Japan's data centre boom to drive 60% of power demand growth as US$28 billion hyperscaler investment reshapes grid

Japan's data centres will consume as much electricity as 15 million to 18 million households by 2034, driving 60% of the country's total power demand growth as hyperscalers invest US$28 billion (4 trillion yen) following the government's selection of Oracle, Google, and Microsoft as official cloud providers, according to new Wood Mackenzie analysis. 

Wood Mackenzie’s report ‘Japan's data centre gold rush: the battle to power a data-driven future’ projects electricity consumption will more than triple from 19 TWh (Terawatt hours) in 2024 to 57 TWh to 66 TWh by 2034. Peak demand from data centres is expected to reach 6.6 GW (gigawatt) to 7.7 GW in 2034, hitting 4% of Japan's total peak load and representing a threefold increase from 2024 levels. 

Demand breakdown (TWh) 

Source: Wood Mackenzie’s Lens Power platform 

This surge positions Japan as the next major battleground for hyperscale data centre expansion, following a similar trajectory to the United States but with a five-year development lag. 

“Despite Japan's steady growth trajectory for hyperscaler investments, data centres account for a significantly smaller share of power demand compared to international benchmarks,” said Naomi Oshita, research associate Asia Pacific power & renewables at Wood Mackenzie. “We project data centres in Japan will account for around 4 to 5% of peak demand by 2034, far below the United States, where peak demand from data centres could reach as high as 15% over the same period.” 

Data centre peak demand share in 2024, 2030, and 2034 

Source: Wood Mackenzie’s Lens Power platform, IEA* 

Infrastructure bottlenecks threaten timeline delivery 

A critical mismatch between demand growth and supply development timelines threatens to delay major projects despite the massive investment commitment. While hyperscalers prefer deployment schedules under five years to capture market opportunities, combined-cycle gas turbine projects typically require seven to 10 years for completion. 

“This fundamental disconnect explains why infrastructure bottlenecks are pushing major data centre and chip foundry projects to 2029, despite the $28 billion investment commitment from global technology companies,” said Oshita. “Timeline pressure will intensify as demand growth materialises, requiring utilities and grid operators to accelerate planning now.” 

Electricity demand is expected to be concentrated in the Tokyo and Kansai regions, where data centre developers prioritise proximity to demand hubs and connection speed over other site factors.  According to Wood Mackenzie, data centres are expected to account for 7% of the power load in these regions by 2030. However, the gradual rollout of these facilities suggests that immediate power shortages are unlikely, as reserve margins remain above 15%. 

Decarbonisation challenge intensifies with fossil fuel dependence 

Coal and gas installations will dominate these regions, representing over 40% of capacity by 2034 and providing crucial baseload power for consistent data centre operations. This creates significant challenges for hyperscalers pursuing carbon-neutral commitments while driving the majority of Japan's electricity demand growth. 

Japan's renewable energy transition adds complexity to meeting data centre power requirements. “The decarbonisation challenge is particularly acute given the scale of data centre demand growth,” said Oshita. “With renewables(solar and wind) reaching only 17% by 2030, Japan will need to accelerate nuclear restarts and renewable deployment to meet both climate goals and hyperscaler sustainability requirements.” 

Market transformation ahead 

The scale of energy consumption will fundamentally reshape Japan's electricity demand profile over the coming decade, positioning data centres as the primary driver of grid planning and investment decisions across the power sector. 

“The question isn't whether Japan will reach similar penetration levels to the US, but how quickly the power system can adapt to support that growth,” concluded Oshita. “Power utilities are building the plane while flying it, and their business model will look radically different by 2034.” 

Editor note: This report covers Japan's data centre pipeline, which is defined as projects in the planning to construction phase scheduled to come online between 2025 and 2034.