Offshore wind is set to play a central role in Japan’s efforts to hit newly increased renewable energy targets, cut emissions and hit net zero by 2050.

With coal continuing to play a significant role in power generation for at least the next decade – much to the dismay of environmental groups – wind at sea is a green alternative for a nation where options on land are limited by spatial and other geographical constraints.

In July, Japan unveiled draft plans for renewables to account for 36-38% of its power mix by 2030, increasing a former goal of 22-24% and up from about 18% in 2019.

Alex Whitworth, research director at Wood Mackenzie, says: “Increasing renewables share will be expensive as onshore wind and solar resources are limited in Japan. So expensive distributed solar and offshore wind will need to take up the slack, and are still at a premium [compared] to other power options.”

The current Japanese targets for offshore wind – 10GW allocated by auctions by 2030 at the rate of a gigawatt annually, and 30-45GW in the water by 2040, up from just 65MW at the end of 2020 – are accompanied by aggressive levelised cost of energy reduction goals of 8,000-9,000 yen/MWh.

That will require a steep cost reduction from Japan’s first few large-scale offshore wind projects, currently being built at a handful of nearshore locations near ports under a former support regime that granted 36,000 yen/MWh, and the upper cap of 29,000 yen/MWh in the first large-scale auction.

Japanese officials will take encouragement from spectacular downward cost curves seen in European markets. But with the added costs of equipping and building projects suitable for Japan’s unique environmental challenges, and wind speeds that are modest rather than spectacular, analysts expect Japan’s path to cheap offshore wind power to be less smooth.

That hasn’t deterred a host of global and local big hitters lining up to take part in Japan’s auctions, with the likes of Orsted, RWE, Iberdrola, Equinor and Northland Power all having declared their intentions to enter the market.

Why Japan's offshore wind dream faces a permitting and grid reality check