Japan’s largest power company, JERA, is set to invest around 500 billion yen (approximately 3 billion USD) in the United States to construct a large-scale natural gas power plant co-located with a data center. This move comes as the Federal Energy Regulatory Commission (FERC) in the U.S. officially requested power grid operators to reform network integration processes last Thursday to facilitate quicker access for large energy users like data centers to the grid. Simultaneously, this initiative aims to support large data centers in developing their own power sources to meet the explosive electricity demands of the AI era.
According to the Nikkei newspaper on Monday, Japan’s JERA will collaborate with major tech companies in the U.S. to jointly develop a large natural gas power plant and data center in the Midwest region. With an investment of approximately 500 billion yen, the project is expected to start operating around 2028.
This venture marks the first time a Japanese power company will build a data center co-located power plant in the U.S., with the term “co-located” referring to positioning the power plant near the data center to directly supply electricity without going through the public grid.
The data center will be utilized for training large language models (LLM), with an estimated investment reaching into the trillions of yen, making it one of the largest facilities of its kind in the U.S. Due to the deployment of high-performance chips like graphics processing units (GPUs), the facility’s electricity demand far surpasses that of traditional data centers.
JERA’s investment in the power plant will result in a generating capacity of approximately 1GW (1,000MW), equivalent to that of a large nuclear power plant unit. Compared to nuclear plants, natural gas power plants offer advantages such as lower investment costs and shorter construction periods.
The development of data centers is pushing U.S. electricity consumption to unprecedented levels, with some areas consuming more electricity than the grid can supply, prompting regulatory action.
FERC’s recent directive requires the six regional grids under its jurisdiction (excluding Texas) to explain or comprehensively reform their processes for supplying power to large energy users. The primary aim is to expedite grid access for data centers, AI computing hubs, and industrial users, allowing these facilities to “self-generate electricity” by constructing their own natural gas or renewable energy power plants to minimize impacts on grid stability and consumer electricity costs.
Under current regulations, new power plants in the U.S. typically take over 10 years from planning to completion to connect to the grid.
Data centers are crucial infrastructure for hosting AI capabilities and as data centers become vital in the AI competition, related construction issues are extending into geopolitics and information warfare.
In an attempt to hinder data center construction in the U.S., Chinese state-affiliated individuals are leveraging OpenAI’s flagship chatbot ChatGPT to generate content aiming to influence public opinion against AI and data centers among Americans. According to a report released by OpenAI, these accounts are circulating comics depicting the AI industry as profit-driven entities whose power consumption harms the interests of ordinary citizens.
OpenAI states that these ChatGPT accounts related to China are trying to incite opposition among local Americans against data centers by generating English social media posts, spreading the narrative that data centers are driving up electricity costs for Americans. This could be to weaken U.S. competitiveness in the AI field.
FERC’s recent order aligns with the U.S. Department of Energy’s policies aimed at accelerating data center power connections in recent years. A directive put forth by U.S. Energy Secretary Chris Wright last year urged speeding up data center power access to align with the strategic goal of securing a leading position for the U.S. in the global AI technology competition. FERC Chair Laura Swett stated, “This is the most critical priority our nation is facing.”
Grid operators and transmission asset holders are required to respond to FERC within 60 days, explaining the reasonableness of their current rules or their willingness to reform in five major areas, such as creating clear power connection processes for super-sized energy users like data centers, and distributing infrastructure upgrade costs to these large electricity consumers rather than burdening general users.
Notably, FERC explicitly encourages large users to self-generate electricity, including constructing power plants on their own. Additionally, FERC urges grid operators to adopt advanced technology to enhance the operational efficiency of existing transmission and distribution facilities.