Publication date: Aug 22, 2025 Japan Plans to Expand Data Centres Near Decarbonized Power Sources

Japan Plans to Expand Data Centres Near Decarbonized Power Sources

At a recent GX Industrial Location Working Group (WG), Japan’s government announced the selection criteria for public applications for “GX (Green Transformation) Strategic Areas,” which supports regions transitioning to a decarbonized industrial structure. The policy has two main focus areas: the “Data Center (DC) Cluster Type” must expand the use of decarbonized power, while the “Complex Regeneration Type” will be assessed based on plans to attract startups in GX-related fields.

Applications will be submitted mainly by prefectural governments, with collaboration from private companies also expected. Selected areas will be supported through GX Transition Bonds and linked with the National Strategic Special Zone framework, combining financial support with regulatory reform to build low carbon industrial clusters.

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Challenges and Evaluation Criteria

For the DC Cluster Type, one requirement is the ability to expand grid connection capacity to around 1,000 MW in the future, with Brazil’s plan for a 3,000 MW data center—one of the largest in the world—cited as a reference. Evaluation will also consider whether operators in the cluster have concrete plans to expand the use of decarbonized electricity, and whether local governments show commitment to promoting such power sources. Infrastructure development, such as undergrounding communication lines and securing industrial land, as well as community engagement efforts by municipalities, will also be taken into account.

For the Complex Regeneration Type, new GX businesses will be launched on former factory sites. The aim is to use land with existing industrial infrastructure to help scale up startups in areas such as manufacturing and GX-related industries. Evaluation criteria will include technological capabilities, signed sales agreements, and the overall feasibility of the plans.

The secretariat also raised the broader challenge of the relationship between municipalities that host decarbonised power facilities and energy offtakers. While the government is looking for ways to encourage electricity offtakers to locate within the areas where decarbonized power sources are situated, for offtakers, it may not always make business sense to move to these municipalities.