At the same ¥908,000/kW, Japan’s fixed-bottom offshore wind costs about ¥20 to ¥41/kWh depending on assumptions, by DeepWind’s simple calculation. Yet most Round 2 and 3 projects won at a ¥3/kWh base price, while the government treats about ¥30/kWh as a guide for viable projects. Reading viability takes four numbers together.
Fixed-bottom CAPEX runs from ¥388,000 to ¥908,000/kW across official documents. Dates and scope differ, so the starting figure can change the conclusion.
In a simple calculation, moving the discount rate from 3% to 6% adds about ¥6/kWh. Moving the capacity factor from 36.6% to 32% adds about ¥4/kWh.
Inflation adjustment and the capacity auction have limited scope. Projects selected at ¥3/kWh depend heavily on market prices and private power contracts.
Where to go deeper on Japan’s offshore wind costs
- 📘 Offshore Wind Cost Breakdown in Japan: Where ¥908,000/kW Goes
- 📘 Floating Offshore Wind Cost Structure and LCOE Reality
- 📘 Cost Realities of Japan’s Offshore Wind Promotion Zones
- 📘 Offshore Wind Auctions: Price Caps and Actual Costs
- 📘 The Disadvantages of Offshore Wind in Japan
CAPEX runs from ¥388,000 to ¥908,000/kW, OPEX from ¥13,200 to ¥36,000
CAPEX is the upfront cost of building a project, and OPEX is the yearly cost of running it. Official documents alone show a wide range.
| Source of the figure | CAPEX (¥/kW) | OPEX (¥/kW/yr) |
|---|---|---|
| Round 3 price cap assumption | 388,000 | 13,200 |
| Benchmark used against operators’ reports | 565,000 | 22,500 |
| Operators’ reports (average of 4 commercial projects) | 779,000 | 36,000 |
| JWPA developer survey | 908,200 | 27,600 |
In JWPA’s breakdown, the turbine is the largest item at 38.6%. The widest gap against the ¥388,000 figure is in installation, at 4.2 times on JWPA’s comparison. A debate focused on turbine prices misses where the difference is largest. The item-by-item table is in the next article.
👉 Offshore Wind Cost Breakdown in Japan: Where ¥908,000/kW Goes
Capacity factor assumptions range from 27.7% to 40.2%
The capacity factor (CF) compares actual output with running at rated power all year. With the same costs, lower output raises the cost per kWh. The documents differ here too.
- 27.7%: average of six operators’ reports, including demonstration units.
- About 32%: average in the JWPA developer survey.
- 36.6%: average used to set Round 2 and 3 price caps.
- 40.2%: the government’s assumption for 2040.
Output depends on wake losses and downtime as well as wind. Lenders care about this estimate because it drives the cash available for repayment.
A 3% discount rate and a 7.3% WACC tell different stories
Cost of capital is the return required on construction funding. It weighs heavily on offshore wind, which pays upfront and recovers over decades.
The government’s 3% is a uniform rate for comparing power sources, separate from what developers pay for funding. IRENA puts Japan’s offshore wind WACC, the blended cost of debt and equity, at 7.30% real after tax for 2025. JWPA uses a 6% project IRR. The definitions differ, but 3% clearly sits below what developers assume.
The same ¥908,000/kW can mean about ¥20 to ¥41/kWh
Putting these numbers into a simple formula shows how much each assumption matters. We used CAPEX of ¥908,200/kW, OPEX of ¥27,600/kW/yr and a 35-year life.
| Discount rate | CF 27.7% | CF 32% | CF 36.6% | CF 40.2% |
|---|---|---|---|---|
| 3% (government) | 28.8 | 24.9 | 21.8 | 19.8 |
| 6% (JWPA IRR) | 37.2 | 32.2 | 28.1 | 25.6 |
| 7.3% (IRENA WACC) | 41.2 | 35.7 | 31.2 | 28.4 |
JWPA reports about ¥22.4/kWh at 3% and 36.6%, and the mid-¥30s at a 6% project IRR. Scope differs, but the levels are close to this table.
Three readings follow. Moving from 3% to 6% adds ¥6.3 at a CF of 36.6%. Moving the CF from 36.6% to 32% adds ¥4.1 at 6%. Cutting CAPEX to ¥600,000/kW gives ¥24.6 at 6% and 32%, a saving of ¥7.6. Yield and financing carry weight comparable to cost reduction.
Site conditions add to this. JWPA estimates that rocky seabed could lift CAPEX to ¥1,335,000/kW. Zone-by-zone conditions are compared in the next article.
👉 Cost Realities of Japan’s Offshore Wind Promotion Zones
Price: between a ¥3 base price and a ¥30 guide
The cost table needs to sit next to the prices chosen in the auctions.
| Auction | Scheme | Selected price (¥/kWh) |
|---|---|---|
| Goto (floating) | FIT | 36 |
| Round 1 (3 zones) | FIT | 11.99 to 16.49 |
| Round 2 (4 zones) | FIP | 3 (3 zones), 22.18 (Saikai Enoshima) |
| Round 3 (2 zones) | FIP | 3 |
The ¥3 is a base price under FIP, the scheme that pays a premium on top of market prices. With almost no premium, actual revenue comes from market prices, private contracts and non-fossil value. Against the cost table, the base price does not even cover OPEX: ¥3 at a CF of 32% gives ¥8,410/kW a year, about 30% of ¥27,600. Viability depends on income earned beyond the ¥3.
In Round 1, the selected developer announced its withdrawal from all three zones in August 2025. Mitsubishi Corporation said construction costs had more than doubled from its assumptions. Round 1 ran under a fixed FIT price, so revenue could not absorb the rise.
👉 Why Japan’s Offshore Wind Round 1 Ended in Withdrawal
What policy can close, and what it leaves open
The government has added tools to narrow the gap. Each has limits in scope or effect.
- Price adjustment: part of the base price can be revised once after selection to reflect inflation, up to 40%. The government expects the effect only at Saikai Enoshima among selected projects, since a ¥3 base likely leaves little to adjust.
- Long-Term Decarbonization Auction: this pays long-term capacity income. Round 2 and 3 zero-premium projects can join round 4, on a one-time basis, within a 500 MW limit. The cap calculation used ¥31.9/kWh. See 👉 Japan’s LTDA Explained.
- Revised bid scoring: an assumed supply price range will ease low-price competition from the next auction. It changes the scoring and sets no revenue floor. See 👉 Japan FIT vs FIP.
- Central method: JOGMEC, the state energy and minerals agency, gives survey data to tender participants, easing their early site work. It does not directly cut construction or financing costs.
Ports, vessels, workable days and seabed conditions stay as they are under these tools. Given the size of the installation gap, DeepWind sees the remaining challenge here.
Floating wind: few comparable results so far
The figures so far are fixed-bottom. For floating wind, a NEDO model puts a baseline wind farm at ¥688,000/kW for a semi-submersible and ¥570,000/kW for a spar. That model assumes European-style conditions, so it cannot be compared with JWPA’s ¥908,200. Comparable commercial-scale results from Japan are still to come.
👉 Floating Offshore Wind Cost Structure and LCOE Reality
A lender’s concern is less the level of LCOE than whether cash covers repayment in the tightest year. That makes the yield estimate decisive, along with how much income beyond the ¥3 can be fixed in long-term contracts. With few contracted buyers, a project takes market price falls directly. You can test different assumptions in the DeepWind Simulator.
Offshore wind viability comes from the combination of four assumptions, and the headline cost is only one of them.
The weight of ¥908,000/kW tends to pull the debate toward cost alone. Even a simple calculation shows differences of similar size from yield and capital. Lower CAPEX can also be cancelled out if output falls short and funding terms tighten.
When reviewing a project or supply plan, consider first whether all four assumptions come from the same source. Exercise caution if you read the government’s ¥21.1 or ¥9.5 to ¥10.1/kWh as a project’s economics. Those figures compare power sources at a 3% rate.
The next evidence is Round 2 and 3 construction. As estimates become results, we will see which CAPEX figure is closer to reality. Round 4 of the capacity auction should also show how much income beyond the ¥3 can be secured.
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Related DeepWind Articles
- Offshore Wind Cost Breakdown in Japan: Where ¥908,000/kW Goes
- Japan FIT vs FIP: How Offshore Wind Revenue Actually Works
- Japan’s LTDA Explained
- Why Japan’s Offshore Wind Round 1 Ended in Withdrawal
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