for the re-auction. Officials were also examining Mitsubishi's withdrawal and considering changes intended to make future projects more financially workable.

The stakes reach beyond the companies involved. Japan has only about 288 to 300 megawatts (MW) of offshore wind capacity operating, while its targets call for 10 GW by 2030 and 45 GW by 2040. Losing three large developments puts more pressure on the timetable for expanding an industry intended to reduce dependence on imported fossil fuels.

What Japan expected from the three sites

The projects were awarded to Mitsubishi-led consortia in Japan's first auction for offshore wind turbines fixed to the seabed in December 2021. Two sites are off Akita Prefecture, and the third is off Choshi in Chiba Prefecture.

• Yurihonjo, offshore Akita Prefecture: 819 MW.
• Noshiro Mitane Oga, offshore Akita Prefecture: 478.8 MW.
• Choshi, offshore Chiba Prefecture: 390.6 MW.

The developments were expected to supply a large increase in generating capacity when they entered operation between 2028 and 2030. Capacity describes how much power a wind farm can produce at a given moment under suitable conditions. It is different from the amount of electricity actually generated over a year, which depends partly on the wind.

Japan's existing offshore wind fleet is small compared with the scale of these planned developments. Each of the three projects, using its listed capacity, would be larger than the roughly 288 to 300 MW currently operating nationwide. Their loss therefore removes a substantial part of the expansion that Japan had expected before the end of the decade.

The main dates and next steps are:

• December 2021: Mitsubishi-led consortia won the three sites in Japan's first auction for turbines fixed to the seabed.
• August 28, 2025: Mitsubishi's withdrawal had prompted plans for a re-auction, financial penalties and a review of auction arrangements.
• 2028 to 2030: The original projects were scheduled to begin operating.
• 2030: Japan aims to reach 10 GW of offshore wind capacity.
• 2040: Japan aims to reach 45 GW.

Why the projects stopped making financial sense

Mitsubishi and its partners won the projects in a business environment that later changed sharply. Construction became much more expensive, supply chains tightened, and the COVID-19 pandemic and war in Ukraine contributed to inflation and rising interest rates.

Higher construction costs increase the money needed before a wind farm starts earning revenue. Higher interest rates can also make borrowed money more expensive. For projects that take years to develop and then operate for decades, both changes can alter whether expected electricity sales will cover the total investment.

Katsuya Nakanishi, Mitsubishi Corporation's chief executive, said the company had considered countermeasures, including restructuring supply chains and reassessing schedules. He explained why those efforts were insufficient:

Cost increases had far exceeded projections, including construction prices more than doubling since the 2021 bidding phase. Even with countermeasures, total expenditures would surpass electricity sales revenue, making project continuation difficult.

Mitsubishi's calculation included maintenance and operating costs as well as construction. The problem therefore extended across the expected life of the projects. Continuing would have required the consortia to commit to developments whose projected spending was greater than their projected electricity income.

Low bids meet a much more expensive market

Mitsubishi's bidding strategy has drawn attention because the consortia secured the projects with low electricity prices. The strike prices agreed in 2021 ranged from 11,990 yen to 16,490 yen per megawatt-hour (MWh). A megawatt-hour measures an amount of electricity, while a strike price is the agreed price used in the project's electricity revenue arrangements.

Low prices helped the consortia compete for development rights. They also left the projects exposed when construction and other expenses rose far beyond the assumptions made at the bidding stage. The central financial problem was straightforward: expected income was tied to prices secured in 2021, while the cost of delivering the projects had climbed.

Industry observers linked the withdrawal to that aggressive approach. Recharge described the outcome in these terms:

Mitsubishi and its consortia partners have forfeited $136 million in deposits and are barred from the next auction round after their strategy of aggressively outbidding competitors in Japan's inaugural offshore wind tender led to their downfall.

The losses affect both Mitsubishi and Chubu Electric Power. Mitsubishi's charge of 52.2 billion yen reflected the financial damage already associated with the projects, while Chubu expected a loss of around 17 billion yen. The forfeited deposits and exclusion from the next auction add consequences for abandoning the development commitments.

Japan's government is treating delivery reliability as part of its renewable energy policy. An auction can select a low electricity price, but the planned power supply arrives only if the winning developer can finance, build and operate the project. Mitsubishi's exit brings those two parts of the process, winning a bid and completing a wind farm, into sharper focus.

The government prepares to offer the sites again

Japan intends to re-auction the three sites after securing local community approval in Akita and Chiba prefectures. Community consent is a critical part of the process because local opposition can delay or derail large infrastructure projects.

Yuichi Furukawa, wind energy policy director at the Ministry of Economy, Trade and Industry (METI), is leading the examination of what caused Mitsubishi's withdrawal. The findings are intended to inform future auction design and reduce the risk of similar setbacks.

Furukawa told Reuters that rising costs were affecting offshore wind developments internationally, while maintaining confidence in Japan's market:

Offshore wind projects are being suspended globally due to rising costs, but Mitsubishi's withdrawal would not hinder the country's offshore wind market.

Industry Minister Yoji Muto called the withdrawal "deeply regrettable" and warned that it could undermine trust in the sector. He also set out the government's intention to use the experience when preparing later auctions:

The decision is regrettable and could undermine industry trust. We will review the reasons for withdrawal and incorporate the findings into future auctions.

The proposed re-auction offers a way to keep the sites in Japan's development pipeline. A new developer would still face the higher costs and market uncertainty that helped drive Mitsubishi out, making the terms of the next competition important to whether the projects attract workable bids.

Could ten more years make wind farms viable?

An expert panel has proposed allowing developers to apply for an additional 10 years beyond the 30 years typically granted for offshore wind leases. That would bring the total period to 40 years.

A longer operating period would give a wind farm more time to sell electricity and recover its investment. For a project with substantial construction costs at the beginning, additional years of revenue can improve cash flow and make the investment more attractive.

The proposal addresses the relationship between the cost of building a project and the time available to earn that money back. Mitsubishi's withdrawal showed how difficult that calculation can become when construction prices more than double after a bid has been accepted.

Denmark and other European countries have also started extending wind farm leases to improve project economics and maintain renewable electricity output. Japan's proposed extension reflects the same pressure to adjust arrangements for an industry facing higher costs and greater uncertainty.

The Japanese government is also considering other measures to attract bidders and support future development:

• Extending lease terms to give projects more time to earn revenue.
• Streamlining permitting and approval processes.
• Making cost assumptions in future auctions more transparent and realistic.
• Offering incentives or support for floating wind technology.

These measures are intended to restore confidence while keeping new projects aligned with Japan's energy security and decarbonization goals. The extension proposal would allow companies to apply for more time, rather than simply giving every project a longer operating period.

New bidders face the same cost pressures

Japan's next task is to find developers willing to take on the abandoned sites. Rising costs and market uncertainty have made companies more cautious, and some major international businesses have already indicated that they do not want these projects.

Markus Krebber, chief executive of Germany's RWE, said the company had no interest in the Mitsubishi projects. His position shows why reopening the auction alone may be insufficient to secure a replacement developer.

Mitsubishi's withdrawal forms part of wider difficulties in offshore wind. Denmark's Orsted and Shell have scaled back or withdrawn from projects in Japan and elsewhere because of rising costs and market uncertainty. BP and RWE have also scaled back or paused offshore wind projects.

Developers internationally have faced supply chain disruption, inflation, fluctuating exchange rates and difficulties completing projects on schedule and within budget. In the United States, political opposition and project delays have added to the industry's problems.

Japan must therefore compete for investment in a market where several large companies are reconsidering their commitments. Longer operating periods and revised auction terms may improve the financial calculation, while the actual cost of construction, equipment and borrowing remains central to a bidder's decision.

Why floating turbines matter to Japan's larger target

Japan has limited sites near its coastline that are suitable for turbines fixed to the seabed. This type of offshore wind development is less expensive and uses more mature technology than floating wind platforms.

Turbines fixed to the seabed stand on foundations attached to the sea floor. Floating turbines sit on platforms that remain afloat. Japan will need to accelerate floating wind development to pursue its target of 45 GW by 2040, because the supply of suitable sites for fixed foundations is limited.

Floating wind technology is still at an early stage and brings higher costs and technical risks. That makes the government's consideration of incentives or support relevant to the longer expansion of offshore wind, beyond the three sites awaiting a new auction.

The immediate challenge concerns replacing the abandoned developments in Akita and Chiba. The longer challenge concerns building enough capacity across Japan while working with its coastal conditions and the costs of the technologies available.

Energy security keeps the stakes high

Japan is the world's second-largest importer of liquefied natural gas (LNG), after China. Its dependence on fossil fuels increased after the 2011 Fukushima nuclear disaster led to the shutdown of most nuclear reactors.

Offshore wind is intended to help diversify that energy mix. Electricity generated from wind in Japanese waters would give the country another domestic source of power and support efforts to reduce reliance on imported fossil fuels.

The industry also forms part of Japan's strategy to reduce greenhouse gas emissions and achieve net zero emissions by 2050. Net zero means balancing emissions released with emissions removed. Reaching that goal while keeping energy supplies dependable requires projects that can move from planned capacity to operating power generation.

Mitsubishi's exit brings the balance between those objectives and financial reality into focus. Japan needs more renewable electricity, while developers need revenue arrangements and operating conditions that make large investments workable. Local communities also need a place in decisions about projects off their coasts.

Government officials remain committed to the offshore wind targets and regard the market as robust and vital to the energy transition. Their response combines penalties for the abandoned commitments with an attempt to improve future auctions. The next practical steps are community approval, a new competition for the sites, and decisions on the proposed regulatory changes.

Key Points

• Mitsubishi and its partners withdrew from three offshore wind projects in Akita and Chiba after construction costs more than doubled from the 2021 bidding stage.
• The projects were described as totaling 1.76 GW and were scheduled to start operating between 2028 and 2030.
• Mitsubishi recorded a charge of 52.2 billion yen, while Chubu Electric Power anticipated a loss of around 17 billion yen.
• The government will retain 20 billion yen in deposits, and the Mitsubishi-led groups are barred from the next auction round.
• Japan plans to re-auction the sites subject to local community approval and is reviewing the reasons for the withdrawal.
• An expert panel proposed allowing developers to apply for 10 additional years beyond the typical 30 years for offshore wind leases.
• Japan retains its targets of 10 GW of offshore wind capacity by 2030, 45 GW by 2040 and net zero emissions by 2050.