Mitsubishi Corp. Abandons Offshore Wind Projects in Japan Due to Rising Costs

Mitsubishi Corp. had planned offshore wind projects in the waters off Choshi, Chiba Prefecture, as one of three planned sites. However, the company has withdrawn from these projects, along with those off the coasts of Akita Prefecture.

This decision was attributed to a confluence of economic factors. Global inflation, a weaker yen, disruptions in supply chains, and rising interest rates have collectively made it challenging to proceed with the planned developments. Mitsubishi Corp. officially announced its withdrawal on August 27.

The withdrawal represents a setback for Japan's energy policy. Offshore wind power has been designated as a crucial element in the nation's shift towards renewable energy sources. A consortium led by Mitsubishi had been chosen in 2021 through a government bidding process to establish three wind farms in the designated areas, with operations initially slated to commence as early as 2028.

Economic challenges in recent years have rendered the projects economically unsustainable. In February, Mitsubishi reported a significant impairment loss related to the three sites and indicated a reassessment of the projects' viability.

Following Mitsubishi's exit, the government will need to identify a new operator, likely through a new bidding process. Despite government support for offshore wind development through new legislation, rising costs are impacting similar projects elsewhere, prompting a review of current policies.