Introduction
Evaluating the profitability of offshore wind projects requires close attention to cost-related indicators such as CAPEX, OPEX, LCOE, and IRR.
However, in Japan’s designated Promotion Zones, publicly available cost data remain scarce, leaving investors and developers with limited information for decision-making.
In this article, we assess the Hokkaido Hiyama Offshore Wind Project, estimating CAPEX, OPEX, LCOE, and IRR using the NEDO cost model, based on representative site conditions including distance to shore, water depth, and distance to port.
While these figures are independent estimates, they provide useful insights into the characteristics of this zone and a basis for relative comparison with other areas.
This article focuses not on project progress or policy background, but on the cost analysis. If you would like to learn more about the project overview of the Hokkaido Hiyama Offshore Wind project, please see the article below.
👉 Hokkaido Hiyama Offshore Wind Power Project
| Revision History |
| 2025-10-05: Updated OPEX model and LCOE&IRR recalculation. |
1. Area Overview
- Area Name: Hiyama Offshore
- Location: Southwest Offshore, Hokkaido
- Estimated Capacity: 1140 MW
- Status: Promotion Zone
- Potential Developer: Hokkaido Electric Power, J-POWER and others
2. Assumptions (Representative Values)
In this article, the representative point was set at the center of the designated promotion area polygon based on its coordinates. Water depth and distance conditions were estimated using data from NeoWins.
Since the offshore area off Hiyama, Hokkaido is divided into two zones—north and south—the representative points were also set as two points, one in the north and one in the south.
2-1. Representative Point 1 (North)
| Item | Estimated Value | Notes |
|---|---|---|
| Water Depth (m) | 48 m | Depth at representative point |
| Distance to Shore (km) | 1.2 km | Shortest distance to landfall point |
| Distance to Port (km) | 17 km | Straight-line distance to assumed O&M port |
2-2. Representative Point 2 (South)
| Item | Estimated Value | Notes |
|---|---|---|
| Water Depth (m) | 45 m | Depth at representative point |
| Distance to Shore (km) | 0.9 km | Shortest distance to landfall point |
| Distance to Port (km) | 11 km | Straight-line distance to assumed O&M port |
3. CAPEX / OPEX Estimates
CAPEX and OPEX were independently estimated by DeepWind with reference to NEDO’s Offshore Wind Cost Model (October 2024).
| Foundation Type | Estimated CAPEX | Estimated OPEX |
|---|---|---|
| Monopile (North) | USD 3020 Million | USD 101 Million/year |
| Monopile (South) | USD 3000 Million | USD 100 Million/year |
| Average | USD 3010 Million | USD 101 Million/year |
4. LCOE Estimate
The LCOE was independently estimated by DeepWind with reference to NEDO’s Offshore Wind Cost Model (October 2024) and NeoWins data.
| Foundation Type | Estimated LCOE |
|---|---|
| Monopile (North) | 106 USD/MWh |
| Monopile (South) | 91 USD/MWh |
| Average | 99 USD/MWh |
5. IRR Estimate
| Foundation Type | Estimated IRR | Modeled Power Selling Price | Assumed Operating Period |
|---|---|---|---|
| Monopile (North) | 10.1 % | 20 yen/kWh | 25 years |
| Monopile (South) | 13.0 % | 20 yen/kWh | 25 years |
| Average | 11.6% | – | – |
6. Profitability Rating (DeepWind Independent Evaluation)
| Evaluation Metric | Score (★1–5) | Result |
|---|---|---|
| Profitability | ★★★★★ | Highly Promising |
| Overall Rating | S Rank | Excellent investment feasibility and generation efficiency. |
Conclusion
The Hokkaido Hiyama Offshore Wind Project shows strong potential for cost competitiveness under Japan’s Promotion Zone framework. The independent estimates suggest CAPEX of around USD 3 billion and annual OPEX of USD 100 million, leading to LCOE values around 100 USD/MWh. Average of IRRs is 11.6% depending on site conditions, with the southern area demonstrating more favorable economics due to shallower water and closer port access.
Overall, the project’s profitability appears attractive, with an average IRR over 10% and strong generation potential supported by favorable wind conditions. However, variations in water depth imply that foundation selection—monopile versus jacket—will play a critical role in determining final project economics. As the project moves toward tender and developer selection, cost optimization and technical strategy will remain key factors for securing long-term investment viability.
If you would like to compare the CAPEX, OPEX, LCOE, and IRR of other Promotion Zones, please also check out this summary article.
🌊 Cost Analysis of Japan’s 12 Offshore Wind Promotion Zones
Weekly digest with actionable insights for investors, developers, and stakeholders in Japan’s offshore wind. 🎁 Welcome gift: Japan Offshore Wind: 2025 Market Outlook (PDF)📩 DeepWind Weekly
- 🔍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.
