Japan’s energy demand is forecasted to surge by 35% to 50% by 2050, driven by the increased need from semiconductor factories and data centers supporting artificial intelligence (AI), according to government projections.
Reuters reports that a government document reveals power production must rise from the current decade’s estimate of 1 trillion kilowatt-hours (kWh) to nearly 1.35–1.5 trillion kWh by 2050 to meet this demand.
This escalation is attributed to the expansion of data centers, chip factories, and other energy-intensive infrastructure. The shift towards remote or hybrid work, online learning, and the growth of e-commerce, all powered by AI, have significantly bolstered the global data center industry. Additionally, the rise of cloud-based video streaming services and the digitization of paper records are also major growth drivers in Japan.
To support this digital transformation, the Japanese government is actively implementing its digitization plan, leveraging substantial investments and legislative changes to strengthen the world’s third-largest economy. This includes constructing more underwater cables across the archipelago and extending fiber optic connections to 99.9% of Japanese households. These efforts are crucial for the nation’s $370 billion information and communications technology sector, which contributes over 10% of Japan’s nominal GDP.
The government document also highlights the need for significant investments in power production, marking the first substantial increase in electric demand in two decades. As part of its strategy, Japan aims to finalize a new policy for reducing carbon emissions and shaping industrial policy for 2040 by the end of May.
There is concern that without an increase in renewable electricity generation, Japan may struggle to ensure a reliable power supply. In response, Japan has passed a law to boost investments in decarbonization initiatives, targeting over $962 billion (150 trillion yen) from the private and public sectors over the next decade.
Currently, Japan relies heavily on fossil fuel imports from the Middle East and coal from Australia and the United States, with 60% of its energy needs met by coal and oil. To address future demands, the nation plans to deploy next-generation reactors, restart nuclear power facilities, and develop floating offshore wind farms and next-generation solar cells, such as perovskite solar cells.
