CIP teams up with Mitsubishi to harness Japan’s offshore wind sector

The joint venture will see the Danish fund manager expand its footprint in Asia.

Danish asset manager Copenhagen Infrastructure Partners and Mitsubishi Heavy Industries will launch a 50-50 joint venture as they seek to develop offshore wind projects in Hokkaido, the northernmost of Japan’s main islands.

“We currently have determined several plans to construct or operate [projects] in Hokkaido,” Tomokazu Sano, senior manager of MHI’s NEXT Energy Business Division, told Infrastructure Investor, without elaborating further. He also declined to disclose financial details of the joint venture.

Currently, the potential areas for promoting offshore wind energy in Hokkaido are Ganwu and Minami Shiribeshi; and Hiyama, according to an announcement by the Ministry of Economy, Trade and Industry made last month.

Last week, the ministry announced another four areas for promoting offshore wind: the sea area offshore Noshiro city, Mitane town and Oga city, in Akita Prefecture; the area offshore Yurihonjo city, also in Akita Prefecture (northern and southern sides); and the area offshore Choshi city, in Chiba Prefecture.

It is unclear whether CIP is financing the joint venture with MHI through Copenhagen Infrastructure IV, which held a first close on €1.5 billion in June. If it reaches its hard-cap of €7 billion – or even its €5.5 billion target – CIP IV will be the world’s largest renewables-only fund, according to the firm.

CIP declined to comment for this story.

At the moment, CIP has seven funds with around €10 billion in assets under management. The Danish firm has made 20 investments in energy infrastructure assets totalling almost 8GW in capacity across the US, the UK, Germany, Spain and Taiwan.

‘Ongoing challenges’

The country’s offshore wind sector has “substantial growth potential”, Fitch Solutions said in a note on Tuesday, but added that ongoing challenges need to be addressed for that potential to be unlocked.

“A key issue for the wind sector in Japan is the relatively high cost of power generation compared to other alternatives such as solar power or thermal sources” the research company said. “This is largely due to the lack of economies of scale for offshore wind power in Japan, and existing supply chains are insufficient to support a substantial ramp-up and drive down costs.”

According to Fitch, Japan’s deep waters will mean that offshore projects are also likely to be focused around floating offshore wind power technology, which still remains fairly nascent to date. It said 80 percent of the country’s offshore wind potential has sea-depths exceeding 100 meters, making fixed-bottom offshore wind economically unviable.