Contents

Introduction

Offshore wind power is expanding rapidly worldwide, but its economics are largely shaped by its cost structure. This article provides a comprehensive overview of the global cost structure and economics of offshore wind power. We explain the differences between fixed-bottom and floating technologies, cost comparisons by foundation type, and the cost competitiveness of Europe and Japan, all in a clear and accessible manner.

1. Offshore Wind Cost Structure

1-1. CAPEX (Capital Expenditure)

Typical CAPEX Breakdown for Japans Offshore Wind Monopile

CAPEX accounts for the majority of offshore wind project costs, covering turbines, floating platforms, and grid connection infrastructure.

Turbine equipment: nacelle, blades, tower
Foundation structures:
- Fixed-bottom: monopiles or jackets
- Floating: semisubmersibles, spars, or other floating platforms
Subsea cables and substations
Installation and transportation costs: require specialized vessels and port infrastructure

1-2. OPEX (Operational Expenditure)

Once operational, offshore wind farms incur OPEX costs for ongoing maintenance and management. Floating wind typically has higher O&M costs due to accessibility challenges.

Scheduled inspections and maintenance
Operations and management (O&M)
Repairs and spare parts

2. Understanding LCOE (Levelized Cost of Energy)

LCOE measures the average cost per megawatt-hour of electricity generated over the project lifetime. Offshore wind LCOE has declined globally due to larger turbines and economies of scale.

3. Fixed-Bottom vs Floating: Technology Cost Comparison

Fixed-bottom: lower costs in shallow waters with simpler foundations
Floating: higher CAPEX due to floating structures and mooring systems but allows installation in deep waters

➡ Related article: Floating Common Platform Development

4. Europe vs Japan: Cost Comparison

European markets benefit from mature supply chains and port infrastructure, resulting in lower costs. Japan faces higher costs due to typhoon resilience requirements, deep waters, and limited local supply chains.

➡ For detailed Japan market insights, visit: Offshore Wind Costs and Economics in Japan

5. Future Cost Reduction Drivers

Localization of supply chains
Larger turbines and technological innovation
Government policies such as competitive auctions and subsidies

6. PPA and Corporate PPA

As a key factor influencing the business viability of offshore wind, the mechanism of PPAs (Power Purchase Agreements) has been gaining increasing attention in recent years. In particular, corporate PPAs, in which companies and power producers enter into direct contracts, are expected to become more widespread as they contribute to electricity price stability and improved investment returns.

The following article provides an in-depth explanation of the fundamentals of PPAs and corporate PPAs in Japan, recent developments, and their impact on the expansion of renewable energy.

7. Cost Structure of Promotion Area Projects (12 Sites)

This pillar article provides a comprehensive comparison of Japan’s 12 offshore wind promotion zones designated under the Renewable Energy Sea Area Act. Using key cost and performance indicators—CAPEX, OPEX, LCOE, and IRR—we evaluate and rank each zone on a star scale for investment attractiveness.

Summary

Global offshore wind costs are decreasing, but Japan faces unique challenges. Understanding cost structures and foundation technology differences is essential to improving economic viability and competitiveness.

Explore more categories at DeepWind:

🔍Market Insights – Understand the latest trends and key topics in Japan’s offshore wind market
🏛️Policy & Regulations – Explore Japan’s legal frameworks, auction systems, and designated promotion zones.
🌊Projects – Get an overview of offshore wind projects across Japan’s coastal regions.
🛠️Technology & Innovation – Discover the latest technologies and innovations shaping Japan’s offshore wind sector.
💡Cost Analysis – Dive into Japan-specific LCOE insights and offshore wind cost structures.