By Chang-Ran Kim

TOKYO, Dec 19 (Reuters) - A city in western Japan plans to launch the country's third and largest data centre cluster with total power capacity of 3.1 gigawatts, a document showed, as the Asian nation races to meet surging demand for artificial intelligence-related services.

Nanto city in Toyama prefecture, near the Sea of Japan, is due to announce the plan with private developer GigaStream Toyama on Friday, according to the document obtained by Reuters.

The project, once completed, will be among the biggest data-centre hubs globally and compares with OpenAI's $500 billion, 10-GW Stargate project.

Demand for data centres is soaring, but establishing a disaster-resilient third Japanese hub to follow those in the population centres of Tokyo and Osaka has proven difficult.

The two regions account for about 85% of Japan's data centres, and the government has said regional diversification is crucial to ease the bottlenecks there.

Nanto is about 250 km (155 miles) from both Tokyo and Osaka and is considered a low-hazard risk area. Toyama is among the prefectures with the fewest large earthquakes, according to the Japan Meteorological Agency.

HYPERSCALE

The first phase of the Nanto Campus would support about 400 megawatts of power capacity, equivalent to some of Japan's largest data centres announced so far and capable of servicing hyperscale operators such as Amazon AMZN.O, Microsoft MSFT.O and Alphabet's GOOGL.O Google.

The site will be ready for service by the end of 2028, according to the public-private plan.

GigaStream Toyama, which focuses on preparing infrastructure for data centre operators - a business model similar to that of U.S.-based Lancium and Tract - plans to begin promoting the Nanto Campus at the Pacific Telecommunications Council conference in Honolulu next month, according to the document.

The company is headed by Daniel Cox, a 25-year veteran in the Japanese real estate investment market.

Officials at Nanto city and GigaStream Toyama declined to comment, saying they would make an announcement soon.

Driven by cloud and AI services, Japan's data-centre market is forecast to almost double to more than 5 trillion yen ($32 billion) in the five years to 2028, according to research firm IDC Japan. The government hopes the sector will help it reach a goal of attracting 120 trillion yen in foreign direct investment by 2030, up from 53.3 trillion yen in 2024.

Unlike in eastern Japan, power is more abundant and generally cheaper in the western region, which is serviced by utilities such as Hokuriku Electric Power 9505.T, Kansai Electric Power 9503.T, Electric Power Development (J-Power) 9513.T and other smaller operators.

Hokuriku Electric, for example, sells less than half of its maximum potential output even without its idled Shika nuclear power plant.

($1 = 155.4700 yen)

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(Reporting by Chang-Ran Kim; Editing by Miyoung Kim and Stephen Coates)

((ran.kim@thomsonreuters.com))