Japan is revising its offshore wind policy as inflation, a weaker yen and higher interest rates undermine project economics. Yet the government continues to regard offshore wind as strategically important for energy security, decarbonisation and industrial development.
The policy remains aligned with Europe’s renewed momentum. Ten European countries agreed under the January 2026 Hamburg Declaration to pursue 100GW of joint offshore wind capacity by 2050. The UK approved support for 8.4GW, while France opened tenders covering about 10GW. Japan and the UK have also established an Offshore Wind Industrial Compact covering investment, technology and supply chains.
Costs rise across the value chain
Japan’s offshore wind-related price index rose about 19 per cent between the reference period for its third auction round and March 2026. From January 2024 to May 2026, the yen weakened by 9 per cent against the dollar and 16 per cent against the euro, raising the cost of imported turbines and components.
Construction costs increased by about 9 per cent, while transmission cable prices surged approximately 67 per cent. Higher long-term interest rates have further increased financing costs for capital-intensive projects.
A government study estimated the cost of offshore wind commissioned in 2023 at ¥30.9/kWh. Japan has therefore proposed using approximately ¥30/kWh as a near-term benchmark for prioritising project development. This is neither a guaranteed tariff nor a uniform auction ceiling and will be reviewed as costs and market conditions change.
Auctions shift from price to delivery
Following withdrawals from projects selected in the first auction round, Japan has amended its tender guidelines for general sea areas. The revised framework gives greater weight to project feasibility, reduces the emphasis on rapid commissioning and introduces indicative supply-price ranges.
A public consultation attracted 301 comments from 74 parties. Respondents sought clearer assessment criteria, greater transparency over price assumptions and flexibility when seabed conditions require changes to foundations or construction methods.
Some participants proposed two-stage auctions, allowing support prices to be determined after more detailed site investigations. This could reduce risk premiums and create a clearer competitive framework for Japanese and international developers.
Japan is not abandoning offshore wind. It is seeking a more investable model that balances cost, project completion and consumer protection. Offshore wind could also complement solar generation by supplying electricity outside daylight hours, improving renewable portfolio diversity and hourly matching between clean power production and demand.
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