By Hamza Faisal
Tokyo Electric Power Co. Holdings (TEPCO) is tightening the rules on electricity supply for data centers, moving against what the industry calls "capacity squatters" — operators that reserve large blocks of grid power but end up using far less than they booked, according to a Nikkei Asia report published October 3.
Japanese utilities and regulators are struggling with a mismatch at the heart of the country's AI boom: data center developers are hoarding power reservations for projects that are frequently delayed, relocated, or scaled down, leaving grid capacity stranded while other projects wait years for a connection.

The problem: phantom megawatts

When a data center project books grid capacity and then stalls, moves, or draws less power than agreed, that capacity sits idle in the planning books instead of going to a project ready to build.
TEPCO is among the Japanese utilities tightening electricity-supply rules for data-center customers to stop this "capacity squatting" — reserving power capacity that ends up underutilized, Nikkei Asia reported.
The problem is national. Japan's Organization for Cross-regional Coordination of Transmission Operators (OCCTO) estimates that new and expanded data centers and semiconductor plants could add up to 7.15 gigawatts of peak electricity demand between fiscal 2024 and 2034, with growth concentrated around Tokyo.
Wood Mackenzie estimates data centers will drive 60 percent of Japan's total power-demand growth through 2034, and developers around Tokyo can face waits of five to ten years for grid access.

New rules, tighter discipline

Japan is now cracking down on capacity hoarding. Effective October 1, OCCTO requires projects that receive grid-connection approval to prove their legal right to the project site within two months — or lose the reservation, pv magazine reported. It is the third such anti-hoarding measure introduced this year.
The scale of the queue shows why: grid-connection applications from battery and generation projects have swelled to 172 gigawatts, while less than one gigawatt of grid-scale storage is actually connected.
TEPCO's own tightening for data-center customers follows the same logic: prove the project is real, use the capacity you book, or free it for someone else.
For the utility, the stakes are concrete — it estimates electricity demand in its service area will reach 9.54 million kilowatts by fiscal 2037, roughly 27 times the fiscal 2024 level, and it has committed 220 billion yen to upgrade substations and distribution grids around Inzai in Chiba, Japan's biggest data-center cluster.

Power access now decides who builds AI

Demand keeps surging even as the rules tighten. JERA, Japan's largest power generator, partnered with Dell Technologies and UK developer Rhaelm on a proposed 15 billion dollar AI data-center campus in Chiba on October 2.
The campus is backed by up to 400 megawatts of power capacity and described as Japan's largest single-site AI infrastructure deployment, with Apollo Global Management helping finance it.
The message to data-center operators is clear: in Japan's AI race, the scarcest resource is no longer land or chips — it is a guaranteed megawatt. Utilities are making sure only projects that can actually use the power get to keep it.
By Hamza Faisal