Japan Data Center Update 27: Data Center Decentralization Drives Nationwide Grid Investment

Japan’s major utilities to add 15 GW of substation capacity amid data center demand growth

Eight major utilities, including TEPCO, will strengthen transmission infrastructure by constructing or expanding substations at 30 locations nationwide to accommodate growing data center demand, according to a Nikkei analysis on OCCTO’s report.

These substations will add approximately 15 GW of transmission capacity to accommodate rising electricity demand by the early 2030s. OCCTO forecasts that additional demand from new and expanded data centers will increase more than tenfold, from 0.64 GW in FY2026 to 6.61 GW in FY2035. The utilities are therefore developing power infrastructure at more than twice the pace of projected data center demand growth.

S2 and BITGRIT plan 1.5 MW data center as first step toward Akita hub

Akita City-based startup S2, and US-based BITGRIT are advancing plans to establish Akita Prefecture as a data center hub. A 1.5 MW data center could begin operations as early as the end of 2027 in the same building as S2’s headquarters in Akita City. BITGRIT will raise the JPY 5 billion construction cost.

The two companies have signed a partnership agreement with Akita City in October 2025 to support data center development. Akita Prefecture has passed the first-stage screening under the data center cluster category of the government’s GX Strategic Zone System. If Akita will be designated as such, it would provide strong momentum for the construction of a 300–500 MW data center in northern Akita City.

A 1.5 MW data center will operate on the ground floor of an office building in Akita. (Source: Nikkei).

TEPCO to develop data center waste heat recovery system with TMG support

TEPCO Holdings will build a system to recover and effectively use waste heat from data centers, with subsidy support from the Tokyo Metropolitan Government (TMG). The company aims to accelerate use of a system that can supply high-temperature waste heat to nearby bathing facilities and factories, and use the recovered heat for cooling server rooms. TMG will cover part of the project cost, up to JPY 520 million.

TEPCO applied as the lead company for TMG’s Data Center Waste Heat Utilization Implementation Promotion Project and was selected. In addition to TEPCO, MESH-X, which designs next-generation data centers and power infrastructure, and NHK Technologies will participate in the project. The project period runs through the end of March 2028.

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