In May 2024 Microsoft announced what seemed like a historic agreement for Kenya’s technological development. The goal: create a gigantic data center that would be powered by geothermal energy. This center was going to be created in the Olkaria region, but the Kenyan president, William Ruto, has been blunt with Microsoft’s energy claims: to power the total requested 1 GW capacity, the country “would have to shut down half the nation.”
too fair. Kenya has an electrical capacity installed capacity of between 3 and 3.2 GW, with peak demand that already reaches 2.44 GW. Microsoft’s project would consume approximately a third of the country’s total capacity. Even the first phase, which requires a capacity of 100 MW, would take a huge bite out of the production of the Olkaria geothermal complex, which generates about 950 GW in total. Kenya seems to be clear that sacrificing domestic consumption was not worth it when most of the project’s profitability will end up in the hands of a large foreign technology company.
Financial disagreement. In addition to the energy problems, the negotiations have ended up getting stuck in the economic field. According to sources close to the process cited in BloombergMicrosoft and the investment firm G42 have reportedly asked the Kenyan government for a financial commitment. Specifically, payment for a certain amount of capacity each year, something with which the Kenyan leaders did not fully agree.
The project has not been canceled. John Tanui, head of Kenya’s Ministry of Information, explained that his country is still in negotiations with Microsoft and G42, and that the agreement “has not failed or been abandoned. The scale of the data center they needed requires some structuring,” and that includes solving both the energy and economic problems.
A project with a lot of geopolitics behind it. This project was not only a technological milestone for Microsoft and Africa, but also a diplomatic one. It is part of a $1.5 billion deal between Microsoft and Abu Dhabi-based G42, which was designed to counter potential deals on this continent with China. In fact, as a condition for the G42 agreement had to divest its Chinese assets and remove Huawei equipment from their systems. While the project is on hold, however, the Chinese company continues to expand in this region and has recently launched new broadband services over fiber with the largest Kenyan operator, Safaricom.
Bottlenecks everywhere. The case of Kenya is not the only one that is stopping Microsoft’s plans. The company has announced a capex of 190 billion dollars by 2026 that will be invested in data centers, and the company is adding approximately 1 GW of computing capacity each quarter globally. However, about half of the data centers planned in the US this year have been canceled or delayed due to the shortage of electrical infrastructure.
Image | Microsoft
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