Japan Delays Offshore Wind Pricing Bid in Green Push Setback

(Bloomberg) -- Japan has delayed indefinitely an auction to set government funding levels for offshore wind projects pending a review of the investment climate, the latest blow to the country’s push to expand renewable energy supplies.

A government panel on Wednesday backed a proposal by the Ministry of Economy, Trade and Industry to postpone the next round of bids to set the feed-in premium for new offshore wind projects, the level of state financial support required by an investor to ensure stable operation of a renewable initiative. The benchmark is critical to the investment decisions of potential developers.

The auction, which had been due to start Oct. 14 and run for two weeks, is being pushed back to allow the ministry to reassess the process after a series of setbacks, according to a METI official. The global offshore wind industry is faltering on high interest rates and the steep cost of raw materials. Mitsubishi Corp., a major Japanese trading house, said in late August that it would withdraw from several projects won via a previous auction, citing escalating construction costs.

Growing Japan’s still-nascent offshore wind power sector to the government’s target of 10 gigawatts by 2030 would require a roughly 40-fold increase in capacity. The ministry official said the next auction would now likely occur after January, following further deliberations by a higher-level council under the ministry. 

Munetomo Ando, a professor at Nihon University and one of the panel members, said during the meeting that it would be important to consider the viability of new projects. Authorities may need to revise auction rules on how procurement prices and other conditions are evaluated, he said at the meeting, a recording of which was seen by Bloomberg.

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