BP is considering an early exit from an offshore wind farm project off the northern coast of Japan after the project lost support following a reorganization of the company's renewables division.

In recent years, BP has been scaling back its involvement in renewable energy and transferred most of its offshore wind assets to a joint venture with Japan's Jera Group on a 50-50 basis. However, not all assets were included in this venture, and BP still directly owns a stake in the Yamagata Yuza project—a 450-megawatt offshore wind farm from which the company now plans to withdraw.

Consortium Structure and Project Status

The Yamagata Yuza consortium is led by the Japanese trading company Marubeni Corporation. Partners include Kansai Electric Power Company, Tokyo Gas, and the construction firm Marutaka Corporation. In December 2024, the consortium, under Marubeni's leadership, secured the rights to develop the Yamagata Yuza wind farm as part of Japan's third offshore wind auction. These rights were obtained before the creation of the Jera Nex BP joint venture.

The transfer of Jera's offshore wind assets to the integrated company went smoothly, but complications arose with BP's stake in Yamagata Yuza. The consortium already includes Kansai Electric, a major Japanese energy company, and adding the Yamagata Yuza asset to the Jera Nex BP joint venture would have resulted in a partnership between two competing energy firms, which is an unusual practice. As a result, the asset remained under BP's control.

Negotiations and Next Steps

BP is currently in talks with its consortium partners about a possible exit from the project. A final decision regarding BP's participation in the Yamagata Yuza wind farm has not yet been made. It is expected that the remaining consortium members may take over BP's 25% stake.

The Yamagata Yuza wind farm is scheduled to begin operations in June 2030. However, the implementation of this and other projects from the second and third auction rounds is progressing more slowly than anticipated due to a review of conditions amid calls for increased government support.

Industry Context and Changing Conditions

The review of project terms followed the decision by three Mitsubishi-led consortia to withdraw from three wind farm projects won in Japan's first-ever offshore wind auction in 2021. The reasons included rising supply chain costs, currency depreciation, higher interest rates, and uncertainty over access to financing.

The Japanese government has acknowledged the need to support the viability of offshore wind projects awarded in the second and third rounds, but the process of revising the terms has been slow. The consortium continues to develop the project in its early stages, despite the lack of announced additional support from Japanese authorities.

Market Trends and Actions by Other Companies

Marubeni recently reached a preliminary agreement to purchase 15-megawatt wind turbines from one of Europe's largest manufacturers. Last month, Norwegian company Equinor announced its exit from the Japanese offshore wind market and the closure of its Tokyo office. In recent years, Equinor has also left several other non-core markets, including Vietnam, Spain, and Portugal, to focus on integrated energy markets.

Government Policy and Development Prospects

Japanese authorities have traditionally placed the development of domestic renewable energy at the center of their energy policy. Disruptions in oil and liquefied natural gas supplies during international conflicts highlight the country's heavy dependence on fossil fuel imports.

Since taking office in October 2025, Japanese Prime Minister Sanae Takaichi has made few public statements about the development of offshore wind energy in the domestic market. During a June visit to the UK, she expressed support for cooperation and joint investments in offshore wind between the two countries.

Industry Expectations and Government Plans

Many representatives of Japan's energy sector remain optimistic about the review of conditions for second and third round projects, as well as the potential for a new tender for first-round projects. The Japanese government has announced plans to resume a long-term auction calendar and to focus more on project feasibility, not just price, in selection criteria. There are also plans to shift offshore wind projects to a feed-in premium (FIP) regime, which should encourage higher-quality contracts and better risk management, but will also increase financing requirements for projects.

A viable financial plan will be required from the outset for auction participants. Consortia that combine international offshore wind experience, strong Japanese partners, and local implementation capabilities are likely to have an advantage.