Round 4 likely to be initiated in July 2025, but areas in question not clearly identified
In December 2024, the effects of Japan’s third offshore wind auction were announced through the Ministry of Economy, Trade and Industry (METI) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
What a very competitive auction saw awards to two consortia. The first, the Tsugaru Offshore Energy Consortium, is composed of Jera, Green Power Investment and Tohoku Electric. It received an award for 615 MW of capacity from the Sea of Japan (South), Aomori Project. The second, Yamagata Yuza Offshore Wind LLC, consisting of Marubeni, Kansai Electric, BP, Tokyo Gas and Marutaka, obtained a value of 450 MW of capacity from the Yuza, Yamagata project. Both projects have a committed advertising operation date of June 2030 and will supply power at a value of 3/kWh (US 0. 19).
Analysts at Watson Farley & Williams (WFW)* say it was notable that in the reasons provided by METI and MLIT for selecting the successful proposals, neither the proposed price for power nor the proposed commercial operations date were deciding factors. “Other applications contained the same proposals,” says WFW. “Instead, other factors referred to by METI and MLIT as important to their determination were the development plan submitted; the feasibility of the business plan; and the capability to consult with and accommodate regional interests such as the fisherman union and local government.”
Analysts at another law firm, White
WFW says, in what remains a challenging global market for fixed and floating offshore wind, the outcome of Round 3 “represents a modest, but nonetheless vital step forward and milestone in the Japanese government’s goal of achieving carbon neutrality by 2050.” They say details for the next auction round, Round 4, have yet to be announced, but it is expected to occur in 2025 and the project sites under consideration by METI and MLIT include the areas identified as ‘promising zones’ in Hokkaido.
Meti has also known possible sites in Aomori, Chiba and Iwate, among the other prefectures, however, they deserve not to be decided for the Tour Four and will probably be more likely in the middle of the next cycles of the auction process. If Circular Four follows a similar design to the previous towers, the deadline for submissions would be July 2025 and successful proposals deserve to be announced in December. However, the schedule can be influenced through modifications to the operational auction policies, that is, the overall design of each set of auction policies for an express auction site is based, which deserves to take position in 2025.
According to WFW, the Japanese government plans to modify the renewable marine energy law that governs the auction procedure for wind energy on the high seas. In November 2024, the METE and the MLIT published a call for comments on the third proposed edition of the operational rules for the auction for the profession in the general maritime spaces (auction operational rules) that govern wind projects on the high seas.
Some of the major proposed adjustments come with adjustments to the evaluation of allocation schedules, adding proposed advertising operation dates and whether the expected dates will get favorable consideration; Threat Relief Measures; Deposits; and the “zero bonuses” one.
Other proposed changes include changes to the price adjustment mechanism; a measure of flexibility in allocation plans; adjustments to pricing (including the proposed definition of “premium tier”); and site studies will be provided through Japan Oil, Gas and Metals National Corp.
White
“The existing prospect slots, which are potentially candidate slots for the fourth-round auction, come with five slots in Hokkaido, like Matsumae,” White says
“The bidders will participate in auctions of the Rrant Ronta will want to largely monitor the discussions undertaken, for example, joint meetings hosted through Meti and Mlit,” they say.
The 30-day period for public comment ended on 30 December 2024, and the results of the consultation were not evident as this article was written, but WFW says it is important the amendment process be concluded by the end of March 2025 (being Japan’s fiscal year end) for Round 4 to proceed smoothly in 2025.
The results of the round follow those of Round 2, which were announced in December 202. Consortia consisting of Rwe, Mitsui and Osaka Gas, Sumitomo and Tepco Renewable Power, and Jera and Partners obtained agreements to build offshore wind farms in Japan’s second call for applications for offshore wind.
In December 2024, Vestas also demonstrated that it had secured an order for 315 MW for the OGA Katagami Akita Offshore wind allocation in Akita Prefecture, which was awarded under the 2nd round. The contract is for 21 V236-15 TurbinesArray0 MW, as well as a long-term service contract designed to realize optimized asset performance, and represents the company’s first order from Vestas for its V236-15. 0 MW turbine in the Asia-Pacific region, and its first order from the company for an allocation to evolve under the Japanese government’s offshore wind auction program.
*Watson Farley & Williams analysis of the auction can be found here
** The White & Case study on the auction can be consulted here.
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