Introduction
In 2025, JapanOffshore wind power generation projectThe industry is at a major turning point. With major companies such as Mitsubishi Corporation successively withdrawing from projects, the entire industry is facing significant challenges. You may be wondering, "Why did these major companies withdraw?" and "What will become of the offshore wind power industry in the future?"
This article clearly explains the factors that led to the failure of offshore wind power projects and the important lessons that Japanese companies must learn. Technical terms are explained in simple terms, making the content easy for the general public to understand.
The background to Mitsubishi Corporation's withdrawal and the "premature" competition
In offshore wind power generation projects,Mitsubishi CorporationMajor companies such as [company name] decided that the prices offered in the government tender were unreasonable and announced their withdrawal. A major reason for this is that they jumped into price competition before the market was sufficiently mature.
The European offshore wind industry has cultivated its market for over 20 years. In contrast, Japan's situation is problematic because, just a few years after the enactment of the Sea Area Use Act in 2019, the price point already had a ratio of over 50% in the first round of development.
Herein lies an important "paradox."
- Businesses that conduct thorough research are less likely to lower prices and thus reduce the feasibility of their projects.
- Conversely, businesses that are unaware of this fact tend to offer lower prices.
This imbalance was disrupted, ultimately undermining the sustainability of the entire project.
Three challenges facing Japanese companies and their solutions
Point 1: Restructuring the supply chain
Mitsubishi Corporation stated that it "was unable to quickly restructure its supply chain in response to price increases by European wind turbine manufacturers." Japanese companies have withdrawn from the development of large wind turbines, and the lack of a domestic supply chain is one of the reasons for the slump.
However, it cannot be said that the lack of domestic wind turbine manufacturers is the sole reason for the failure. Both Japan and Europe face the challenge of raising prices to recoup development costs, and reducing costs through mass production is more difficult in Japan compared to Europe.
Point 2: Inflation-related institutional design is necessary.
Costs have been rising globally since the Ukraine crisis. In the UK, a benchmark for electricity generation prices is set annually, and a system is in place to adjust for actual inflation. Japan's offshore wind industry vision aims for 8-9 yen/kilowatt-hour with 35%, but an urgent review and the design of an inflation-adding system are essential.
Point 3: Flexible system for buying and selling operating rights
In Europe, there are cases where the operating rights for projects expected to incur losses are sold to other operators. In Japan, however, changing wind turbine manufacturers is difficult, and there is little flexibility in the system. This lack of flexibility is delaying recovery from failures.
Supplementary information and future prospects
The history of offshore wind power development in Europe
- 1991: Offshore wind power begins in Denmark.
- The cost of generating electricity was about eight times what it is now.
- Subsidies were provided under the Feed-in Premium (FIP) scheme.
- Since 2016: Moved away from subsidies and reached a level where it can compete on market prices.
Current situation in Europe
Business stagnation had already begun before the Ukraine crisis. Governments in various countries are responding swiftly, such as by resuming subsidy support. In some cases, such as in the UK and Denmark, the bidding process itself has been canceled.
Japan's Future Outlook
Japan has the advantage of being able to introduce highly efficient, large-scale wind turbines, which have been developed in Europe, from the outset. However, it's a matter of experience, not time. Instead of discussing the first round of projects or withdrawals pessimistically, we should re-examine what is necessary.
Summary
The lessons to be learned from offshore wind power projects lie not only in cost competitiveness, but also in how to balance market maturity and sustainability. Learning from failures and continuously improving is key to enhancing true competitiveness. Offshore wind power will play an important role in Japan's energy transition, but what is needed is the development of a sound business model rather than unreasonable price competition.
