Publication date: May 5, 2025 April 2025 Monthly Newsletter: The Latest News In The Japanese Power Market
April 2025 Monthly Newsletter
On April 13, Expo 2025 Osaka, Kansai was officially inaugurated. At the Japan Pavilion, hosted by the Japanese government, the theme is “circularity”, exemplified by a functioning biogas power system that converts waste produced at the venue into energy. This concept of circularity is closely connected to renewable energy. Effectively utilizing nature-derived renewable energy sources while balancing increasing energy demand and environmental impact is becoming a critical challenge for the future of society.
In this month’s newsletter, we begin with a recent forecast of installed renewable energy capacity in Japan, which predicts as much as 260 GW by 2050. We also highlight some off-site PPA projects that are increasingly common across various regions in Japan. Lastly, we conclude with news about a new working group specialising in the connection between power infrastructure and the rise of data centers.
Renewable Energy Installed Capacity Could Reach 260 GW by 2050
At an expert panel meeting, the Organization for Cross Regional Coordination of Transmission Operators (OCCTO) revealed projections that the total installed capacity of renewable energy in Japan is likely to be between 170 GW and 260 GW by 2050. Solar power is expected to account for around 70% of the total. Conversely, pumped hydro storage capacity is forecast to decrease from 27.4 GW in 2019 to 20 GW by 2050 due to increased downtime for inspections and repairs as renewable energy expands.
The estimates are based on the assumption that increasing demand, driven by factors such as the construction of new data centers will expand in tandem with renewable energy.
The installed capacity of nuclear power is expected to be between 23 GW and 37 GW, incorporating assumptions such as 60-year reactor operation and facility replacements.
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Japan Sees an Increase in Off-Site PPAs
Off-site power purchase agreements (PPAs) are gaining momentum. For example, Hokkaido EPCo has announced plans to construct 14 new solar power facilities with a total capacity of 12 MW in Hokkaido by FY2026 as part of its off-site PPA initiatives. In the first phase, it will supply 300 MWh annually to the Sapporo Building owned by Daido Life Insurance Company under an off-site PPA scheme. This will cover the electricity needs of the Sapporo Building and help reduce approximately 160 tons of CO2 emissions per year. The power supply is expected to begin by FY 2026.
In the Chubu region, Chubu Electric Power Miraiz has launched an off-site PPA service that sells electricity purchased from household solar facilities that have reached the end of the Feed-in Tariff (FIT) period, known as “post-FIT“. The company began purchasing power from post-FIT household solar facilities in November 2019. By utilizing existing solar power facilities, corporate customers can benefit from off-site PPAs with a short one-year term, instead of the typical 20-year contract, offering greater flexibility.
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Launch of a New Working Group Focusing on Data Centers
The Ministry of Economy, Trade and Industry (METI) and the Ministry of Internal Affairs and Communications (MIC) have launched a working group (WG) aimed at promoting “Watt-Bit Integration”, a concept that involves the coordinated development of power infrastructure and data centers (DCs). With DC connection applications concentrated in certain regions, the WG recognizes the need to make effective use of existing power grids in the short term. Opinions were also expressed on the need to install DCs on grids with spare connected capacity and to deal with DC operators who hold unused grid-connection capacity allocations.
In the short to medium term, by around 2030, the focus will be on promoting the decentralized location of DCs by efficiently utilizing existing grid capacity. For the medium to long term, from the mid-2030s onward, the strategy will shift to the planned development of DCs through enhanced power and communication infrastructure. The group also aims to promote small-scale DCs that can more easily make use of available grid capacity.
April 2025 Monthly Newsletter: The Latest News In The Japanese Power Market