Japan Data Center Update 19: Government and Industry Push Integrated Approaches to Data Center Development

Ministry of the Environment Offers Up to JPY 1 Billion for Low-Carbon Data Center Projects

The Ministry of the Environment (MoE) launched a tender for subsidies supporting data center decarbonization through energy efficiency improvements and the utilization of unused renewable energy under its “Support Program for Decarbonization Equipment Deployment for Regionally Integrated Data Centers” (applications accepted until noon on June 12).

The subsidy program aims to guide growing data center demand toward suitable locations such as areas near decarbonized power sources. It supports the deployment of energy-efficient equipment, leveraging unused renewable energy power, heat utilization systems, and energy storage systems at data centers, with subsidies of up to JPY 1 billion per project. The standard subsidy rate is one-half of project costs, while battery energy storage systems (BESS) are eligible for a subsidy rate of one-third.

JERA is jointly advancing a data center project with Yokohama City at the site of one of its thermal power plants. (Source: JERA).

GAFA Eyes JERA’s Thermal Power Sites for Integrated Data Center Projects

JERA Vice President Junya Tawa said that over the past two years, a growing number of companies, including major tech companies such as GAFA, have approached the company regarding power plant-integrated data centers (or behind-the-meter projects). JERA’s key advantage is the location of its power generation assets in the Tokyo metropolitan area. The company operates 12 thermal power plants within a 50 km radius of central Tokyo, where data center demand is highest, and many of these sites have sufficient space to accommodate data center construction. Building data centers within or near power plant sites could significantly shorten grid connection waiting times.

In February this year, JERA announced a partnership with Amazon Web Services (AWS), under which JERA will supply electricity to AWS-operated data centers in Japan and overseas.

SoftBank Targets GWh-Scale Domestic Battery Production for AI Data Centers

SoftBank has launched a domestic battery business aimed at building next-generation power infrastructure to support rapidly growing electricity demand driven by the expansion of AI. The company will develop and manufacture BESS equipped with advanced battery cells and technologies through an integrated end-to-end business model.

SoftBank plans to build next-generation power infrastructure centered on the Osaka Sakai AI Data Center at the former Sharp Corporation factory site in Sakai City, Osaka Prefecture. The company aims to begin manufacturing battery cells and energy storage systems in FY2027 and target annual mass production at the GWh scale by around FY2028. SoftBank plans to deploy these domestically produced batteries at the large-scale AI data centers it is developing.