JAPAN Trends and Developments Contributed by: Takahiro Kobayashi, Shigeki Okatani, Yusuke Murakami and Hirohiko Tanaka, Mori Hamada
The amendment to the Marine Renewable Energy Act was enacted in June 2025 and came into force on 1 April 2026, establishing a permit system for the instal- lation of offshore wind-power generation facilities in the exclusive economic zone (EEZ) outside the ter- ritorial waters of Japan. Under the amended Marine Renewable Energy Act, operators of offshore wind projects in the EEZ will be selected through a two- stage process consisting of a provisional permit and an installation permit, as opposed to the one-stage operator selection process within territorial waters. The above-mentioned amendment also introduces a centralised system for the environmental impact assessment (EIA) of offshore wind projects in territorial waters, under which the initial procedures of each EIA will be carried out by the Minister of the Environment, instead of each developer. The government is also implementing various meas- ures to promote offshore wind power, including devel- opment of related infrastructure (like base ports and submarine transmission cables) and raising the “Green Innovation Fund” for new technologies (such as float- ing wind farms). Further, the government has demon- strated strong commitment to creating an appealing domestic market for offshore wind power to attract both domestic and cross-border investments in its Vision for the Offshore Wind Power Industry, with the first version formulated on 15 December 2020 and the second version published in August 2025. In particu- lar, the Vision for the Offshore Wind Power Industry (second version) places greater emphasis on floating offshore wind power and sets a target of forming float- ing offshore wind projects of at least 15 GW by 2040. Notwithstanding the government’s efforts to promote offshore wind power, some hurdles remain for devel- oping offshore wind farms in Japan, and the recent sharp increase in project costs due to geopolitical conflicts, including the war in Ukraine, cost-push inflation and exchange-rate fluctuations, is making the development of offshore wind farms challenging. In particular, in August 2025, a consortium that had been selected for three offshore wind projects in the first bidding round announced its decision not to pro- ceed with the development of those projects, citing the difficulty of formulating a feasible business plan.
In light of these circumstances, the government has continued its efforts to promote offshore wind power through, among other measures, revisions to the bid- ding rules, including placing greater emphasis on the feasibility of project implementation, adjusting the method for evaluating bid prices and introducing price adjustment mechanisms to reflect inflation and other cost fluctuations. Investors and financial institutions have also shown strong interest in, and willingness to provide, funding for offshore wind-power projects. Accordingly, while the future trajectory of the offshore wind market in Japan remains subject to uncertainty, further development of the market is expected in the coming years. Corporate PPA The number of corporate power purchase agreements (PPAs), encompassing various forms, such as on-site PPAs, off-site PPAs, and virtual PPAs, has been rapid- ly increasing in Japan. The background of this move is not only the government’s shift from the FIT to the FIP system, but also increased environmental awareness, including movements such as the increase of RE100 members and development of carbon credit markets, and the decreased cost of introducing renewable energy generation facilities. In addition, corporations have recently started to pay more attention to PV power generation in response to the soaring electric- ity prices influenced by the global situation. The government has fostered corporate PPAs by clarifying and easing relevant regulations, while also providing subsidies. In addition, grid access and grid reinforcement have become increasingly important for corporate PPA pro- jects, particularly for corporate PPAs with large-scale demand users such as data centres. The government is discussing and implementing measures to facilitate large-scale transmission investment, including financ- ing support for major intra-regional and inter-regional transmission lines. At the same time, new rules are being considered for large-scale demand users, such as data centres, to prevent inefficient reservation of grid capacity. These developments may affect not only the feasibility of new renewable projects but also the siting and procurement strategies of corporate offtakers under physical and virtual PPAs.
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