Japan to Resume Offshore Wind Lease Sales in December with Revised Rules

Japan plans to resume public auctions for offshore wind power projects in December under revised rules aimed at encouraging a wider range of operators and accelerating the development of infrastructure, the industry ministry said on Tuesday.

The schedule for the second major round of auctions to select operators for four new areas capable of generating 1.8 gigawatts (GW) of offshore wind power a year was presented by the ministry to a committee of experts to discuss ways to promote renewable energy.

As part of Japan's decarbonization strategy, the government plans to install up to 10 GW of offshore wind capacity by 2030 and up to 45 GW by 2040.

But an auction for the Happo-Noshiro area in northern Japan was abruptly suspended in March after complaints from businesses about the lack of clarity around the bid process. 

The criticism increased after the government last December selected three consortiums, all led by Mitsubishi Corp., to operate all three areas in the first major round of offshore auctions.

After lengthy discussions and many public comments, the industry and land ministries amended the bid rules late last month, giving a higher evaluation score to operators that submit earlier start-up dates and setting a 1 GW limit on bids that one consortium can win when multiple ocean areas are auctioned.

To discourage a focus on price alone, the evaluation process will give all bids below the market an equal score in their assessment on price.

Global companies, including Denmark's Orsted and Germany's RWE, have shown interest in the Japanese market, but industry sources say the limit on how much one group can win is discouraging because it reduces the potential for economies of scale.

An official at the ministry said the scheme was designed to cover the preliminary stages and would be dropped once the initial auctions have taken place.

(Reuters - Reporting by Yuka Obayashi; editing by Barbara Lewis)

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