The Ministry of Economy, Trade and Industry (METI) is looking to adjust the allocation rules for new lease rounds, so that part of the increase in construction costs can be added to the offtake price for power.

The government in Japan has made offshore wind development a pillar in the move towards the expansion of renewable energy in the country. However, the installation costs of offshore wind are high, and the increase in material and construction prices can lead to projects being unprofitable, after the project has been awarded.

To prevent this, METI is looking to change the system so that part of the increase in construction cost can be added to the offtake price, for rounds held in government designated areas. The price will be reflected based on the rate of increase in the Corporate Price Index, and the government hopes that the measure will increase the number of operators who respond to future tenders and support the development of offshore wind in the country. The new rules may first be applicable in allocation round 4, expected to be announced in the first half of 2025.