Mitsubishi to exit from offshore wind projects in Japan after costs double

TOKYO - Mitsubishi Corp. said Wednesday it will withdraw from domestic offshore wind power projects after construction costs more than doubled from initial plans, rendering its business plan unviable and dealing a blow to the government's renewable energy push.

The consortium, led by the trading house and including a Chubu Electric Power Co. subsidiary among others, had initially planned to build wind turbines at three sites off the coasts of Akita and Chiba prefectures.

"The massive changes in current economic conditions and the business environment led us to make this decision," Mitsubishi President Katsuya Nakanishi said during a press conference in Tokyo. "We take this result very seriously."

The consortium was selected by the government in 2021 as the operator of the project after it presented incredibly low prices compared to its competitors through its use of feed-in tariffs.

Nakanishi apologized for disappointing the relevant regions and said he planned on visiting Akita and Chiba to directly explain the decision.

He also reiterated the importance of wind power and stated the company's goal toward decarbonization.

A total of 134 wind turbines were planned, with commercial operations initially scheduled to begin between 2028 and 2030 and projected to continue through 2052. Construction in Chiba was expected to begin in 2025, and in Akita in 2026.

"The business environment around the wind energy industry has changed drastically due to the COVID-19 pandemic, the war in Ukraine, supply chain disruptions, inflation, exchange rates and rising interest rates," Mitsubishi said in a press release.

Mitsubishi said in February that it incurred a 52.2 billion yen ($353 million) impairment loss on its domestic offshore wind power business for the nine months ended December, citing rising costs and interest rates.

Asked whether he would step down to take responsibility for the losses incurred, he ruled that out and said he will continue to lead the company.

Earlier on Wednesday, Mitsubishi issued a statement saying it was considering several options for the project and that the decision remained undecided after reports the previous day of its exit.

The announcement to withdraw from the project comes after reports last week that Kajima Corp., which was slated to handle part of the construction, was pulling out.