Socioeconomic Analysis of
Offshore Wind Power Development in Japan

December 2022

Renewable Energy InstituteAcknowledgments
We would like to express our gratitude to Prof. Ayu Washizu of the School of Social Sciences,
Faculty of Social Sciences, Waseda University, and Prof. Satoshi Nakano of the Departmentof Economics, Faculty of Economics, Nihon Fukushi University, for their enormous assistancein the preparation of this report. We also owe thanks to various other experts in related fields
for their many valuable suggestions.

This report was written by the Offshore Wind Study Team at Renewable Energy Institute.
Lead Author
Jiayang Wang Senior Research Fellow

Disclaimer
Although we have taken all possible measures to ensure the accuracy of the information
contained in this report, Renewable Energy Institute shall not be liable for any damage caused
to users by the use of the information contained herein.

About Renewable Energy InstituteRenewable Energy Institute is a non-profit think tank which aims to build a sustainable, richsociety based on renewable energy. It was established in August 2011, in the aftermath of the
Fukushima Daiichi Nuclear Power Plant accident, by its founder Mr. Son Masayoshi,
Chairman & CEO of SoftBank Corp., with his own resources.

Contents
Introduction .......................................................................................................................... 1
１ Setting analysis goals and a development scenario ........................................................... 2
１-１ Goals of the socioeconomic analysis ......................................................................2
１-２ Setting a scenario for development of offshore wind power ..................................3
１-３ Analysis goals and methods ...................................................................................5
２ Analysis of the socioeconomic ripple effects of offshore wind power development .......... 7
２-１ Analysis of the ripple effects of offshore wind power construction .......................7
２-２ Analysis of the ripple effects of offshore wind power operation ..........................10
２-３ Analysis of the effects of replacing thermal power with offshore wind power .....12
３ Conclusion .................................................................................................................... 15
３-１ Reflections on the ripple effects of offshore wind power .....................................15
３-２ Challenges in offshore wind power deployment ..................................................16

Figures and Tables
Fig. 1-1 Trend in installed capacity of offshore wind power ............................................4
Fig. 1-2 Trends in capital expenses and operation and maintenance expenses ...............4
Fig. 1-3 IONGES after addition of renewable energy sectors (image) ............................6
Fig. 2-1 Trend in the economic ripple effects of offshore wind power construction .......9
Fig. 2-2 Trend in the employment ripple effects of offshore wind power construction ...9Fig. 2-3 Difference in ripple effects due to changes in the import ratio of wind turbines................................................................................................................................10
Fig. 2-4 Trend in the economic ripple effects of offshore wind power operation ..........11
Fig. 2-5 Trend in the employment ripple effects of offshore wind power operation .....12
Fig. 2-6 Economic ripple effects of replacing thermal power generation .......................13
Fig. 2-7 Change in employment due to thermal power replacement .............................14
Fig. 2-8 Change in CO2 emissions due to thermal power replacement ..........................14
Table 1-1 Scenarios for offshore wind power adoption ....................................................3
Table 2-1 Breakdown of offshore wind power construction expenses .............................7
Table 2-2 Economic and employment ripple effects of offshore wind power construction..................................................................................................................................8
Table 2-3 Economic and employment ripple effects of offshore wind power operation 11

Introduction
At the end of 2021, the total offshore wind power generation capacity installed worldwide reached 56GW.
Installations are accelerating, not just in Europe, where this technology has been most concentrated up tonow, but also in Asia. China added 16.9GW of capacity in 2021 alone, bringing its cumulative total capacity
to 26.4GW and overtaking the U.K. as the world’s No. 1 producer of offshore wind power systems.1 Thisintensification of investment has also driven down costs.
One of the factors behind the accelerating adoption of offshore wind power is its ability to produce large
quantities of energy reliably, thereby enabling a rapid energy transition. Given the increasing severity ofclimate change and energy security issues, there are high hopes for offshore wind power as a new utilityscale technology, as it will also attract large-scale investments and form a broad supply chain.
Japan has set itself the goal of forming sufficient projects to achieve a total capacity of 10GW by 2030
and 30-45GW by 2040. It has also set the goal of achieving a 60% Japan content rate by 2040.2 A systemfor designating areas for the development of offshore wind power in accordance with the “Renewable
Energy Sea Area Utilization Act” (Act on Promoting the Utilization of Sea Areas for the Development ofMarine Renewable Energy Power Generation Facilities) has begun. As of the end of 2021, developers had
been selected for a total capacity of around 1.7GW in five sea areas. Concrete action has started on the
supply chain side too, including construction of domestic production facilities by wind turbine
manufacturers, building of new ships for offshore wind power construction work, and the launch of training
courses to nurture human resources by universities and private companies.
To make steady progress on the large-scale deployment of offshore wind power technology, somechallenges will become increasingly important. One of these is the need to coordinate with preexisting sea
area users (e.g., fishing operators). For this purpose, it is desirable to quantify and visualize the economic
impact of offshore wind power, both nationally and locally, and to clarify more concretely how the energy
transition will coexist with other industries and local communities.
This report examines the benefits of offshore wind power development in Japan by analyzing the overall
domestic socioeconomic ripple effects of constructing and operating offshore wind power facilities.

1

The UK has 12.9GW at the end of 2021; International Renewable Energy Agency, IRENA (2022), "Renewable Energy

Statistics 2022.
2“Vision for Offshore Wind Power Industry (Phase 1) Overview (December 15, 2020),” Public-Private Council on

Enhancement of Industrial Competitiveness for Offshore Wind Power Generation1

１Setting analysis goals and a development scenario
１-１

Goals of the socioeconomic analysis

Quantitatively analyzing the social, economic, and environmental ripple effects of a new industry driven
by technological innovation is essential for providing evidence to support the implementation of policies toaccelerate innovation, as well as for setting up legal mechanisms and streamlining systems to support
industrial development and regional revitalization.
A variety of organizations have conducted socioeconomic analyses of wind power development in Japan.
In 2013, the Ministry of Education, Culture, Sports, Science and Technology 3 (MEXT) conducted aquantitative analysis of the social and economic effects of adopting renewable energy using an extended
input-output table. Using a similar analysis technique, in 2014, the Japan Wind Power Association 4(JWPA) analyzed the economic ripple effects and impacts on job creation and CO2 emissions reduction of
deploying wind power based on medium- to long-term goals up to 2050. These studies both quantitatively
assessed the socioeconomic ripple effects of developing wind power, including offshore wind, on the wholeof Japan, including detailed examinations of economic ripple effects and job creation in related industries.
Developing offshore wind power is of growing importance in helping to meet the commitments many
countries have made to achieving carbon neutrality by 2050. For this reason, they have set ambitious goals
for the development of offshore wind power. In 2020, Japan set some clear goals for itself in its Vision for
Offshore Wind Power Industry (Phase 1). The vision calls for the public and private sectors to work
together on forming increasingly large-scale development projects, to install a total capacity of 10GW by
2030 and 30-45GW by 2040. JWPA and research institutions such as Mitsubishi Research Institute are now
conducting socioeconomic analyses of offshore wind power based on these new goals.

3“Analysis of Economic and Environmental Ripple Effects of Renewable Energy Facility Construction Using Extended

Input-Output Table,” Research Center for Science and Technology Trends, National Institute of Science and Technology
Policy, Ministry of Education, Culture, Sports, Science and Technology (2013)
4“Wind Power Installation Potential and Medium- and Long-term Goals for Development V4.3,” Japan Wind Power

Association (2014)2

To help meet Japan’s goal of becoming a carbon-neutral society, Renewable Energy Institute hasannounced a strategy for achieving 100% renewable energy by 2050.5 Based on this strategy, we analyzed
a renewable energy development scenario for minimizing the annual cost of energy systems during theenergy transition period up to 2050. 6 In this report, we specify a scenario for offshore wind power
development that is compatible with our renewable energy scenario and analyze its socioeconomic effects
using an extended input-output table.
１-２

Setting a scenario for development of offshore wind power

The details of our offshore wind power development scenario are summarized in Table 1-1. The
quantities of installed capacity and costs for the scenario are specified for every five years. The costs are
divided into two components, capital expenses (CAPEX) and operation and maintenance expenses (OPEX).
In analyzing for this report, we used data that had leveled out those components on an annual basis.
Table 1-1 Scenario for offshore wind power adoption
Offshore Wind

2020

2025

2030

2035

2040

2045

2050

Cumulative installed capacity (GW)

0.1

0.1

7

21

36

52

63

CAPEX (k¥/kW)

600

430

329

266

260

257

256

OPEX (k¥/kW/year)

17.1

12.3

9.5

7.7

7.4

7.3

7.3

Note: Operation and maintenance expenses are all the costs of repairs, inspections, equipment, and other elements
needed to operate offshore wind turbines.
Source: Created by Renewable Energy InstituteIf we consider the progress of current projects and the required timeframe for environmental impact
assessments at this time, there is little or no possibility of constructing new offshore wind power facilities
by 2025. For this reason, the cumulative installed capacity for 2025 in this report is set at 0.1GW, the samelevel as 2020. From 2025, the new capacity added each year will steadily grow, hitting a peak around 2040
before starting to decline. As a result, the total installed offshore wind power capacity in 2050 will be 63GW
(Fig. 1-1). The Ministry of the Environment estimates Japan’s total potential for offshore wind power
capacity to be 715GW, assuming wind speeds of at least 7 m/s for fixed-bottom and 7.5 m/s for floating
wind turbines, and excluding sea areas where natural conditions, legal impediments, and social conditions
relating to land utilization make implementation difficult. Based on this estimate, it is fair to conclude that
there is sufficient potential to achieve 63GW of total installed capacity under our scenario.

5“Proposal for Energy Strategy Toward a Decarbonized Society: Achieving a Carbon-Neutral Japan by 2050,” Renewable

Energy Institute (2019)
6“Renewable Pathways to Climate-neutral Japan: Reaching Zero Emissions by 2050 in the Energy System,” Renewable

Energy Institute (2021)

3

Fig. 1-1 Trend in installed capacity of offshore wind power

Source: Created by Renewable Energy Institute

Figure 1-2 shows the trend in capital expenses (CAPEX) and operation and maintenance expenses(OPEX). Global technological innovation and economies of scale will work to drive down costs, so bothkinds of expenses will decline sharply from 2020. However, as the level of industrial development matures,the rate of cost decline will fall, and by 2035 the cost will flatten out.
After 2035, capital expenses will fall below 300,000JPY/kW, less than half the 2020 level. At the sametime, in this scenario, annual operation and maintenance expenses are predicted to fall from 17,000JPY/kW
in 2020 to around 7,000JPY/kW, a drop of approximately 60%.
Fig. 1-2 Trends in capital expenses and operation and maintenance expenses

Source: Created by Renewable Energy Institute

4

１-３

Analysis goals and methods

Developing offshore wind power will have ripple effects not only on the wind power industry, but also on
a variety of other related fields, such as equipment manufacturing, business operations, maintenance, andtransportation. Accordingly, for this report, we analyzed the ripple effects in the two phases of “construction”
and “operation” separately. We also considered two kinds of ripple effects: economic ripple effects,
measured by increases or decreases in production, and employment ripple effects, measured by changes in
the number of jobs created (or people employed). These were the two analysis goals we set.
If thermal power were replaced by offshore wind power in the operation phase, we would expect to see
production increases or decreases in related industries. Therefore, we included the impact of suchproduction changes on the economy and employment as the targets of analysis for this report. Furthermore,since CO2 emissions from thermal power generation make up a large proportion of total CO2 emissions,7
replacement with offshore wind power is likely to reduce CO2 emissions significantly. For this reason, thechanges in CO2 emissions resulting from the replacement of thermal power are also included in the analysis
targets.
For our analyses, we used the Input-Output Table for Analysis of Next-generation Energy Systems(hereinafter IONGES), as well as estimates based on previous studies by the Ministry of Internal Affairs
and Communications (MIC) and Yokohama National University.
Details of analysis methodology
The Institute for Economic Analysis of Next-generation Science and Technology at Waseda University
developed the Input-Output Table for Analysis of Next-generation Energy Systems (IONGES) by adding
data on renewable energy-related sectors to the input-output table of the MIC. IONGES is an analysis toolthat makes it possible to comprehensively analyze the economic, social, and environmental effects ofadopting renewable energy technologies.
As Fig. 1-3 shows, IONGES added 15 renewable energy sectors to the regular input-output table. We
divided the added sectors into construction and operation sectors and estimated intermediate inputs, final
demand, added value, and gross output for each of the 15 kinds of power generation technologies. The total
gross domestic product of the power generation operation sectors in IONGES is equal to the total gross
output of the operation sectors in the input-output table of the MIC (MIC table).

7

CO2 emissions from the energy conversion sector (e.g., power plants, oil refineries) in FY2020 were approximately 422

million tons (40.4% of total emissions), with thermal power accounting for 76% of emissions from power sources in thesame year. Greenhouse Gas Emissions Report (April 2022), p.5, p.14, Ministry of the Environment5

On the other hand, the concept of the power generation construction sectors in IONGES is different
from that of the power facility construction sectors in the MIC table. In the former case, activities include
the mechanical equipment and civil engineering work required to construct power generation facilities,
whereas in the latter case, only the civil engineering work for power generation facilities is included. The
total of the gross outputs of the construction sectors in IONGES is equal to the sum of the gross outputs ofthe power facility construction sectors in the MIC table and the total value of the materials for power
generation equipment in the fixed capital formation to meet final demand.
Fig. 1-3 IONGES after addition of renewable energy sectors (image)Source: Created by Renewable Energy InstituteTo analyze employment ripple effects and changes in CO2 emissions, we estimated coefficients for
employment and CO2 emissions based on the IONGES8 and previous studies by MIC9 and Yokohama
National University. 10 These coefficients were multiplied by the domestic output induced in theconstruction and operation phases, respectively, to analyze the employment and CO2 emissions changes ineach phase.

8

Input-Output Table for Analysis of Next-generation Energy Systems (IONGES), CO2 emissions factor table (2015renewable energy table), Institute for Economic Analysis of Next-generation Science and Technology, Waseda University
9

Input-Output and Employment Tables (2015), Ministry of Internal Affairs and Communications

10

Izumi Mori et al. (2017), Renewable Energy and Employment Potential: A Comparative Analysis Based on an Input-

Output Model, Journal of the Japan Institute of Energy, 96(1), 16-27

6

２ Analysis of the socioeconomic ripple effects of offshore wind power
development
２-１

Analysis of the ripple effects of offshore wind power construction

Table 2-1 shows a breakdown of the expenses of offshore wind power construction sectors.11 In the
IONGES, the proportion of the domestic demand for wind turbines met by imports is assumed to be 46%,
based on the quantity of domestically produced and imported wind turbines installed in 2015 and the pricedifference between domestic and imported wind turbines (ratio of domestic price to import price). At thesame time, we assume that all offshore wind power facility construction is performed by domestic operators,
based on the track record up to now.
Table 2-1 Breakdown of offshore wind power construction expenses
TowersBladesGearboxes
Other items
Converters
Pitch/yaw mechanisms
Generators
Transformers
Cast metal
Bearings
Forgings
Control devices
Interconnectors, submarine cables, substations, etc.
Project costs
Transportation and installation
Construction and financing
Foundations
TOTAL

6.6%
6.3%
5.6%
5.0%
1.7%
1.7%
1.3%
1.3%
1%
1%
1%
0.7%
12%
2%
19%
12%
22%
100%

Source: Ayu Washizu and Satoshi Nakano (2021)

11

Three sectors were added to the IONGES—wind turbines sector, bladee sector, and offshore power facility construction

sector—as construction expense items for creating input vectors for the construction sector. All outputs from the windturbine and blade sectors are input to the offshore wind facility construction sector.

7

For the offshore wind power development scenario described above, we calculated the annual
construction expenses by multiplying the quantity of new capacity added at each point in time by the unit
cost of construction (kJPY/kW).12 Based on these annual construction expenses, we used the IONGES toanalyze the economic and employment ripple effects on Japan as a whole. The analysis results are
summarized in Table 2-2. The table shows both the economic and employment ripple effects. In each case,it shows both the ripple effect of the new capacity added for the single year and the cumulative ripple effectof all years.
Table 2-2 Economic and employment ripple effects of offshore wind power construction
2030

2035

2040

2045

2050

Added capacity per year (GW)

2.0

3.0

3.2

2.8

1.7

Cumulative installed capacity (GW)

7

21

36

52

63

Economic ripple effects (trillion JPY)
Single-year effect

1.30

1.60

1.66

1.43

0.88

Direct

0.66

0.81

0.84

0.73

0.45

Indirect

0.64

0.79

0.82

0.71

0.43

5.02

12.58

20.81

28.53

34.16

Direct

2.55

6.38

10.55

14.46

17.32

Indirect

2.48

6.20

10.26

14.07

16.84

Cumulative effect

Employment ripple effects (thousand ppl)
Single-year effect

54

66

69

59

36

Direct

20

25

26

22

14

Indirect

34

41

43

37

23

208

522

863

1184

1417

Direct

79

198

327

448

537

Indirect

129

324

536

735

880

Cumulative effectSource: Created by Renewable Energy InstituteThe single-year economic ripple effect of constructing offshore wind power is estimated to range from
0.6 trillion JPY to 1.7 trillion JPY. Note that over the peak installation period from 2035 to 2040, the singleyear economic ripple effect is slightly over 1.6 trillion JPY, while the cumulative economic ripple effect by
2050 is greater than 34 trillion JPY. Of these quantities, the increase in demand (total construction expenses,
including construction work and investment in plant and equipment) due to the construction of offshore
wind farms is considered the direct effect. The increase in demand for parts and services from related

12

These annual construction expenses were substituted into IONGES as the final demand for the offshore wind power

facility construction sector, for analyzing economic ripple effects and impact on employment, respectively. For
convenience, it is assumed that 100% of construction expenses are incurred in the year of installation, even thoughconstruction of offshore wind facilities takes multiple years, which means that construction expenses are incurred over alonger time.

8

industries to satisfy the demand increase generated by the direct effect is regarded as the indirect effect.
The results of our analysis indicate that the direct and indirect effects of developing offshore wind power
are of approximately equal magnitude.
Fig. 2-1 Trend in economic ripple effects of offshore wind power construction

Source: Created by Renewable Energy InstituteOur estimates of the single-year employment ripple effect ranged from 30,000 to 70,000 jobs. At the peakaround 2040, the number of jobs generated is around 70,000 per year. And by 2050, construction is
expected to have created employment for a cumulative total of more than 1.4 million people. Of all thesejobs, 537,000 result from the direct effects of construction, while 855,000 result from indirect effects. Thus,
indirect effects generate 1.6 times more employment than direct effects.
Fig. 2-2 Trend in the employment ripple effects of offshore wind power construction

Source: Created by Renewable Energy Institute9

We estimated that if the use of domestically manufactured products were to increase by 10%, or if the
proportion of imported wind turbines decreased from 46% to 36%, the construction of 1GW of offshore
wind power capacity would have the effect of driving up domestic production by approximately 51.7 billion
JPY. A look at this for different sectors (Fig. 2-3) shows that the ripple effects on domestic production are
particularly striking in the production sectors of wind turbines, blades, and related machinery and metal
products.
Fig. 2-3 Difference in the ripple effects due to changes in the import ratio of wind turbines

Source: Created by Renewable Energy Institute２-２

Analysis of the ripple effects of offshore wind power operation

While the ripple effects of the construction phase are limited to the time of construction (a single year),the ripple effects of the operation phase occur continuously throughout the operating life of offshore wind
power facilities. To analyze the operation phase, we therefore performed our analysis by cumulatively
adding up the operation and maintenance expenses for the total (cumulative) installed capacity and thensubstituting into the offshore wind power sectors in the IONGES. The results of the analysis are
summarized in Table 2-3.

10

Since we are analyzing the effect on cumulative installed capacity up to a particular year, the results are
the cumulative effect, which steadily increases. The value of the economic ripple effect of offshore wind
power operation in 2050 will be 940.9 billion JPY, while the cumulative employment ripple effect willamount to 30,000 jobs per year.
Table 2-3 Economic and employment ripple effects of offshore wind power operation

Cumulative installed capacity (GW)

2025

2030

2035

2040

2045

2050

0.1

7

21

36

52

63

Economic ripple effects (100 million ¥)Cumulative effect for year

25

1,404

3,318

5,497

7,740

9,409

Direct

12

682

1,613

2,672

3,763

4,575

Indirect

13

721

1,705

2,824

3,977

4,834

Employment ripple effects (ppl)
Cumulative effect for year

17,86882

4,563 10,785

Direct

27

1,501

3,549

Indirect

54

2,990

7,068 11,709 16,488 20,043

589
5,879

24,768 30,107
8,279 10,064

Source: Created by Renewable Energy InstituteFig. 2-4 Trend in the economic ripple effects of offshore wind power operation

Source: Created by Renewable Energy Institute11Fig. 2-5 Trend in the employment ripple effects of offshore wind power operation

Source: Created by Renewable Energy Institute２-３

Analysis of the effects of replacing thermal power with offshore wind power

Most of the CO2 emissions from the power generation sector are generated by thermal power generation.
So, if offshore wind power were used to replace thermal power, we would expect a substantial reduction in
CO2 emissions in the operation phase. On the other hand, a reduction in thermal power generation would
have some negative economic and employment impacts. For this reason, we conducted an analysis tocompare these negative effects with the positive effects of higher offshore wind power production.13
This analysis shows that although a decline in production in the thermal power generation sector andrelated industries has a negative impact on the Japanese economy as a whole, this is outweighed by the
positive impact of higher production in offshore wind power and related industries. A look at the amountof change by sector (Fig. 2-6) shows a decrease in production in the thermal power sector and the related
fuel supply industry and transportation sector, but there is also a significant increase in production in
offshore wind power operation and related financial services, machinery repair, and business-to-businessservice industries. The net result is an increase in domestic production of approximately ¥200 billion.

13

IONGES matches the unit price of a power source by adjusting the value-added part. For this reason, the final demand for

power sources can be substituted with one another. Thus, we conducted the analysis by substituting 10% of the final demand
for thermal power with offshore wind power—that is, decreasing the final demand for thermal power by 10% while
simultaneously increasing the final demand for offshore wind power by 10%—and substituting it into IONGES.

12

It should be particularly noted here that the results of this calculation represent an analysis of changes indomestic production. Since Japan relies on imports for nearly all its fossil fuels, it must purchase these fuelsfrom abroad to generate thermal power. This means that a reduction in thermal power production would
cut fuel expenses and help to prevent the outflow of national wealth. According to calculations based on the
IONGES, a 10% reduction in final demand for thermal power would save approximately ¥200 billion in thefossil fuel sector.
Fig. 2-6 Economic ripple effects of replacing thermal power generation (left: decline in thermal
power, right: rise in offshore wind power)

Note: Only the sectors of greatest change are shown in the figure.
Source: Created by Renewable Energy Institute13

The amount of change in employment is summarized in Fig. 2-7. As already mentioned, the employment
coefficients estimated in previous studies can be used to analyze the ripple effects on employment due tothermal power replacement. Our analysis shows that if 10% of thermal power capacity were replaced byoffshore wind power, there would be a reduction in total employment in the thermal power sector andrelated industries of nearly 13,000 jobs, compared to an estimated increase in employment in wind power
and related industries of around 32,000 jobs. Thus, the net employment ripple effect of thermal power
replacement would be an increase of 19,000 jobs.
Fig. 2-7 Change in employment due to thermal power replacement

Source: Created by Renewable Energy InstituteIn a similar way to employment ripple effects, we can analyze the impact of replacing thermal power on
reducing CO2 emissions based on the estimated CO2 emissions coefficient. The analysis results (Fig. 2-8)
show that if 10% of thermal power capacity were replaced by offshore wind power, the combined CO2
emissions of the thermal power sector and related industries would be reduced by 16.59 million tons. At
the same time, the total increase in CO2 emissions from wind power and related industries (all sectors)
would only be 510,000 tons. Therefore, the net overall effect would be a reduction in CO2 emissions of
16.08 million tons.
Fig. 2-8 Change in CO2 emissions due to thermal power replacement

Source: Created by Renewable Energy Institute

14

３
３-１

Conclusion
Reflections on the ripple effects of offshore wind power

To achieve the goals of limiting the rise in global temperature to 1.5°C and achieving carbon neutrality,
it is essential to start developing renewable energy sources as far as possible, so that we can generate close
to 100% of our energy from renewable sources by 2050. To shape a society in which solar PV and wind are
the principal power sources, large-scale development of offshore wind power is vital. Our analysis of thesocioeconomic ripple effects of adopting offshore wind power is important for providing evidence topromote policies and institute legal mechanisms to promote technology and industry development, andregional revitalization, and for pursuing rational policy implementation.
In this report, we divided the development of offshore wind power into the two phases of “construction”
and “operation” to analyze the economic ripple effects, measured by an increase or decrease in production,and the employment ripple effects, measured by the change in available jobs, in each of the two phases. We
also analyzed what would happen if thermal power capacity were replaced by offshore wind power, by
estimating the economic and employment ripple effects and changes in CO2 emissions.
The results of our analysis showed that the single-year economic ripple effect of offshore wind power
construction would range from 0.6 trillion JPY to 1.7 trillion JPY, with a cumulative economic ripple effectof 34 trillion JPY by 2050. The single-year ripple effect on employment was estimated at 30,000 to 70,000
jobs, with a cumulative total of over 1.4 million jobs created from construction by 2050.
On the other hand, since our analysis of the operation phase considered the cumulative total installedcapacity up to a particular year, the magnitude of the effect increased steadily year by year. We estimatedthat by 2050, the economic ripple effect of offshore wind power operation would amount to 940.9 billion
JPY, with the creation of more than 30,000 jobs.
If 10% of thermal power capacity were replaced by wind power, there would be a negative impact on theJapanese economy as a whole, due to decreased production in the thermal power sector and relatedindustries. However, this would be more than offset by the positive impact of higher production from
offshore wind power and related industries, resulting in a net increase in domestic production of
approximately 200 billion JPY. Furthermore, the employment ripple effect of this replacement would leadto an increase of 19,000 jobs and a reduction of 16.08 million tons of CO2 emissions. Lower thermal power
production would also affect fuel expenses. For example, a 10% decrease in final demand for thermal power
would result in an annual saving of approximately 200 billion JPY in fuel expenses. Since Japan imports
most of its fossil fuels, the deployment of offshore wind power would also help to prevent the outflow ofnational wealth.

15

３-２

Challenges in offshore wind power deployment

This analysis makes it clear that the adoption of offshore wind power can make a big contribution tosocioeconomic development. However, to realize the goal of adopting offshore wind power on a large scale,various challenges need to be faced.
The first is the development of human resources. According to our analysis, the construction of offshore
wind power facilities will create 30,000 to 60,000 jobs per year. Of these, 20,000 would be for workers
directly involved in construction work. However, in Japan today, the number of workers with expertise andskills suitable for the construction of offshore wind power systems is far fewer than this level of demand.
On top of this, it takes a long time to train workers, and due to the lack of specialized facilities and knowhow, it is not easy for Japanese companies to develop human resources. For these reasons, there is an urgent
need to put in place promotional policies and systems to accelerate the process of cultivating highly
specialized human resources.
Another big challenge is the development of domestic supply chains. To adopt and implement offshore
wind power reliably and at a low cost, it is important to build domestic supply chains that are globallycompetitive. Up to now, most of the main manufacturers of offshore wind equipment have been European
companies, and Chinese and Korean manufacturers have also grown rapidly in recent years, as the Asianmarket has expanded. In line with the Vision for Offshore Wind Power Industry (Phase 1), which calls for“forming the foundation of the industry over the next 10 years and rapidly developing an internationallycompetitive domestic industry by 2030,” the goal of a 60% domestic sourcing rate for equipment by 2040
has been set. As mentioned, increasing the domestic sourcing rate will drive an increase in domestic
production. So, just as Europe regards the promotion of offshore wind power deployment as an importantpart of its “green recovery” efforts, the development of a domestic industry for offshore wind power canserve as a key element of Japan’s sustainable economic development plans.
The development of a domestic offshore wind power industry requires long-term investment and policy
support, implemented in a timely manner and in the appropriate order. To do this successfully, it is vitalfor the public and private sectors to work together to push projects forward, and for companies and local
communities to strengthen their collaboration.

16

Socioeconomic Analysis of
Offshore Wind Power Development in Japan
December 2022

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