Mitsubishi Corporation President Katsuya Nakanishi at a press conference announcing the company’s withdrawal from three offshore wind projects off Akita and Chiba, August 27, Chiyoda Ward, Tokyo.
Mitsubishi Corporation has decided to pull out of three offshore wind projects off Akita and Chiba. The move marks a stunning reversal for a company that once promoted offshore wind as the crown jewel of its decarbonization business. Announced on August 27, the withdrawal highlights the financial pitfalls of Japan's offshore wind push. It also raises broader questions about the technology and future direction of the nation's renewable energy policy.
Costs Double, Business Model Collapses
At an August 27 press conference in Tokyo, Mitsubishi President Katsuya Nakanishi admitted that the numbers no longer added up. "Total expenditures, including maintenance and operation, outweigh total revenue. It has become impossible to devise a viable plan," he said.
Mitsubishi and its partners, including Chubu Electric, had initially won bids with strikingly low offers, ranging from ¥11 to ¥16 JPY ($0.08 to $0.11 USD) per kilowatt-hour. That was far below the government's ¥29 ($0.25) cap under the feed-in tariff (FIT) scheme.
At the time, the company relied on its European subsidiary's expertise to build products affordably. However, surging material costs, soaring turbine prices, and other unforeseen expenses more than doubled construction and operating costs, rendering an aggressive pricing strategy a liability.
The fallout is substantial. Mitsubishi has already booked over ¥50 billion ($345 million) in losses related to offshore wind. Chubu Electric expects losses of around ¥36 billion ($248 million), bringing the combined hit to nearly ¥90 billion ($620 million). Two newly opened Mitsubishi branch offices in Akita and Chiba will close, while the projects themselves have been scrapped entirely.
Local Backlash and National Setback
The withdrawal has sparked anger in host communities. Chiba Governor Toshihito Kumagai expressed regret after meeting with Nakanishi, stating that the prefecture had pinned its hopes on both renewable energy and local revitalization. "Frankly, we were strung along," he added.
Mitsubishi has pledged to maintain dialogue with communities, but the reputational damage is evident. For the government, the collapse is a blow to its energy plan, which envisioned offshore wind supplying 4-8% of Japan's electricity by 2040, up from its current 1% share. The abandoned projects were meant to spearhead that expansion.
Chief Cabinet Secretary Yoshimasa Hayashi has since promised to review auction requirements and consider reforms, including shifting from FIT to a feed-in premium (FIP) model that would let developers pass cost fluctuations onto consumers. However, Mitsubishi insists that even such changes would not have saved the projects, given today's price environment.
Offshore Wind as a Global Bust
Critics say Japan should have seen this coming. In November 2023, commentator Genki Fujii highlighted a wave of offshore wind failures abroad. Citing reports in Nihon Keizai Shimbun and the Financial Times, Fujii noted massive write-downs by BP, Equinor, and Ørsted, as well as spiraling losses at General Electric's turbine division.
"To build 200-meter turbines in typhoon zones without clear answers for how they withstand extreme weather — it was bound to fail," Fujii argued.
He also highlighted structural weaknesses: legal disputes over turbine patents, the fragility of floating platforms, and investor flight from ESG funds. Offshore wind, he insisted, was "always destined to collapse," in Japan as much as in Europe and America. Mitsubishi's exit, he predicted then, would not threaten the corporation's survival, but would leave Japanese consumers and local governments to carry the disappointment.
Rational Business, But Broken System
Securities analyst Kohei Morinaga, speaking on the radio just after Mitsubishi's announcement, acknowledged that from a listed company's perspective, Mitsubishi's decision was rational. Costs had ballooned to the point where the projects were unprofitable
Yet Morinaga emphasized the broader consequences, noting that the issue went beyond Mitsubishi's balance sheet. "These were national projects," he said. "Losing them means wasted time, disrupted local planning, and shaken trust in government policy."
He criticized the ultra-low bids that secured Mitsubishi the contracts, warning, "If companies can underbid unrealistically, then back out later, what lesson does that teach? That caution and proper pricing are punished, while recklessness is rewarded." Unless penalties are introduced, Morinaga warned, similar fiascos could plague other government-backed infrastructure initiatives.
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Author: Daniel Manning
