Japanese electricity demand from semiconductors and data centres is likely to grow faster than expected with the rapid adoption of artificial intelligence (AI), which is becoming a major source of concern and a key topic for discussions in reviewing the country's energy policy.
A committee under Japan's trade and industry ministry (Meti) in May started to discuss the country's basic energy policy, which is due for review every three years. The current guidelines were drafted in 2021 when the country's power demand was forecast to fall with energy saving efforts and a falling population.
But now there is growing consensus among the committee members that demand from yet-to-be-built data centres to power AI software will increase at a fast pace, following a dramatic growth in the generative AI technology over the past few years. AI may exceed the level of human intelligence in 2025, earlier than initial target of 2045, said the president of Japanese telecommunications firm Softbank Junichi Miyakawa, who was invited to a meeting held by the committee on 6 June as an industry expert.
Given a construction period of data centres of around three years, which is shorter than that of power plants, it will be important to advance investment in power plants and grid systems, Miyakawa emphasised. Lead times should be seriously considered, the commissioner of Meti's natural resources and energy agency Yoshifumi Murase told the committee. It generally takes five years for solar power, six years for gas, eight years for wind and geothermal and 17 years for nuclear before starting operations, according to nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators (Occto).
Land areas used for data centres in Japan is forecast at around 1,680km² based on announced projects, of which 64pc is located in the Tokyo metropolitan area and 24pc is in the Kansai region, Meti said. The Tokyo area has already faced electricity shortages several times over the past few years because of the absence of operational nuclear reactors. The concentration of data centres in the capital area suggests increased efforts to add to electricity capacity will be necessary to meet demand from 24-hour operational data centres.
On-site power generation, excluding unstable renewables, will help ensure stable power supplies, said the chairman of fellow telecommunications firm NTT Jun Sawada, who also attended the meeting. Creating public and private grid systems will be another solution, he added.
Peak projections
The potential expansion of data centres and semiconductor fabrication plants is expected to boost the country's peak power demand by 5.37GW in the April 2033-March 2034 fiscal year, while peak demand in 2033-34 is forecast at 161GW, up from a projected 159GW in 2024-25, according to Occto.
Japan's power generation capacity is predicted to be 361.16GW in 2033-34, assuming 33.08GW of nuclear capacity will be available. This could theoretically meet expected peak demand of 161GW in the same year. But to ensure stable power supplies for the long term, it will be necessary to create demand forecasts beyond 10 years, taking into account the lead time of power plants and transmission networks, Japan's Federation of Electric Power Companies requested on 27 May with the review of the basic energy policy.
