Mitsubishi confident Japan offshore wind will be profitable

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The signboard of Mitsubishi Corp is pictured at its head office in Tokyo, Japan August 2, 2017. REUTERS/Kim Kyung-Hoon

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TOKYO, March 17 (Reuters) - Japan's Mitsubishi Corp (8058.T) is confident that the three offshore wind farms it won last year in auctions will be profitable despite the low feed-in tariff prices it bid, the head of its energy solutions unit said on Thursday.

The Japanese government on Dec. 24 selected three consortiums, all led by Mitsubishi, as the operators of offshore wind farms in Akita, northern Japan, and Chiba, near Tokyo, with a total generation capacity of 1.7 gigawatts (GWs). read more

Mitsubishi's rivals were stunned by the low tariff prices the trading house's group had proposed - 11.99 yen ($0.1) per kilowatt hour (kWh), 13.26 yen kWh and 16.49 yen kWh - far below a ceiling price of 29 yen kWh.

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But Yoshihiro Iwasaki, the chief executive of Mitsubishi Corporation Energy Solutions Ltd, said on Thursday: "We will be fine."

"We made our bids by accumulating all the costs from suppliers, after thinking out specifications and construction methods to trim expenses," he told Reuters on the sideline of the Smart Energy Week event.

"That was after we had examined all the risk factors and made thorough discussions with our group's experts at home and abroad."

One executive at an overseas wind power company, who declined to be identified due to sensitivity of the issue, predicted Mitsubishi will likely make losses following its success at the auction.

"The results sent a shockwave to the industry as their prices were so low," he said, speaking on the sidelines of the same event.

Asked whether Mitsubishi will make bids with similar or lower tariff prices in the future tenders, Iwasaki said it will depend on a project as each site has different conditions.

A number of global wind power companies such as Denmark's Orsted (ORSTED.CO) and Germany's RWE (RWEG.DE) are keen to enter Japan's market. The government plans to install up to 10 GW of offshore wind capacity by 2030, and up to 45 GW by 2040.

($1 = 118.7500 yen)

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Reporting by Yuka Obayashi; Editing by Jan Harvey

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