Mitsubishi says it will rethink Japanese offshore wind power projects

Mitsubishi Corp said on Monday that it was reviewing how to proceed with the development of its offshore wind projects in Japan, citing a "significantly changed" business environment, including inflation and a weaker yen.

The announcement by Mitsubishi, which led consortia that won Japan's first state-run offshore wind auctions in 2021, is showing Tokyo is not immune to rising costs across offshore wind projects globally.

Japan, which imports nearly everything for its energy needs, bets on renewable energy to raise its energy security and decarbonise the economy by 2050.

The government started to auction sites for future offshore wind farms - of which Japan wants to have 10 gigawatt (GW) by 2030 and 45 GW by 2040 - only in 2020.

A year later, consortia led by Mitsubishi were selected to operate three projects in the Akita prefecture in the north and the Chiba prefecture to the east of Tokyo with total projected capacity of 1.76 GW and a target start-up of 2028 to 2030.

"We will consider the appropriate next steps after thoroughly examining the results of our review," Mitsubishi said in a statement, without providing other details.

Chubu Electric Power Co, whose unit C-Tech partners with Mitsubishi in all three projects won in 2021, said on Monday that it was re-evaluating the feasibility of its offshore wind projects, including exploring measures to improve profitability.

On Monday, Chubu Electric posted an 18-billion-yen ($116 million) loss on the three Mitsubishi-led offshore wind projects in the April-December period due to rising construction costs amid inflation, yen depreciation, tight supply chains, rising interest rates and other factors.

"C-Tech is reviewing its business plan in cooperation with its business partners, considering various measures to improve profitability," Takehide Horibe, a manager at Chubu Electric, told reporters.

In addition to its partnership with Mitsubishi, Chubu Electric is involved in several other offshore wind projects in Japan, including two operational ones with Marubeni and others in the Akita prefecture.

(Reporting by Yuka Obayashi, Chang-Ran Kim and Katya Golubkova; Editing by Savio D'Souza, Sherry Jacob-Phillips and Mrigank Dhaniwala)