“Joint Venture” for Alaska LNG; NDC Delayed; Japanese Offshore Wind Supply Chain; Mitsubishi Losses on Offshore Wind; Data Center Grid Connection Challenges
Hey Power Japan readers,
Wherever you are in the world, I hope you’re well. The last few weeks have been particularly busy for me, which explains why I haven’t sent out these Japan Energy Currents. So this week’s edition includes a few notable news from a few weeks ago.
A few housekeeping items: if you haven’t yet taken the short subscriber survey that I sent out in mid-January, I hope you do. I’ll keep it open until the end of February, after which I plan to present the “findings.”
As I mentioned in a post last week, I co-authored a commentary piece in The Japan Times on the intersection of climate change and insurance. Check it out if you’re curious.
Last thing: I interviewed Dr. Myles Carroll of Ochanomizu University about his recent study on corporate Japan’s narrative on climate change and carbon neutrality. You can find out more about his research and what it reveals here.
With that, I bring you five stories that caught my attention.
1. Trump announces a “joint venture” with Japan to build Alaska LNG (Alaska Public Media)
After the much-anticipated meeting between Prime Minister Ishiba and President Trump, Trump told reporters that Japan will be part of a “joint venture” for the Alaska LNG Project, with the aim of importing more American LNG once the project is completed. But as is usually the case with Trump, he was shy on the details.
Ishiba was also eager to become a bigger buyer of US LNG and other resources like bioethanol and ammonia at a reasonable and stable price.
Stakeholders of the Alaska LNG project were worried about the project’s cost and funding. The entire project is estimated to cost $44 billion (the 800—mile pipeline alone would be almost $11 billion). Japanese investment would really help.
2. Japan’s new climate goal will be delayed (Asahi Shimbun | in Japanese)
Japan’s environment minister announced that Japan won’t be able to deliver the updated climate target (Nationally Determined Contribution, or NDC) by early February, a due date set by the UN Climate Change Framework Convention.
That’s because the government is reviewing the comments (over 3,000 of them) received during the plan’s public comment period. The new timeline is to have the NDC approved by the cabinet by the end of this fiscal year ending in March.
As it stands, Japan’s proposed target is to cut emissions by 60% by 2035 from 2013 levels. This target has been criticized both at home and abroad as lacking ambition. The plan was put through a public comment period from December 27 to January 27, receiving over 3,000 comments.
Japan joins more than 180 signatories to the Paris Agreement that will miss their climate target deadline. UN Climate Change executive director Simon Steill, however, said that “taking a bit more time to ensure these plans are first-rate makes sense.”
Personally, I’d be surprised if Japan’s finalized NDC will be significantly more ambitious than its draft form.
3. Japan to raise local content target for offshore wind farms to 70% (Nikkei Asia)
In an effort to build up the local supply chain, Japan will raise its domestic procurement goal for offshore wind farms to ~70% in 2040 from the current 60% by this summer.
This goal refers to the share of the total investments (by value) that components made in Japan make up for offshore wind projects.
Japan has no wind turbine manufacturers and relies on imports for core components from Western companies. Yet none of these manufacturers have factories in Japan that produce the components. Achieving the higher domestic procurement goal will require 1) Western suppliers to build factories in Japan and 2) Japanese companies to have the capacity to supply them with parts and materials.
US President Trump's recent executive order to stop the leasing of federal land and waters for wind farms could send companies to look for investment opportunities elsewhere, including Japan.
4. Mitsubishi’s ¥522 billion offshore wind loss (Nikkei GX | in Japanese)
Mitsubishi Corporation’s are now facing a harsh reality check. The company announced a massive ¥522 billion impairment loss on three offshore wind farms off the coasts of Akita and Chiba.
The loss is the result of a combination of economic turbulence and aggressive bidding strategies gone awry. Mitsubishi stunned the industry in the 1st offshore wind auction in 2021 by securing all three project sites with ultra-low electricity prices. This bold move won them the contracts but left little room for cost overruns. Then came global economic shocks — the war in Ukraine, rampant inflation, a weakening yen, and rising interest rates have sent costs soaring.
The result: delays, uncertainty, and loss. With the first site originally slated for operation in 2028, Mitsubishi is now re-evaluating the viability of the projects from the ground up—even considering a full-scale retreat.
METI’s recent announcement that offshore wind tenders in fiscal year 2025 will allow up to 40% cost increases is an attempt to address these concerns.
Japan sees offshore wind as a key pillar of its energy transition, targeting 10 GW by 2030. If Mitsubishi stumbles, it could chill investment across the sector. Other players, like Marubeni, are already treading cautiously. Mitsubishi’s next move—whether to press forward or cut losses—will send ripples through Japan’s entire renewable energy landscape.
5. Data center grid connections face 15-year wait (Nikkei GX | in Japanese)
Connecting large-scale data centers (DCs) to Japan’s power grid can take 10-15 years due to rising electricity demand, bureaucratic hurdles, and shortages of labor and key infrastructure components like transformers.
To meet growing energy demand, utilities like TEPCO Power Grid are accelerating grid expansion projects, cutting timelines from 4 years to 2, but shortages of construction workers and materials threaten long-term progress.
Japan’s government estimates that grid expansion to connect regional grids would cost ¥6-7 trillion in investments by 2050, but financial strain on utilities and long transformer lead times (4-5 years) may hinder Japan’s clean energy transition.
To reduce infrastructure costs, utilities and tech companies are exploring alternative DC locations like co-locating near power plants (nuclear, offshore wind, and thermal power) to bypass transmission bottlenecks.