(Bloomberg) — An Nvidia Corp.-backed cloud services firm is planning to establish a new data center in Japan, with one key condition: there must be nuclear power available in the vicinity.

Ubitus K.K., which operates out of Tokyo, aims to acquire land in Kyoto, Shimane, or a prefecture located on Japan’s southern island of Kyushu. This is primarily due to the nuclear power availability in these areas, as discussed by Chief Executive Officer Wesley Kuo in an interview on Thursday. The company, which already operates two gaming data centers, intends to build a third that will cater to generative artificial intelligence, according to Kuo.

“Unless we have other, better, efficient and cheap energy, nuclear is still the most competitive option in terms of cost and the scale of supply,” Kuo remarked, pointing out that renewable energy sources like solar and wind are too variable. “For industrial use — particularly with AI — they require a steady, high-capacity supply.”

Ubitus, which secured funding from Nvidia earlier this year, is part of a growing movement among tech companies seeking to reinvigorate the use of nuclear energy globally. The increasing demand for emissions-free and reliable electricity spurred by AI and data centers has driven this trend. Major firms such as Amazon.com Inc., Alphabet Inc.’s Google, and Microsoft Corp. have all recently made strides to gain access to atomic energy.

Securing nuclear power in Japan proves to be a complex endeavor, particularly in light of the sensitivities surrounding the 2011 Fukushima disaster and the rigorous regulatory framework established following the incident. Presently, the nation has 33 reactors that are commercially operable, though many of them remain inactive.

According to Kuo, Ubitus is looking to identify a location for its new data center in the first quarter of next year. He has already explored potential sites in Kyoto and Shimane and intends to visit Kyushu as well. The company currently manages two gaming data centers in Japan in collaboration with Nippon Telegraph & Telephone Corp.

Establishing a data center in these regions would provide access to a power grid offering cheap and stable electricity, courtesy of the nuclear facilities, Kuo explained. This strategy differs from that of US tech giants, who have been more inclined to secure power purchase agreements directly from nuclear plants or to invest in building their own facilities.

In Japan, areas with nuclear power plants such as the western Kansai region and Kyushu typically enjoy lower electricity rates.

Kyoto is situated near several nuclear power plants operated by Kansai Electric Power Co., whereas Kyushu hosts four units managed by Kyushu Electric Power Co. Chugoku Electric Power Co. is set to restart its Shimane No. 2 reactor in December.

The cloud-based gaming services provider was initially established in Taiwan in 2007, and it has since relocated to Tokyo, forming partnerships that include Nintendo Co. Its current data centers are found in Tokyo and Osaka to stay in proximity to gaming clients. According to Kuo, for generative AI, the focus shifts more towards the capacity of energy supply and the cost of electricity.

Ubitus is targeting a power-receiving capacity of 2-3 megawatts for its new data center during the initial phase of operation, with intentions to possibly scale up to 50 megawatts in the future.

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