LOGO

In recent years, the rapid proliferation of generative AI and cloud services has driven a steady expansion in domestic demand for data centers. The power capacity required for IT equipment in Japanese data centers is projected to grow from approximately 2,365 MVA at the end of 2024 to about 4,499 MVA by the end of 2029—a compound annual growth rate (CAGR) of roughly 13.7%. This surge necessitates an urgent, dual-track development of both power and digital infrastructure.

Against this backdrop, the concept of “Watt-Bit Collaboration” (Wat-Bit Renkei) has garnered significant attention. This is a public-private framework aimed at optimizing the synergy between power (“Watt”) and telecommunications/data (“Bit”). The Ministry of Economy, Trade and Industry (METI) and the Ministry of Internal Affairs and Communications (MIC) have already established organizations to promote this initiative, reflecting the national strategic imperative to integrate power infrastructure with the growing demand for data centers.

Integrating Infrastructure: The Promise of Watt-Bit Collaboration

The establishment of the “Public-Private Council for Watt-Bit Collaboration” highlights the necessity for a strategic approach to digital infrastructure that treats power and telecommunications as a single, unified entity. By fostering cooperation between utility companies and IT/telecom firms, the initiative aims to create a balanced design and operational framework for the power, connectivity, and cooling infrastructure essential for stable data center operation.

Research and pilot projects are already underway, focusing on energy supply-demand balancing and peak-time optimization—considering both domestic power grid conditions and global trends. Efforts toward the technical convergence of the energy and data center sectors are rapidly gaining momentum.

The Moves of Power Utilities: Exploration and Implementation

Under these circumstances, some power companies have begun to explore direct involvement in the data center business. For instance, Tohoku Electric Power has launched a GPU cloud service, utilizing container-type data centers to provide cloud infrastructure equipped with high-performance GPUs.

Furthermore, the company has signed a memorandum of understanding with other partners to establish new containerized data centers, with plans to offer GPU server housing services on idle land. These initiatives exemplify a shift where utility companies are stepping beyond mere power supply, venturing into value creation through the provision and operation of data centers.

Information also suggests that other utility companies and related firms are exploring business models that provide power and data center capabilities as an integrated service. As the rapid expansion of AI workloads raises concerns about power security, the role of utility companies is evolving—from traditional suppliers toward becoming integral partners in the broader digital infrastructure ecosystem.

Conversely, TEPCO Holdings has officially stated (as of late 2025) that it has no current plans to enter the data center business directly. The company cites concerns regarding regulatory alignment and the scope of its core business obligations as primary reasons for maintaining this stance.

From “Supplier” to “Co-creation Platform”

Overall, rather than a sweeping trend of utilities unilaterally taking over the data center market, the industry is in a phase of exploring new value creation through strategic partnerships and collaboration. As the race to secure power infrastructure coincides with the growth in data center demand, providers with strengths in energy technology, site selection, and environmental management are increasingly positioning themselves as “co-creation platforms” alongside data center operators and telecommunications firms.

Looking ahead, the next defining trend in the industry will hinge on how utility companies refine their business models and commit to the growth of the data center market while navigating the complex interplay between energy and digital infrastructure.