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The Japanese government is now clearly emphasizing the importance of “Watt-Bit Collaboration”—the fusion of energy and digital technologies. The 2024 Basic Policy on Economic and Fiscal Management and Reform has positioned this collaboration as a core strategy, aiming to create a framework that simultaneously solves regional challenges and drives economic growth by integrally utilizing watts (electric power) and bits (digital data).

A key technology expected to drive this initiative is the next-generation decentralized ICT infrastructure known as IOWN (Innovative Optical and Wireless Network). By leveraging its decentralized and autonomous network architecture, IOWN enhances processing capabilities at the network’s edge. This structure allows for the distribution of massive power consumption and data processing to regional areas, rather than concentrating them in a few urban data centers. This capability makes it possible to overcome the limitations of over-concentration in metropolitan areas and establish a robust digital infrastructure in local communities.

The “Watt-Bit” Concept: A Vision That Thrives in Regional Japan

At its core, the Watt-Bit Collaboration is a vision designed for regional Japan, not a policy meant for metropolitan hubs like Tokyo and Osaka. This energy-x-digital approach is most effective when applied to the unique challenges plaguing rural areas, such as population decline and aging infrastructure. Today, advances in network technology—including fiber optics, 5G/Local 5G, and even satellite internet—have significantly overcome geographical disadvantages. An environment capable of handling advanced digital processing is rapidly taking shape in regional Japan.

From a power supply perspective, distributed data processing facilities also offer advantages to utility companies by providing greater flexibility for managing supply and demand and integrating renewable energy sources. In particular, a “locally-produced, locally-consumed digital infrastructure” that runs on renewable energy like solar and wind can enhance disaster preparedness and boost the overall resilience of local municipalities.

Will Big Tech Get on Board? The Next Challenge for Decentralized Infrastructure

However, this vision is not without its challenges. It remains uncertain whether global IT giants like GAFAM, which handle vast amounts of data, will embrace a decentralized regional infrastructure model. Their decisions will hinge on multiple factors, including the reliability, security, and cost-effectiveness of distributed edge computing and smaller-scale facilities. The ability to build an operational model that satisfies these global players will be the key to the nationwide success of the Watt-Bit Collaboration.

Moving forward, the initiative will require more than just national-level policy design and support. It calls for a diverse range of players—including local governments, private companies, power utilities, and telecommunication carriers—to work together to create a sustainable and practical model. The Watt-Bit Collaboration is not merely a technological endeavor; it is a national project that will define the very future of Japan’s regional communities.

Tokyo Electric Power Company Power Grid (TEPCO PG) has established TEPCO Digital Infrastructure Co., Ltd. to advance its digital infrastructure business. This move comes against a backdrop of an explosion in data demand and the redefinition of power infrastructure driven by the widespread adoption of advanced digital technologies like generative AI. Power companies are no longer just energy suppliers; they’re evolving into crucial partners underpinning our data-driven society.

A prime example of this evolution is the joint data center development in the Inzai-Shiroi area of Chiba Prefecture by NTT Data Group, NTT Global Data Centers, and TEPCO PG. Announced in late 2023, this plan involves establishing a Special Purpose Company (SPC) within fiscal year 2023, with services aiming to launch in the latter half of 2026. The initial phase will see the construction of a large-scale data center with 50 MW of power capacity for IT equipment, with further joint developments progressively being considered, primarily in the Tokyo metropolitan area.

The Fusion of Power Company Expertise and ICT Company Technology

The significance of this project lies in the synergy between TEPCO PG’s extensive asset base and power operation expertise, and the NTT Group’s advanced ICT technologies and global data center operational capabilities. Together, they aim to build a more sophisticated and sustainable data center model. This design philosophy, particularly its ability to address societal challenges like decarbonization and distributed power sources, points toward the future direction of next-generation infrastructure.

Similar initiatives are emerging from other power companies. Tohoku Electric Power, for instance, has launched a new business for generative AI using containerized mobile data centers. A key feature of this initiative is its speed-to-market approach, enabling GPU-equipped servers to be operational within a few months. Spearheaded by ideas from younger and mid-career employees, this project leverages the cool climate of the Tohoku region for efficient power consumption and also lays the groundwork for attracting large-scale data centers in the future.

“Electricity’s” Growing Presence as the Foundation of the Data Society

Underlying these developments is a structural shift in electricity demand. With the establishment and expansion of data centers and semiconductor factories, peak electricity demand is projected to reach 7.15 million kilowatts by 2034. This makes redesigning Japan’s electricity supply system an urgent priority. Addressing challenges such as stable supply, renewable energy integration, and securing baseload power simultaneously necessitates an integrated approach between electricity and digital infrastructure.

As power companies become deeply involved in digital infrastructure, data centers and electricity have become inextricably linked. High-density, always-on digital foundations demand vast and stable power supplies. Conversely, for power companies, data centers represent the most realistic growth driver as they seek decarbonization and new revenue streams.

In essence, power companies and data center operators are now transcending the traditional supplier-user relationship, transforming into partners jointly building the social infrastructure. To envision a future that balances both stable supply and sustainability, it is absolutely essential for both parties to team up and tackle these challenges together.