Japan, endowed with the world's third-largest geothermal resources, is actively seeking to expand its geothermal energy sector as part of its broader decarbonisation strategy. Despite this potential, geothermal energy currently contributes only a small fraction to the nation's real-time energy mix, says the country’s leading English language daily, The Japan Times.

As of the end of 2023, Japan's installed geothermal power capacity was approximately 576 MW but was climbing rapidly, at the time placing it 10th globally in geothermal capacity rankings. This figure had remained relatively stagnant since 1995, indicating limited growth over the previous 30 years, and as the number of operational geothermal power stations decreased slightly from 16 in 2020 to 14 in 2023, some saw geothermal installations as faltering.

Notably, however, in May 2024, ORIX Corporation commenced operations at the Minami-Kayabe geothermal power plant in Hokkaido, which, at 6.5 MW, is Japan's largest binary cycle geothermal facility at present.

As a result, installed geothermal capacity in Japan increased to 601 MW at the end of 2025, according to Think GEOENERGY.

Community engagement

Approximately 80% of the country's geothermal resources are located within national parks, where strict environmental regulations have historically limited development. Moreover, there is resistance from the centuries old onsen (hot spring) industry, which fears that geothermal development could adversely affect hot spring water quality and availability EIS Insight reports. Whether or not this ultimately proves correct, and as experts spoken to by AsiaElec indicate is highly unlikely if not nigh on impossible, Japan’s cultural links to onsen which date back to prehistory according to ancient tales, are not links to be taken lightly.

Onsen have long been a part of the daily lives of Japanese, and are seen as so integral to the culture as likely to trump any ‘new-fangled’ technological ideas in the eyes of many – younger Japanese included.

To address these concerns, the government is now promoting next-generation geothermal technologies, such as "closed-loop" systems, which extract heat without affecting underground water sources, thereby minimising environmental impact and alleviating concerns of hot spring operators.

Government policy and initiatives

These concepts are helped by recent policy moves and new initiatives put in place by Tokyo. Recognising the untapped potential of geothermal energy in recent years as the country struggled to supply power following the 2011 Fukushima nuclear disaster and subsequent mothballing of many of Japan’s nuclear power stations, the Japanese government has set ambitious targets to increase geothermal’s share in the national energy mix even as the highly influential onsen industry looks on.

The Ministry of Economy, Trade, and Industry (METI) aims to elevate geothermal energy's contribution to 1% by 2030 and up to 2% by 2040. But with an estimated total capacity potential of around 23 GW, the third largest amount in the world after the US and Indonesia by some estimates, albeit lower than Taiwan now on the back of recent estimates, this number will climb rapidly.

To facilitate this, METI now plans to introduce new support measures, including financial incentives for small and medium-sized geothermal projects and the establishment of agreements between local authorities, power companies and residents to streamline project development. Tokyo is also increasing subsidies for geological surveys and covering initial drilling costs through the Japan Organization for Metals and Energy Security (JOGMEC) to mitigate financial risks for companies.

Locally, one prominent example of a project already in place is the Matsuo-Hachimantai Geothermal Power Plant in Iwate Prefecture north of Tokyo. Operational since 1995, this facility generates around 50 MW of electricity – enough to power over 100,000 households. The plant utilises steam drawn from deep underground reservoirs, channelling it directly into turbines to produce electricity. This system operates continuously, providing a stable baseload power supply that is unaffected by weather conditions, unlike solar or wind which are also being developed in the area.

In Kyushu, Japan’s southernmost main island the Otake and Hatchobaru geothermal plants, managed by Kyushu Electric Power (KEPCO), stand as long-serving examples of geothermal efficiency in the country. Hatchobaru, Japan’s largest geothermal plant, generates over 110 MW and features a binary cycle system to extract additional power from lower-temperature fluids – a technology that improves efficiency and reduces environmental impact.

Meanwhile, back in northern Japan on the main island of Honshu – in Akita Prefecture – the Sumikawa Geothermal Plant, located on the outskirts of a national park, has demonstrated that geothermal projects can coexist with environmental protection efforts. With a capacity of 50 MW, it uses reinjection techniques to return spent geothermal fluid to underground reservoirs, preserving natural balance and preventing land subsidence; all concepts that worry onsen owners around the country.

Despite challenges such as regulatory restrictions and local opposition, these plants show that geothermal power beyond onsen tourism has a role to play in Japan’s path to energy resilience and carbon neutrality in the future.

Good intentions and government initiatives aside, however, Japan's geothermal energy sector stands at a crossroads on the back of actual utilisation remaining limited due to regulatory, environmental and societal challenges. However, with renewed government commitment, technological advancements and more and more local companies engaging local communities, there is a concerted push to overcome these obstacles and harness geothermal energy as a stable and sustainable component of Japan's energy future.