Japan is poised to experience a major explosion in electricity demand from data centers over the next decade. According to new analysis by Wood Mackenzie, data centers alone will account for 60 percent of the country’s total electricity demand increase by 2034.

Japan in the spotlight with data center investments

With the Japanese government selecting global technology giants like Oracle, Google, and Microsoft as official cloud providers, these companies have planned a $28 billion (4 trillion yen) investment in Japan. As a result of these investments, electricity consumption in the country’s data centers will rise from 19 terawatt-hours (TWh) in 2024 to 57-66 TWh in 2034. This increase represents a more than threefold increase.

By 2034, data centers will generate a peak demand of 6.6-7.7 gigawatts, which will meet 4 percent of Japan’s total electricity demand. This rate is lower than data center demand in the US, which is expected to reach 15% in the same period.

Despite these massive investments, Japan faces serious challenges in its electrical infrastructure. The 7-10-year construction schedules for natural gas combined cycle power plants, in particular, are at odds with technology companies’ investment plans, which aim to remain under five years. This poses the risk of postponing some large data center and chip manufacturing facilities to 2029.

Coal and natural gas power plants are crucial for the uninterrupted operation of data centers. By 2034, these sources are expected to account for more than 40% of the country’s energy capacity. This presents a significant challenge for tech giants aiming for carbon neutrality. Furthermore, Japan’s renewable energy capacity is projected to reach only 17% by 2030.