In November 2025, Japan’s Ministry of Economy, Trade and Industry (METI) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) released a major policy package titled “Measures to Ensure the Successful Completion of Offshore Wind Projects.” The document was developed in direct response to the withdrawals seen in Japan’s first offshore wind tender round. It sets out a comprehensive suite of reforms aimed at securing the successful delivery of upcoming Round 2 and Round 3 projects.

This article summarizes the key points of the government’s policy update and, more importantly, provides DeepWind’s view on what these seven measures mean for Japan’s offshore wind market from a practical, financial, and strategic perspective.

This article focuses on one key topic within Japan’s offshore wind market. For a broader perspective and other critical themes, explore our comprehensive overview here:
👉 Offshore Wind Market in Japan: Key Insights into Challenges and Opportunities

Contents

1. Why is Japan reviewing its entire offshore wind framework now?

— The impact of the Round 1 withdrawal

The withdrawal of leading consortia from Round 1 was a turning point for Japan’s offshore wind industry. Cost assumptions collapsed under the weight of rapidly rising turbine prices, construction costs, and supply chain pressures. In several cases, capex estimates exceeded initial projections by more than a factor of two, undermining project viability.

The government acknowledges this explicitly. The new policy package aims to prevent similar scenarios by reinforcing flexibility, stabilizing revenues, and reducing structural risks throughout the project lifecycle. It represents a shift away from the rigid frameworks of the past toward a more adaptive project environment.

2. The seven measures defining Japan’s new offshore wind environment

1) Allowing zero-premium FIP projects to enter the Long-Term Decarbonization Power Source Auction

(Only for Round 2 and Round 3)

Ordinarily, FIP projects cannot participate in Japan’s Long-Term Decarbonization Power Source Auction (LTDA). However, the government will allow zero-premium projects from Rounds 2 and 3 to participate. This gives developers access to a stable 20-year capacity revenue stream—greatly improving revenue certainty, financial structuring, and IRR stability.
The government refers to this as a transitional measure for the sector’s “early stage,” making it effectively a targeted relief mechanism.

If you want to lean more about LTDA, check out this article.
👉 What Is Japan’s LTDA? A Clear Guide to the Long-Term Decarbonization Auction and Its Impact on Offshore Wind

2) No retroactive cost adjustments to the tender baseline

Developers had requested the ability to adjust their tender prices retroactively—back to the tender launch date—to reflect inflation and global supply chain cost surges. The government rejected this proposal, citing concerns about fairness, neutrality of the adjustment scheme, and uneven benefits limited mainly to specific sites such as Nagasaki/Enoshima.

Japan will maintain the current rule: only future cost inflation will be covered by the adjustment mechanism.

3) Greater flexibility to change key project components, including turbine suppliers

Recognizing the significant volatility in global turbine supply chains, the government will allow developers to revise major project components, such as turbines, nacelles, and blades, under certain conditions. This includes situations where market price movements exceed reasonable risk assumptions or where supplier negotiations collapse.

This flexibility effectively acts as a safety valve to prevent unnecessary project withdrawals.

4) More flexible use of port infrastructure, including multi-port strategies and fee adjustments

Japan’s base ports are increasingly strained. The government will examine new operational models, including multi-port arrangements, revised port fee structures, and port capacity planning tailored to large-scale floating wind deployment.
Given the extreme spatial requirements of floating platforms, this policy direction will become critical as Japan approaches its 2040 floating wind ambitions.

5) A major shift: Occupancy permit renewals become “a default option”

This is one of the most consequential reforms.

The government clarifies that occupancy renewals—previously treated inconsistently—will now be “approved in principle” across Rounds 1–3, subject to clear criteria:

The site remains appropriate for designation as a Promotion Zone
Continued operation by the existing developer is reasonable for system stability
The developer meets occupancy permit requirements

Under Japan’s legal framework, occupancy can be renewed in 10-year increments with no explicit limit on the number of renewals.
This effectively introduces the possibility of long-life operational models extending beyond the traditional 30-year horizon.

6) Enhancing transparency and usability of renewable energy certificates

The government will improve non-fossil certificates, clarify the treatment of environmental value under FIT/FIP, and strengthen certificate tracking. This supports both RE100 companies and global supply chain decarbonization, and it simplifies corporate PPA procurement strategies.

7) Supporting long-term decarbonized power development through grid, port, and financial measures

The policy package also includes commitments to strengthen inter-regional transmission lines, expand port capabilities, and improve financing mechanisms—forming a more integrated support system for Japan’s long-term offshore wind ambitions.

3. DeepWind Analysis: What do these measures really change?

Collectively, the reforms materially improve the likelihood that Round 2 and Round 3 projects will reach completion. The combination of long-term revenue stability (via the capacity auction), flexibility to change turbines, and predictable occupancy renewals significantly reduces downside risk.

The impact on financial modeling is equally important. With capacity revenues and multi-decade operational scenarios now viable, developers will need to revisit IRR and LCOE assumptions. Some valuations could shift meaningfully—an underappreciated point in the market today.

Port flexibility also signals early-stage preparation for Japan’s floating wind expansion plan, targeting 15 GW or more around 2040.

However, it is crucial to note that the government explicitly limits these relief measures to Round 2 and Round 3. Future tenders—including Round 4—are expected to return to a highly competitive, zero-premium environment. In other words, these reforms should be seen as transitional support, not a permanent change in Japan’s offshore wind strategy.

4. DeepWind’s takeaways

Japan’s new policy package marks a structural shift toward reducing project failure risk and improving long-term financial stability. In particular:

Project longevity: Multi-decade operation beyond 30 years is now structurally feasible.
Revenue stability: Zero-premium projects may access 20-year capacity payments.
Operational resilience: Turbine supplier flexibility and improved port strategy reduce execution risk.

These reforms lay the groundwork for Japan to move from a tender-driven market toward a more sustainable, long-term offshore wind industry.

5. What to watch next

Key issues that will define Japan’s offshore wind trajectory include:

Detailed conditions for the Long-Term Decarbonization Auction
Actual change requests from Round 2 & 3 developers
Port infrastructure strategies for floating wind
The next iteration of Japan’s non-fossil certificate system
Round 4 tender guidelines (expected around 2026)

The outcomes of these discussions will shape Japan’s offshore wind landscape over the next decade.

For a broader understanding of the challenges and opportunities surrounding Japan’s offshore wind sector, be sure to check out our Pillar article:
👉 Offshore Wind Market in Japan: Key Insights into Challenges and Opportunities