- Japan plans key regulatory reforms to revive its offshore wind sector, including longer project durations and relaxed cabotage laws.
- Rising costs and investor exits, including Ørsted and Shell, have slowed progress toward Japan’s 45 GW by 2040 target.
- METI sees a shift to a feed-in premium model to reduce risks and attract global investors to stalled projects.
Japan plans to overhaul its offshore wind regulations to revive its faltering renewable energy goals. The government aims to install 45 gigawatts (GW) of offshore wind by 2040, but rising costs and delays threaten progress.
Since launching its first auction in 2021, Japan has seen offshore wind projects slow down. Top global energy firms have paused or dropped investments. High losses and rigid rules have pushed the government to reconsider its strategy.
The Ministry of Economy, Trade and Industry (METI) now leads discussions with industry players. Officials seek to revise key rules and lower barriers for investors. One proposal would extend project terms from 30 to 40 years. This change would help developers recover costs and secure long-term profits.
Developers have also called for relaxed cabotage laws. Current rules block foreign vessels from operating in Japanese waters. Industry leaders argue that easing these restrictions would cut costs and speed up offshore construction. METI now weighs options to allow foreign-flagged ships to support wind farm development.
METI also plans to change the payment model for energy producers. Japan currently uses a feed-in tariff (FIT), which offers fixed prices. METI proposes a shift to a feed-in premium (FIP) model, which links earnings to market prices. Recent auctions have already used this model, and companies support the shift for better flexibility and risk management.
Companies say Japan must update its rules quickly. Mitsubishi Corporation, a major player in early auctions, lost over $300 million in offshore wind investments. The company now re-evaluates projects it planned for 2028–2030. Executives point to unclear regulations as a leading cause for concern.
Other global firms have scaled back their efforts. Ørsted, a Danish energy giant, exited Japan’s offshore wind market in 2024. Shell reduced its offshore wind team in Japan, according to industry insiders.
Some international companies continue to monitor the market. Germany’s RWE, Spain’s Iberdrola, and BP maintain interest. Equinor and TotalEnergies still operate in Japan but limit their activities. These companies wait for regulatory clarity before committing further.
Japan risks increasing its dependence on fossil fuels if it fails to grow renewables. METI estimates that LNG imports could rise by over 10% by 2040, reaching around 74 million metric tons. Data centres and semiconductor industries would drive most of this demand.
Industry analysts believe Japan can still attract investment if it acts fast. The country offers strong long-term potential in offshore wind. Reforms that reduce risks and improve profitability could restore global confidence.
Japan now faces a critical moment. Government leaders must adopt reforms quickly to meet energy goals and avoid deeper reliance on imported gas. The success of these efforts will shape Japan’s clean energy future.