Japan Data Center Power Market

Japan Data Center Power Market Size and Share:

The Japan data center power market size was valued at USD 1.5 Billion in 2024. Looking forward, IMARC Group estimates the market to reach USD 2.3 Billion by 2033, exhibiting a CAGR of 6.6% from 2025-2033.  The market is primarily driven by technological advancements, regulatory support fostering digitalization, innovative infrastructure solutions for energy efficiency, strategic collaborations enhancing capabilities, rising cloud service reliance, decentralized computing adoption, and escalating needs for scalable, resilient facilities, thereby augmenting Japan data center power market share.

The market in Japan is influenced by the increasing digital transformation initiatives across industries, which raises the demand for data center infrastructure and requires advanced power management solutions to ensure efficiency and reliability. According to the report by the Japan External Trade Organization (JETRO), the data center market in Japan is projected to grow at an average annual rate of 5.5 percent, from 3.2 trillion yen (US23.5 billion dollars) in 2022 to over 4.0 trillion yen (US29.2 billion dollars) in 2026. The Japanese government is supporting this growth through infrastructure investments and regulatory reforms as part of its Vision for a Digital Garden City Nation strategy. Additionally, the rapid expansion of the Internet of Things (IoT) and artificial intelligence (AI) technologies further accelerates the need for robust power systems to support high-performance computing and storage capacities. Moreover, the growing emphasis on data localization and compliance with stringent regulations necessitates the development of local data centers with optimized power systems.

Besides this, the growing focus on edge computing is fostering the deployment of smaller, decentralized data centers, which require innovative power solutions to ensure low-latency performance. Partnerships for energy storage solutions, including collaborations between data center operators and renewable energy providers, are also playing a pivotal role in enhancing energy reliability and sustainability. For instance, on August 9, 2024, Flex and Musashi Energy Solutions announced a collaboration to develop capacitive energy storage systems (CESS) using Musashi’s Hybrid SuperCapacitor technology. These systems address utility power fluctuations in AI data centers by enhancing grid stability during intensive AI workloads. Commercial production is set to begin in early 2025, offering improved reliability, efficiency, and cost-effectiveness for hyperscale operators. Also, the rising frequency of natural disasters in Japan highlights the importance of disaster-resilient power systems, encouraging investments in advanced backup and uninterruptible power supply (UPS) solutions. Apart from this, increasing investments from global hyperscale cloud providers and domestic companies are bolstering the need for power infrastructure that can meet the scalability and efficiency requirements of modern data centers.

Japan Data Center Power Market Trends:

Accelerating Shift to Renewable Energy Solutions

The shift towards renewable energy integration is significantly influencing the Japan data center power market growth. As Japan aims to be carbon neutral by 2050, data centers are embracing renewable energy sources, including solar, wind, and hydroelectric power. Companies are now exploring green PPAs for long-term access to sustainable energy, reducing dependence on conventional power grids. For instance, on May 24, 2024, Google announced the first renewable energy deals in Japan, adding a total of 60 MW of solar capacity to power its data centers. The company will partner with Clean Energy Connect to build around 800 small-scale solar plants with a total capacity of 40 MW across multiple grid regions and with Shizen Energy to establish a 20 MW utility-scale solar project in Inzai City, Chiba Prefecture. These are some of the efforts Google is undertaking to invest almost $690 million in sustainable infrastructure in Japan. These transitions reduce long-term operational costs and help mitigate environmental impacts. Also, the market is witnessing increased innovation in the integration of renewable energy, and sustainability is being positioned as the cornerstone of future power management strategies.

Growing Focus on Artificial Intelligence (AI) Data Centers

The development of artificial intelligence (AI) infrastructure is enhancing the Japan data center power market outlook. The integration of AI-ready capabilities reflects the growing demand for data centers optimized to handle intensive artificial intelligence (AI) workloads. The data centers are being designed to manage the high power density and computational demands of AI workloads, making energy-efficient and scalable power systems necessary. Also, modular power systems and AI-driven energy management tools are becoming increasingly important to ensure efficient operations and adaptability. Also, the trend is further bolstered by global data center operators and Japanese enterprise collaborations. For example, on September 2, 2024, Empyrion Digital announced its entry into the Japanese market by partnering with a major Japanese financial services group to build a 25MW AI-ready data center, JP1, in Tokyo. Located within 5km of Otemachi, the facility will be equipped with the latest cooling technologies to ensure the highest efficiency of energy and water usage, in line with Empyrion's sustainable digital infrastructure strategy. Construction will start in 2025, with production likely to be ready by the end of 2027.

Adoption of Advanced Cooling Technologies

Increasing advanced cooling technologies are majorly shaping the Japan data center power market trends. As data centers increase their capacity to handle more computing demands, heat management is becoming critical for ensuring energy efficiency and equipment longevity. Operators are increasingly integrating liquid cooling systems and free cooling to reduce energy consumption and operational costs. These align with the Japanese regulations on energy efficiency and sustainability, as cooling traditionally accounts for significant power consumption in data centers. Hybrid cooling systems that combine air and liquid methodologies are also gaining popularity, as they can easily adjust to other operational needs. Also, the deployment of immersion cooling technology, especially for high-density computing environments, is on the rise. For instance, on June 2, 2024, Supermicro announced the deployment of advanced liquid-cooled AI superclusters for a major AI data center in Japan that will support large-scale artificial intelligence workloads. The system integrates Supermicro's GPU servers with energy-efficient liquid cooling technology to enhance performance while minimizing environmental impact. This initiative reflects the growing demand for AI infrastructure and aligns with sustainability goals in high-performance computing.

Japan Data Center Power Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the Japan data center power market, along with forecasts at the country and regional levels from 2025-2033. The market has been categorized based on solution type, service type, size, and vertical.

Analysis by Solution Type:

• Power Distribution and Measurement
  • Intelligent PDUs
  • Non-Intelligent PDU
  • Monitoring Software
• Power Backup
  • UPS Device
  • Generators
• Cabling Infrastructure
  • Transfer Switches
  • Switchgear
     

Power distribution and measurement systems form the basis of data center operations in Japan. These systems allow efficient power allocation across IT equipment, cooling systems, and support infrastructure while minimizing the waste of energy. Advanced power measurement tools help monitor consumption patterns, allowing operators to optimize energy use and reduce costs. Japan's commitment to sustainability, these solutions come with energy-efficient designs and real-time analytics for effective management. Reliability in power distribution is a crucial factor in supporting growing workloads, especially for hyperscale and edge data centers. Therefore, it is an integral part of Japan's evolving data center power market.

Power backup solutions are an important part of the uninterrupted operations of Japan's data centers dye to common occurrence of natural disasters, including earthquakes and typhoons. In such a country, uninterruptible power supplies (UPS) and backup generators help maintain critical systems functioning during any power outage. Increasing renewable energy sources also creates a need for advanced energy storage systems, including batteries, that can manage variability; for such industries as BFSI, health care, and e-commerce requiring high availability, power backup systems come into the forefront. In Japan, backup solutions make up a central part of their robust data center infrastructure if it promotes resilience and reliability.

Infrastructure cabling is vital in the operation of data centers in Japan. Properly designed cabling systems ensure that connectivity is seamless, and latency is minimized, which is critical for supporting high-speed networks and data-intensive applications like artificial intelligence (AI) and internet of things (IoT). Japan's emphasis on energy efficiency extends to cabling, as structured solutions minimize cooling requirements and power losses. High-quality cabling also supports scalability, allowing data centers to grow their workloads without major reconfigurations. As Japan expands its digital infrastructure, investments in advanced cabling technologies enhance operational reliability and future-proof its data center power market.

Analysis by Service Type:

• System Integration
• Training and Consulting
• Support and Maintenance
   

System integration services are necessary to ensure the functional and efficient functionality of complex data center infrastructure, and these encompass designing, installing, and optimization of systems for power management, cooling, and renewable energies. As Japanese data centers keep adopting advanced technologies, including artificial intelligence (AI), the internet of things (IoT), and 5G, system integration assumes a very high importance to achieve interoperability challenges and enhance scale. Japanese data centers favor energy-efficient options and global acceptance, making integrating services a prime necessity to complete operational objectives. Innovative tools available allow system integration to help improve the use of energy and solid digital infrastructure that supports business productivity.

Training and consulting services are very important in providing businesses with the knowledge needed to run power systems in a data center efficiently. In Japan, where sustainability and technological innovation are considered important, consulting services assist organizations in implementing energy-efficient and renewable power solutions. These services also help address compliance with very strict regulations and industry standards. Training programs enhance the capability of IT and operation teams to run high-end infrastructure for power with reduced downtime, thereby enhancing operation efficiency. Fostering knowledge and preparedness, training, and consulting services are instrumental for Japan's data centers to better respond to these changing technological demands.

Support and maintenance services are the main elements to enable the power system in the Japanese data center. It involves all types of preventive maintenance, periodic monitoring, and troubleshooting, hence ensuring an uninterruptible supply of power along with optimum performance. In a disaster-resilient country like Japan, good support systems minimize the chance of a power outage and facilitate business continuity. Maintenance providers assist in energy-saving measures and improve systems to fulfill growing demands. As data centers increasingly rely on renewable energy, support services ensure seamless integration and sustained efficiency, making them indispensable for the long-term success of the country's data center infrastructure.

Analysis by Size:

• Mid-Size Data Center
• Enterprise Data Center
• Large Data Center
   

Mid-size data centers cater to regional businesses and organizations requiring moderate storage and processing capacities. These facilities are essential for supporting edge computing, enabling faster data access and improved latency for localized services. In Japan, mid-size data centers are gaining prominence as industries expand into regional markets and prioritize decentralized digital infrastructure. Their scalability and cost-efficiency make them a better choice for small and medium-sized enterprises (SMEs) and niche applications. Mid-size data centers also prefer energy-efficient technologies and renewable energy solutions, thus contributing to the sustainability goals of Japan and saving operational costs.

Enterprise data centers serve to the exclusive needs of larger organizations, which includes corporations and government agencies. This kind of data center facility houses proprietary data in critical infrastructures for security reasons and provides customized application support. In Japan, enterprise data centers are found as an important infrastructure for the sectors of BFSI, healthcare, and manufacturing because their data reliability is non-negotiable and requires compliance. With hybrid cloud solutions becoming increasingly popular, these centers are transforming themselves to engage on-premises and cloud-based systems. Advanced power management, backup systems, and renewable energy focus are becoming more aligned with the new wave of operational efficiency and environmental responsibility.

Large data centers, including hyperscale facilities, dominate the Japanese data center power market due to their ability to support massive workloads and global digital services. These facilities are essential for cloud service providers, content delivery networks, and artificial intelligence (AI) applications. Large data centers in Japan take advantage of sophisticated infrastructure, high-speed connectivity, and renewable sources of energy for the sustainability and scalability of such large-scale facilities. The more demand there is for 5G, IoT, and big data analytics, the more there will be an investment in large-scale facilities. Because of their strategic role in powering Japan's digital economy, they will be crucial to maintaining global competitiveness and supporting future technological advancements.

Analysis by Vertical:

• BFSI
• Telecommunication and IT
• Energy
• Manufacturing
• Others
   

Banking, Financial Services, and Insurance are some of the most important sectors for Japan's data center power market due to its need for secure and efficient digital infrastructure. High-performance data centers are critical for banks in offering real-time transactions, fraud detection, regulatory compliance, and customer services. Increased adoption of fintech solutions, blockchain, and artificial intelligence (AI) technology further demands the scalability and reliability of the power infrastructure by this sector. In addition, the BFSI sector emphasizes disaster recovery and redundancy, and investment in backup power systems and renewable sources of energy is necessary to ensure smooth operation and customer confidence.

The telecommunication and IT sector is significant for the development of Japan's data center power market as the sector creates an ever-growing need for high-speed connectivity and processing of data. With the dawn of 5G networks, IoT, and cloud computing, telecom operators and IT firms need more robust data centers supported by reliable and scalable energy solutions. Such centers are indispensable in providing uninterrupted communications, enabling the support of applications related to artificial intelligence, and managing the data flows of millions of people. Energy efficiency and sustainability become accelerating factors for the industry while embracing edge computing and hyperscale data centers; therefore, more investment happens in advanced power management technologies as well as in renewable energy sources.

Digitization increases the interconnectivity of the energy sector, which in turn increases its presence in Japan's data center power market. With the growth in renewable energy, dependence on data centers for controlling smart grids and monitoring energy production increases. Energy companies also utilize data centers to improve analytics and data storage requirements necessary to achieve carbon neutrality in Japan. The need for a green data center emerged as a necessity for the development of renewable energy and energy efficiency in cooling. This increases its collaboration with the data center industry in developing further a more sustainable digital economy, thus building an ever-stronger foundation.

Regional Analysis:

• Kanto Region
• Kansai/Kinki Region
• Central/ Chubu Region
• Kyushu-Okinawa Region
• Tohoku Region
• Chugoku Region
• Hokkaido Region
• Shikoku Region
   

The Kanto region, hosting Tokyo, is a central location for Japan's data center power market. Being the most populated and economically active region, this drives the greatest demand for cloud computing, e-commerce, and financial services. The strong digital infrastructure of Tokyo, combined with its proximity to global internet exchanges, makes it a popular location for hyperscale data centers. Continuous investments in renewable energy solutions make data centers in Kanto more sustainable, aligning with very high environmental standards. Its strategic significance lies in supporting Japan's digital economy and international connectivity.

The Kansai region, which encompasses Osaka and Kyoto, is of utmost importance in Japan's data center power landscape. Osaka is considered a secondary data center hub to Tokyo and is more affordable and less vulnerable to natural disasters. The advanced infrastructure and high-speed connectivity attract global hyperscale operators. Data centers in Kansai play an important role in disaster recovery solutions, given the growing demand for business continuity. Furthermore, the region's renewable energy adoption is aligned with Japan data center power market demand for sustainable and energy-efficient facilities, thus ensuring long-term growth in its data center power market.

The Chubu region, centered around Nagoya, holds strategic significance due to its industrial base and geographic location. As a manufacturing and logistics hub, Chubu generates considerable demand for data storage and processing power. The relatively temperate climate helps with energy-efficient cooling methods for data centers, which means reduced operational costs. Additionally, being relatively equidistant from both Tokyo and Kansai makes it another location for disaster recovery or regional backup sites. Also, investments in other forms of renewable energy, such as solar and wind, make this an attractive region for sustainable data center practices.

The Kyushu-Okinawa region presents a unique set of advantages in the data center power market because of its renewable energy resources and geographical diversity. Kyushu has geothermal, solar, and wind energy resources, which places it at the forefront of green data center development. Okinawa's strategic location positions it as a gateway for international connectivity, particularly with Southeast Asia. These regions are experiencing investment in edge data centers to cater to local business and rural connectivity. Consequently, Kyushu-Okinawa is becoming a part of the Japanese efforts towards decentralized data infrastructure and sustainability.

The Tohoku region is gaining prominence for data center development because of the stable climate which minimizes the need for cooling energy and easy access to renewable energy. Post-Great East Japan Earthquake, the region has focused on infrastructure resilience and attracted investments in disaster recovery facilities. Affordable land and energy costs make Tohoku a cost-effective alternative for expanding data center operations. This region supports the decentralization of Japan's data infrastructure, enhancing national security and addressing the growing demand for edge computing in rural and industrial areas.

The Chugoku region, including Hiroshima city, is becoming a hotspot location for data centers. Being close to other major industrial locales and offering renewable sources such as hydro and wind makes it a great place for a sustainable operation. The region supports regional businesses and government initiatives aimed at digital transformation and connectivity improvements. With increased investments in energy-efficient facilities, Chugoku complements larger markets, thereby diversifying Japan's data center infrastructure and mitigating risks associated with over-reliance on central locations.

Hokkaido, the northernmost region of Japan, presents unique advantages for the data center power market because of its cold climate, which significantly reduces cooling costs. This area also has sufficient renewable energy resources, such as wind and hydropower. Hokkaido is characterized by low land and energy costs, attracting not only domestic investment but also investments from abroad. The region will be a vital component in rural connectivity and industrial applications with the advent of edge computing. In fact, due to its strategic location, Hokkaido will play an important role in the decentralized development of Japan's data infrastructure.

The Shikoku region has renewable energy potential that is now making it a feasible location for data center operations. Its emphasis on clean energy in the form of hydro and solar power aligns well with what the industry demands: sustainability. The relatively smaller market size does encourage the development of edge data centers, which would address localized demands and support regional businesses. Shikoku focuses on energy-efficient technologies, making it a cost-effective option for expansion in data centers. By encouraging the development of digital infrastructure, the region contributes to the overall resilience and decentralization of Japan's data center ecosystem.

Competitive Landscape:

The Japan data center power market is highly competitive, driven by the rapid expansion of digital infrastructure and increasing demand for reliable, energy-efficient solutions. Market participants focus on offering innovative technologies, such as advanced power distribution units, energy storage systems, and backup solutions, to cater to the growing needs of hyperscale and colocation data centers. Energy efficiency, sustainability, and government regulations are among the major drivers that are compelling investments in renewable energy integration and green power initiatives. The market is also influenced by technological innovation, such as AI-powered energy management systems and modular power solutions, which have improved operational efficiency. The regional and global players further increase the competition through partnership deals, scalability improvement, and fulfilling the changing requirements of cloud computing, IoT, and 5G deployment in the country. For example, on September 12, 2024, CyrusOne and its joint venture partner, Kansai Electric Power Company (KEPCO), started building their first data center in Osaka, Japan. The facility, a much-needed addition to CyrusOne's Asia-Pacific portfolio, will have a 36 MW capacity when completed. This development stands as a testimony to CyrusOne's strategic expansion into the region due to the rapidly increasing demand for digital infrastructure.

The report provides a comprehensive analysis of the competitive landscape in the Japan data center power market with detailed profiles of all major companies.

Latest News and Developments:

• February 15, 2024: Marubeni Corporation announced a partnership with Yondr Group to develop a hyperscale data center in West Tokyo, emphasizing renewable energy utilization. The project addresses the rising demand for data centers driven by remote work, cloud adoption, and AI technologies, aiming for sustainability and decarbonization. Marubeni will leverage its local networks to support renewable energy supply for the initiative, marking its entry into the hyperscale data center market.
• August 26, 2024: Hitachi, Ltd., and Singtel announced a strategic alliance to build GPU Cloud services and next-generation data centers in Japan and potentially throughout the Asia Pacific area. This collaboration aims to enhance data center performance and accelerate AI adoption by combining Singtel's expertise in data center operations and connectivity with Hitachi's end-to-end integration capabilities, including green power solutions and data management.
• November 20, 2024: Hokkaido Electric Power's President, Susumu Saito, announced plans to restart the Tomari Number 3 nuclear reactor to meet increasing energy demands from local data centers. The reactor, offline since May 2012 following the Fukushima disaster, is considered essential for the company's goal of achieving carbon neutrality by 2050. To enhance safety, the company is constructing a 19-meter seawall, expected to be completed within three years, to protect the facility from potential natural disasters.
• October 18, 2024- Tokyo, Japan-based cloud gaming services company Ubitus KK announced building a new data center, likely in Kyoto, Shimane, or Kyushu Island, as these locations are relatively close to nuclear power plants. The chief executive, Wesley Kuo, mentioned that nuclear energy is cheaper and more stable, essential for running the operation of generative artificial intelligence. The firm is targeting an early 2025 location selection with initial power requirements of 2-3 MWe but with a possible expansion to up to 50 MWe.

Japan Data Center Power Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the Japan data center power market from 2019-2033.
• The research study provides the latest information on the market drivers, challenges, and opportunities in the Japan data center power market.
• Porter's Five Forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the Japan data center power industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.