Japan’s energy security shock is reshaping the renewable investment landscape

Offshore wind and energy resilience 

During our visit to Tokyo this past March, our conversations with investors and renewable energy developers highlighted how the country's rapidly evolving energy security concerns are reshaping perceptions of Japan’s renewable energy market. In particular, while offshore wind has traditionally been viewed through the lens of decarbonisation, market players increasingly described it as a potentially important component of broader efforts to reduce Japan’s exposure to external energy shocks and strengthen the country’s long-term energy resilience. 

These concerns have intensified as regional instability disrupts shipping through the Strait of Hormuz, a route through which roughly 70–75 percent of Japan’s oil imports pass. Japan remains heavily dependent on imported energy, sourcing approximately 95 percent of its crude oil from overseas markets, much of it from the Gulf. Rising energy prices and disruption to shipping routes are exposing the fragility of supply chains on which the country remains heavily reliant. 

Against this backdrop, Japanese policymakers are placing greater strategic importance on the country’s renewable energy sector, including offshore wind, within broader efforts to strengthen energy security and reduce dependence on imported fuels. 

Navigating execution risk in a nascent market

Offshore wind illustrates this shift particularly clearly. The Japanese government views the sector as a nascent, yet important, component of its long-term energy diversification strategy, and upcoming auction rounds suggest policymakers remain committed to market expansion. However, the sector is entering a more commercially disciplined phase as developers and investors confront rising costs, supply chain constraints and execution risk. 

Mitsubishi Corporation’s decision in 2025 to exit three major offshore wind projects it had been awarded during Japan’s earlier auction rounds highlighted these pressures. As discussed during the Asia Offshore Wind Day Conference we attended in March, the company exited the projects because of factors including higher financing and construction costs. Rather than signalling a retreat from offshore wind altogether, the decision underscored the challenges of scaling the sector within a market that still lacks sufficient domestic industrial depth, supply chain capacity and delivery infrastructure. 

At the same time, geopolitical and supply chain security considerations also play a role in shaping participation in Japan’s offshore wind sector. Concerns around strategic infrastructure resilience are likely to favour experienced international operators, particularly European firms with longstanding offshore wind capabilities, while limiting reliance on Chinese suppliers across parts of the value chain. 

What this means for investors 

For international investors, Japan’s renewable energy transition presents opportunities across multiple layers of the value chain, extending beyond direct project ownership. 

• For developers and strategic operators, Government-backed auctions and long-term deployment targets continue to create a visible pipeline in a market with strong political support and growing energy security relevance. 
• For subcontractors and service providers, Japan’s limited domestic capacity across areas including installation, marine logistics and specialist engineering is creating structurally underserved demand. 
• For private equity and infrastructure investors, Japan’s renewable energy transition is creating opportunities both at the project level and across the wider ecosystem supporting deployment. 

What investors should consider

Firms entering the market should approach Japan with a clear understanding of the operational and commercial challenges likely to shape project delivery and long-term returns. Based on our conversations with local stakeholders in Tokyo, investors continue to view the market as commercially attractive over the long term, although concerns around project execution, installation costs and delivery capacity remain material. 

First, firms should reassess assumptions around project economics and delivery timelines. Rising financing costs, continued dependence on imported equipment and specialist vessels, and limited domestic supply chain capacity are all placing pressure on returns. Several developers we spoke to highlighted that offshore wind deployment in Japan remains more expensive than in many European markets due to installation complexity and the lack of a domestic supply chain. While yen weakness may improve purchasing power for some foreign investors, it can also increase cost volatility across internationally sourced components and supply chains, particularly for projects operating under earlier auction assumptions. 

Our conversations also pointed to the importance of local stakeholder management and market navigation. Offshore wind projects in Japan often require extensive coordination with prefectural governments, fisheries groups, port operators and regional business networks. Delays linked to local opposition, administrative complexity or competing stakeholder interests can materially affect project execution and timelines. 

Investors should also expect to encounter complex networks of subcontractors, suppliers, local joint ventures and infrastructure partners involved in project delivery. As a result, thorough due diligence and supply chain visibility will be important not only for maintaining operational reliability, but also to mitigating integrity and reputational risks, including potential exposure to anti-social forces (反社会的勢力).  

Japan’s offshore wind sector is increasingly being shaped by energy security concerns as much as decarbonisation objectives. While the market continues to offer long-term opportunities across project development, infrastructure and supply chains, scaling the sector will require overcoming significant commercial, operational and regulatory challenges. For investors, success is likely to depend not only on access to capital or technical expertise, but also on strong local market understanding, careful partner selection and a clear understanding of how projects are delivered in practice across local supply chains and stakeholder networks.  

How we can help 

Our work in Japan combines local market knowledge with investigative, intelligence, and due diligence capabilities developed through supporting clients operating across the country’s renewable energy and infrastructure sectors. We have experience assisting investors, developers, and service providers navigating the commercial, regulatory and stakeholder complexities associated with Japan’s evolving energy transition landscape.