Eneos, a Japanese company, warns of rising costs in developing offshore wind businesses

Eneos Holdings - Japan's largest oil refiner that has expanded into renewable energy - warned on Wednesday of the rising cost of developing their offshore wind project. Their CEO said returns were difficult.

Eneos' Japan Renewable Energy unit won the government auction in March 2024 to develop a 375 megawatt offshore wind farm in northern Akita Prefecture, Japan, with Spain's Iberdrola, and Tohoku Electric Power Co. Construction will begin in 2020, and operations are expected to begin in 2029.

Eneos CEO Tomohide Miyata said at a press event that the company has not made any decisions yet, such as quitting, or delaying it for another two or three year. He also added that there are no major changes in the plan of development.

He said: "Project costs have risen, but green electricity prices are not matching the costs. This makes it more difficult to get returns than ever before."

A Mitsubishi-led group backed out of three offshore wind projects that were awarded for 2021 due to high costs. This forced the government to intensify talks with the remaining players on measures to support the continued development of the industry.

Mitsui & Co., which teamed with Germany's RWE, Osaka Gas, and Niigata Gas to build a 684 MW power plant in the northeastern Niigata Prefecture, warned last week of rising costs, but stated that it was in discussions with the government about the issue.

Japan has conducted three auctions to date to reach its goal of having offshore wind capacities of 10 gigawatts and 45 GW in 2030, respectively. This will improve energy security and clean up power.

J-Power's president stated last month that the company, which is a partner of JERA, Itochu, and Tohoku Electric on a 315-MW project in Akita Prefecture, hopes to begin operations by 2028. (Reporting and writing by Yuka Obayashi, Editing and editing by Kate Mayberry).

(source: Reuters)