Japan offshore


governed by Japanese legislation. METI is trying to establish new legislation for utilising the EEZ.


In the current market, the most important of these regulatory frameworks is the Marine Renewable Energy Act, which came into force in 2018. It is under this legislation that the auction process for offshore wind farms off the coast of Japan is governed. To develop a project, the Japanese government will designate an area first as a “Preparatory Area” and then as a “Prospective Area”. At “Prospective Area” stage there will be a variety of investigations and consultations by government departments and a public notice to stakeholders about the designation of the zone. After this stage, the area will, if it is proceedable, become a “Promotion Area”. See map below.


The auction process for “Promotion Areas” will involve preparation of guidelines for occupancy, submission of action plans for occupancy and then selection of the most appropriate business operator. Items that are evaluated in the selection process include price, experience of the developer, proposed timing for the commencement of commercial operation, the quality of the development plan, the stability of the electricity supply and contributions to the local community. Importantly, for the purposes of developing the power generation market in Japan, an amendment was introduced to the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities, in April 2022. This created a framework for a feed-in-premium system to replace a feed- in-tariff system. This restructure creates


Areas


1 Nagasaki Pref., (small floating) Goto 2 Akita Pref., Noshiro, Mitane, Oga 3 Akita Pref., Yurihonjo 4 Chiba Pref., Choshi


5 Akita Pref., Happo, Noshiro


6 Akita Pref., Oga, Katagami, Akita 7 Niigata Pref., Murakami, Tainai 8 Nagasaki Pref., Saikai


9 Aomori Pref., Sea of Japan (South) 10 Yamagata Pref., Yuza 11 Hokkaido Pref., Ishikari


12 Hokkaido Pref., Gannu, Minami Shiribeshi 13 Hokkaido Pref., Shimamaki 14 Hokkaido Pref., Hiyama 15 Hokkaido Pref., Matsumae


16 Aomori Pref., Sea of Japan (North) 17 Yamagata Pref., Sakata 18 Chiba Pref., Kujukuri 19 Chiba Pref., Isumi


opportunities for developers that can accurately predict movement in the market and/or changes in demand as they can take advantage of such dynamic pricing. But it also introduces greater risk for developers as they may miscalculate the profitability of the project overall.


It is also to be noted that Japan’s Foreign Exchange and Foreign Trade Law is relevant to developers engaging with the Japanese offshore wind market. This regulation imposes certain restrictions on foreign direct investments in key sectors of the Japanese economy, which includes the power generation business. Foreign developers will need to notify the competent authority in Japan and receive confirmation prior to any investment. In practice, this permission is often granted relatively easily and without issue.


Offshore wind rounds Japan has held two offshore wind tenders to date.


The first tender round for offshore wind projects concluded in 2021, with the same consortium, led by Mitsubishi Corp and Chubu Electric Power, being awarded the occupancy permits for each of the three fixed-bottom projects: Noshiro-Mitane-Oga (494 MW), Yurihonjo (845 MW), and Choshi (403 MW). The only floating offshore wind project, Goto (16.8 MW), was won by a consortium of six led by Toda Corporation. The winning price for the fixed-bottom projects was far lower than the upper price limit set in each auction. This resulted in the market questioning whether the consortium could cover their costs for the


Capacity (MW)


17


494 845 403 375 315 684 420 600 450


910~1140 560~710 440~560 910~1140 250~320 300 500 400 410


20 Hokkaido Pref., Gannu, Minami Shiribeshi (floating) 24 Toyama East (fixed/floating) 21 Hokkaido Pref., Shimamaki (floating) 22 Aomori Pref., Mutsu 23 Iwate, Kuji (floating)


25 Fukui Pref., Awara


26 Fukuoka Pref., Hibikinada 27 Saga Pref., Karatsu


1 8


Round 1 projects (1-4) Consortium selected: approx. 1.7 GW


Round 2 projects (5-8) Consortium selected: approx. 1.8 GW


Supply price (JPY/kWh)


36


13.26 11.99 16.49 3 3 3


22.18


Round 3 projects (9-10) Approx. 1.1 GW (Auction is in progress) (1/19~7/19)


10 7 24 25 26 18 27 19


Potential offshore wind project locations in the General Sea Area, as designated by the Marine Renewable Energy Act


Source: Derived from Upcoming Renewable Energy Policies (Japanese Agency for Natural Resources and Energy, May 29, 2024)


4 15 5 2 6 3


23 17


21 22 14 16 9 20 13


projects. Such speculation, and the fact that the same consortium won all three bids, resulted in the government updating the auction rules in October 2022 to facilitate certain key changes, including: ■ speed of execution of a project was given more weight;


■ if any of the bidders’ proposed price was less than the price at a zero premium, an equal score for pricing will be given to all bids below the zero premium; and


■ the government could limit the grid capacity that a single bidder was able to win at once.


In the second tender round for offshore wind projects the auctions were conducted based on the feed-in-premium regime and pursuant to the revised auction rules. Of the four auctioned projects, results for three of the projects were released on 13 December 2023, with Oga-Katagami-Akita (315 MW) being awarded to a consortium of JERA, J-Power, Itochu and Tohoku Electric, commercial operation date 30 June 2028, Murakami-Tainai (684 MW) awarded to a consortium of Mitsui, RWE and Osaka Gas, with a commercial operation date of 30 June 2029, and Saikai-Enoshima (420 MW) awarded to Sumitomo and TEPCO Renewable Power, with a commercial operation date of 31 August 2029. The award of the fourth and final site in the second tender round, Happo- Noshiro (375 MW), was announced in March 2024. It was awarded to a consortium of Japan Renewable Energy Corporation (JRE), Iberdrola, and Tohoku Electric Power, with commercial operation scheduled for 2029.


12 11


24


World Wind Technology


Preparatory areas


Prospective areas


Promotion areas


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