Japan's electricity planners have two problems that are starting to overlap. The first is forecasting how much power new data centres will need and when. The second is securing the fuel to supply it, after the Strait of Hormuz disruption pushed up the price of liquefied natural gas (LNG) across Asia. In August 2026, OCCTO, Japan's cross-regional grid coordinator, published its aggregation of electricity supply plans for fiscal year 2026, and both problems were visible in its findings.
OCCTO said it is becoming increasingly difficult to forecast highly probable demand, mainly because data centres keep postponing the start of operation. It also warned that the supply-demand balance "after fiscal year 2028 is expected to become severe with multiple areas exceeding the supply reliability criteria."
A forecast that keeps moving
OCCTO's 10-year demand outlook, published on 21 January 2026, still shows data centres and semiconductor plants driving growth. According to an analysis by Shulman Advisory, the combined incremental peak demand from new data centres and chip fabs is projected to reach around 7.6 GW by FY2035, above the previous forecast. Data centre peak demand alone is projected at roughly 6.6 GW by FY2035, with consumption of about 49 TWh.
But the timing has shifted. Because of project delays and plan revisions, data centre peak demand is now expected to remain below the previous forecast through around FY2033, before overtaking it from FY2034. OCCTO counts projects case by case, including firmly those that have reached grid connection cost agreements and including others on a probabilistic basis.
For FY2026 itself, the January outlook put total peak demand across Japan's ten areas at 159.6 GW, with consumption of 803.4 TWh. The August supply plan aggregation, which uses a different basis, forecasts energy requirements of 843.7 TWh for FY2026, rising to 864.8 TWh in FY2030 and 887.1 TWh in FY2034, with peak demand growing at an average annual rate of 0.4% over ten years. OCCTO attributes the upward trend to economic growth and new and expanded data centres and semiconductor factories, which outweigh population decline and efficiency gains.
The supply side is thinning
The August aggregation also shows where the system is weak. In the Tokyo area, annual expected unserved energy exceeds the target outage volume in FY2026, because "the necessary supply capacity could not be procured" despite coordination of maintenance schedules. In the longer term, the calculations exceed the target in Tohoku for FY2028 and FY2029, in Tokyo for FY2028 to FY2031, in the areas from Chubu to Shikoku for FY2028 to FY2030, and in Kyushu for FY2028 to FY2035.
OCCTO links this to the retirement of inefficient coal plants, many of which are being replaced with LNG-fired units on existing sites through Japan's long-term decarbonisation capacity auctions. Generation companies, it said, are reluctant to invest in new plants because of "excessive concern about stranded asset risk," which is made worse by the uncertainty over when data centres will actually arrive.
That is a circular problem. Developers delay data centres because grid capacity is uncertain, and generators delay plants because data centre demand is uncertain.
Where Hormuz comes in
Japan's balancing capacity is mainly thermal plants burning coal and LNG, plus pumped storage. LNG is the flexible fuel that fills gaps when nuclear units are offline or renewables fall short. OCCTO's figures show LNG plants running at a projected capacity factor of 37.4% in FY2026 and 39.8% in FY2030.
The war that began on 28 February closed the Strait of Hormuz and cut LNG exports from Qatar and the UAE. The International Energy Agency (IEA) says almost 90% of the LNG exported through the Strait in 2025 went to Asia, accounting for more than a quarter of the region's LNG imports. Japan is also heavily exposed through oil: it imports about 95% of its crude from the Gulf, The Straits Times reported in March.
The price effect was large. Spot LNG prices in Asia averaged USD 17.5 per million British thermal units in the second quarter of 2026, up 45% year on year, according to the IEA's Gas Market Report for the third quarter. The IEA also noted that higher LNG prices were spurring gas-to-coal switching in Asian power sectors, and forecast that Asian gas demand would fall by 0.5% in 2026.
For Japan, the consequences run through the whole power system. Every additional gigawatt of data centre demand that is met by LNG-fired generation is exposed to a market that the IEA now expects to stay tighter for longer. The agency estimates cumulative LNG supply losses of around 140 billion cubic metres between 2026 and 2030, after damage to Qatar's Ras Laffan site delayed the expected wave of new supply.
Policy direction
Japan's Seventh Strategic Energy Plan, approved by the Cabinet on 18 February 2025 alongside the GX2040 Vision, set out to deliver "stable energy supply, economic growth, and decarbonization simultaneously," with a target of cutting greenhouse gas emissions by 73% by FY2040 from FY2013 levels. The plan anticipated demand growth from data centres and chip plants, and leaned on nuclear restarts and renewables to meet it, with LNG as a transition and backup fuel.
The Hormuz disruption tests that framework. OCCTO's projected nuclear capacity factor rises from 32.3% in FY2026 to 38.4% in FY2035, reflecting expected restarts. The faster those restarts happen, the less Japan's data centre growth depends on imported gas.
OCCTO itself urged attention to "risks rising from international situations" in deliberations on phasing out coal, a recognition that energy security considerations now weigh on decarbonisation timelines.
What to watch
Three signals will show how Japan balances these pressures. The first is the next capacity market main auction and long-term decarbonisation auction, which will reveal whether generators are willing to commit capital. The second is the share of data centre projects that move from probabilistic to firm inclusion in OCCTO's January 2027 forecast. The third is how quickly Japanese buyers can rebuild LNG supply away from the Gulf.
For hyperscalers planning Japanese capacity, the message from OCCTO is that grid access in the Tokyo area will remain tight for several years, and the cost of the marginal megawatt will be set, in part, by events in the Gulf.