BloombergNEF's Long-Term Energy Outlook 2026 for Japan points out that electricity demand will rise as data centers and EVs spread in Japan, making investment in grid reinforcement and other areas essential. It examines the feasibility of the government's decarbonization targets and provides detailed coverage of energy security.
Japan's future electricity demand is expected to turn upward as data centers and electric vehicles expand. Meeting this demand will require large-scale investment, including grid reinforcement, with total investment of $389 billion (approximately ¥60 trillion) expected over the period from 2026 to 2050. Renewing existing facilities is expected to account for more than half of the total, while grid reinforcement is expected to account for approximately one-third, although the specific funding arrangements remain unclear.
The report says total demand in 2050 will remain below 1000 TWh, while citing demand growth driven by the spread of AI and electrification. Demand from data centers and EVs is each expected to increase by more than 100 TWh. Heat pumps will support demand, but the impact of declines in industry and buildings and a shrinking population is expected to limit the overall net increase to approximately 95 TWh.
From an energy-security perspective, the report estimates that energy and commodity imports under the ETS (Energy Transition Scenario) amounted to approximately $167 billion in 2024, equivalent to approximately 4% of GDP, and are expected to decline to $111 billion by 2050, a decrease of approximately 33%. Under the NZS (Net Zero Scenario), meanwhile, fossil-fuel imports will fall sharply to $31 billion, approximately 82% below 2024 levels.
The report also forecasts that CO2 reductions under the ETS will remain at approximately 32% to 33% in 2050, emphasizing the thorough deployment of renewable energy and grid reinforcement as the path to decarbonization. Extending the life of coal-fired power plants and replacing nuclear power facilities would require enormous subsidies, while Japan's relatively low level of renewable-energy investment is identified as a challenge.