Japan weighs $140bn AI data centre build as power and cooling move on site

The first site sits next to JERA's gas-fired power station in Chiba, east of Tokyo. It is planned to draw about 400 megawatts and cost more than $15bn, or ¥2.3tn, across all phases, according to JERA. Operations are due to start around 2028.

"We can deliver a 400MW facility years ahead of a conventional grid-connected timeline," said Bradd Lewis, RHAELM's chief executive. JERA brings the land and power, Dell supplies pre-built racks of servers, and RHAELM runs the construction, with Apollo as its financing partner. The data centre will take power directly from JERA's plant instead of waiting years for a grid connection.

That model, where the data centre project absorbs more of the power equation, is spreading well beyond Japan.

On-site power moves the impact next door

On 22 September, New Jersey's Department of Environmental Protection announced a $1.07 million penalty against DataOne, an AI data centre operator in Vineland, saying it installed and operated 62 natural gas generators without the required permits. DataOne disputed the determination on the temporary generators but said it would apply for air permits, according to the New Jersey Monitor, as reported by Data Center Knowledge.

"AI data centers are increasingly becoming power plants as well as computing facilities," Abhijit Sunil, a senior analyst at Forrester, told Data Center Knowledge. "AI infrastructure can now be deployed faster than traditional permitting and inspection processes were designed to oversee." He added that taking pressure off the grid does not eliminate an environmental cost: combustion pollutants such as NOx, CO and particulate matter, plus continuous noise, become local issues.

El Paso shows the same tension from the utility side. El Paso Electric wants to build the 366MW McCloud gas plant, made up of 813 modular generators from Enchanted Rock, to supply Meta's $10 billion, 1-gigawatt data centre in northeast El Paso. Administrative law judges at the Public Utilities Commission of Texas released a proposed decision on Wednesday finding the utility did not adequately consider alternatives and did not issue a request for proposals, Inside Climate News reported. They recommend approval only on condition that the utility does not pass capital and operating costs to ratepayers; without that condition, they recommend denial. The five commissioners have not scheduled a vote.

The cost of the McCloud facility is estimated at $499 million. Meta subsidiary Wurldwide drove the process, the judges wrote. Ameren Missouri, meanwhile, filed a long-range plan proposing 5,400MW of new gas by 2032, while dropping its emissions reduction goals from the plan's promotional materials, according to the Sierra Club.

Demand is not slowing. Hydro-Québec told a provincial regulator hearing in Montreal on Thursday that data centres consuming more than five megawatts should pay a new rate averaging 13 cents per kWh, against the 6.82 cents per kWh they pay now. The utility said such sites consume 190MW at peak today and could reach 1,000MW by 2035. "The era of energy surpluses is now behind us," said Sarah Trabelsi, chief of costs and pricing. The hearing is set to run until 9 October, with a second part in December.

Bain estimates the industry must generate $6tn in annual revenue by 2031 to justify the capital going into data centres, with infrastructure spending possibly reaching $1.5tn a year. On the supply side, Fervo Energy said on Thursday it started selling power from its Cape Station enhanced geothermal plant to the grid on 30 September, one day ahead of schedule, after 23 months of construction.

Transparency is becoming its own fight. Lighthouse Reports filed a complaint against the European Commission under the Aarhus Convention, accusing it of keeping the public from seeing how much energy and water individual data centres use. Commission figures put Europe's data centres at 20.7TWh of electricity in 2025, up 26% on 2024, with water use up 52%, but the totals come from incomplete data and are published only in aggregate. In the Netherlands, less than a quarter of larger data centres publish electricity or drinking water figures, NL Times reported.

Cooling is where the design problem lands. Data Center Knowledge notes that N+1 redundancy can hide a shared controller, network path or sensor, turning several units into one failure domain. And Google's Project Suncatcher satellite, launched on 1 October, will run its four TPUs in 15-minute bursts because its radiators cannot keep up continuously, according to Ars Technica and TechCrunch.