I’ve been wondering this for a while. With its many volcanoes and hot springs, Japan clearly has the ability to produce electricity from heat underground. It also has some big companies that make the hardware. However, Japan only gets 0.3% of its energy from geothermal sources, making up just 5% of the world’s total and being about the same as the tiny population of Iceland use.
A student of mine works for a Japanese company building a new geothermal plant in Indonesia, and she claimed that the main impediment in Japan is that most good sites are in national parks. An article on the topic on the Economist website mentions that but puts more emphasis on resistance from onsen hot springs owners who are worried that all their hot water might be drained away. While they are a surprisingly powerful lobby in Japan, I think it’s much more likely to be the influence of the power companies, who for some reason have resisted any pressure to produce renewable energy and have had the political clout to make sure no pressure is put on them (the same main reason for nuclear accidents etc).