Plans to place computerized data centers are drawing protests from residents in many parts of Japan, who aren't happy about their nondescript facades nor see any benefits from hosting them. 

The demand for data centers (DCs) is growing exponentially amid advances in artificial intelligence, among other factors.

Data centers proving unpopular among locals seem puzzling, given that these establishments provide perks, such as increased tax revenue, for regional communities.

Turning to those advantages, Inzai, Chiba Prefecture, outside Tokyo, has been recruiting data center operators so aggressively that the city is known by the nickname “DC Ginza” in tribute to the busy Ginza shopping district in the capital.

A tour of one of Japan’s leading data center clusters, as well as its surrounding municipalities, provides a look at the enigmatic situation facing the essential facilities in an era of information technology.

Inzai city saw a spate of data center building projects get under way rapidly during the 2010s. It is currently lined by a total of 30 such establishments operated, for example, by the U.S. Google LLC and an affiliate of Amazon.com Inc.

The municipality attracted considerable attention among business operators because it is particularly resistant to flooding and other natural disasters, thanks to its stable ground. Likewise helpful was the city’s prime location, easily accessible from central Tokyo and Narita Airport.

Construction is still progressing in locations across Inzai, with the number of data centers projected to reach 45 or so by 2028.

TAX INCOME MORE THAN DOUBLES OVER DECADE

Inzai city has been fully reaping the benefits of accommodating data centers.

Data centers are subjected to a higher permanent asset tax rate than logistics warehouses and similar facilities, since taxation applies to the servers densely arranged on respective floors, in addition to the land and buildings.

Servers used at data centers are costly, in particular. They need to be replaced every few years to keep pace with technological advances, helping stabilize tax revenues for host municipalities.

Proceeds from permanent asset taxes were 16.5 billion yen ($105 million) for Inzai city in fiscal 2024, more than double the 7.9 billion yen recorded 10 years ago.

Former Inzai Mayor Masanao Itakura, who led the municipal initiative to attract data centers, recounted how their existence has contributed to an improved quality of life for citizens.

“A lot of public services, inclusive of providing free meals to students at elementary and junior high schools, were made possible owing to the financial support from tax yields from data centers,” Itakura said.

However, land redevelopment in Inzai is already approaching its limits.

Home to a plethora of data centers, the Otsuka district in front of Chiba Newtown Chuo Station is fully occupied by existing and planned establishments.

The DPDC Inzai Park, which sits north of Inzai-Makinohara Station, no longer has any vacancies, and the same is true for the other major data center site, the Matsuzaki industrial complex, in southern Inzai.

The specialized premises suitable for setting up data centers for industrial purposes in urbanization-restricted zones are now occupied virtually to the fullest.

MASSIVE POWER USE

The local energy supply grid is similarly constrained and burdened.

TEPCO Power Grid Inc. stated that the Inzai area has gone through two rounds of substation enhancement in anticipation of rising electricity demand at data centers there.

The current energy supply capacity comes to 1.7 gigawatts, enough to power 480,000 average households. This figure is a result of an unprecedented investment in the city with a population of only 110,000.

The energy distribution still falls short of actual needs.

TEPCO Power Grid is looking to hike capacity by an additional 0.6 gigawatt by fiscal 2027. Even with this boost, the available power will be insufficient to meet the estimated total consumption of existing and envisioned data centers.

The utility is considering further investment, yet a public relations representative of TEPCO Power Grid acknowledged that the process “is believed to take some time.”

An executive of the operator of a data center in Inzai noted that more businesses are currently looking outside the city.

“Although few locations are better suited than Inzai, adequate sites are scarce, making it unrealistic to plan new construction projects going forward,” said the senior official. “Operators are increasingly turning their attention en masse to regions outside Inzai.”

LOOK BEYOND INZAI

Having lost sight of the “most appropriate site” for them, data center firms are setting their eyes on regions around Inzai, provoking a hostile reaction from residents at times.

A program was unveiled in 2022 toward putting a data center in Nagareyama in Chiba Prefecture.

Featuring four stories above ground and one basement, the facility was expected to boast an overall floor space of 34,000 square meters on commercial land near the city hall.

People living in the neighborhood did not roll out the red carpet for the massive building, as data centers offer almost no local jobs and contribute little to the vitality of the regional communities.

One opponent in Nagareyama thus noted the planned establishment could simply “create an oppressive atmosphere when seen from Nagareyama Station.”

Another voiced opposition, insisting, “It is easy to imagine that a data center (near a residential area) would be deemed as an unwelcome facility” among citizens.

The third-party committee set up by Nagareyama city held a mediation meeting, only to find that the developer had dropped the plan in 2024.

“The data center was not even anticipated” by residents, pointed out a representative from the city planning division of Nagareyama. “They may have thought of the large, sparsely windowed building, with effectively no people coming or going, as unsettling.”

The previous candidate site for the data center is reportedly undergoing the construction of an apartment and a commercial facility for now.

Residents of Shiroi, Chiba Prefecture, are alike raising objections, as more than one data center building program has been proposed there. They claim that this type of facility could “cast shadows and infringe on their right to sunlight.”

Even in Inzai, the leading host city, Mayor Kengo Fujishiro has questioned an endeavor to install a data center in a prime location in front of Chiba Newtown Chuo Station on the Hokuso Line.

Fujishiro wrote on his social media account: “An establishment appropriate to the community should be developed there--not a data center at this time.”

Locals have launched a drive to stop the facility as well.

It is, however, extremely difficult for residents and authorities to pressure data center operators to give up their construction in succession.

Unlike factories and cemeteries, data centers are free from regulations on construction and installation from the perspective of emissions, noise and negative public health effects.

With no apparent disadvantages to surrounding areas anticipated, data centers are therefore treated as “offices” in legal terms.

Keeping this background in mind, a municipal official expressed concerns, saying, “Stopping a building program is impossible as long as the procedures are legal. Resorting to excessive tactics could instead expose us to lawsuits.”