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Microsoft's massive Kenya AI data center would require switching off 'half the country' to meet power requirements, government says — $1 billion project stalls over capacity disagreements and lack of infrastructure
A $1 billion data center that Microsoft and Abu Dhabi-based AI firm G42 planned to build in Kenya has stalled after the Kenyan government failed to meet Microsoft's demand for guaranteed annual capacity payments, Bloomberg reported Sunday. Kenyan President William Ruto put the scale of the project's power requirements into clear terms at a recent state event in Nairobi, saying the country would need to "switch off half the country" to keep the facility running.
The project, announced in May 2024 during Ruto’s visit to Washington, was supposed to bring a geothermal-powered data center to the Olkaria region in Kenya's Rift Valley. G42 was to lead construction, with the facility running Microsoft Azure in a new East Africa cloud region. The first phase targeted 100 megawatts of capacity and was expected to be operational by this year, with a long-term goal of scaling to 1 gigawatt.
President Ruto isn’t exaggerating about shutting off half the country’s power. Kenya’s total installed electricity capacity sits between 3,000 and 3,200 megawatts, and peak demand reached a record 2,444 megawatts in January, according to data from KenGen, the country’s government-owned electricity producer.
The full 1 gigawatt build would therefore have consumed roughly a third of the country’s total capacity, and even the first 100 megawatts would have required a significant share of the Olkaria geothermal complex's output, which currently generates around 950MW across all its plants.
John Tanui, principal secretary at Kenya's Ministry of Information, told Bloomberg that the project hasn’t been withdrawn and that talks are continuing, adding that the “scale of the data center they [Microsoft] wanted to do still requires some structuring.” A separate 60-megawatt project with local developer EcoCloud is also still under discussion.
Kenya’s Microsoft campus was set to be the first facility that Microsoft and G42 built together after Microsoft invested $1.5 billion in G42 back in 2024. That deal followed G42's agreement to divest from Chinese holdings and strip Huawei equipment from its systems under pressure from Washington. Microsoft President Brad Smith joined G42's board as part of the arrangement and described the Kenya project at the time as the “single biggest step forward” for digital technology in the country's history.
Meanwhile, Huawei is expanding its presence in Kenya, having launched a new fiber broadband service with Safaricom, Kenya’s largest telecom operator, last week. Africa currently hosts roughly 1% of the world's data center capacity.
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Microsoft is spending $190 billion on capex in 2026, and the company adds approximately 1 gigawatt of data center capacity every three months globally. But power constraints are proving to be a universal bottleneck: nearly half of planned U.S. data center builds this year have been delayed or canceled due to shortages of electrical infrastructure.
Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.
Planning on using 1/3 of the total power capacity of a country sounds like it should have had some consideration by people other than yes men.
If my whole village had its power cut for the foreseeable future because of chatbots and meme generators id be pissed.
Hopefully most of the other data centers planned have more realistic plans in place.
Makes you wonder if the hyperscalers have reasonably considered the economic viability of these things.
Interesting that the Kenyan government is bringing this up. In the U.S. the locals would have forced a referendum that would have resulted in 90% of the voters saying "No!" and it would get built anyway.
Data center developers are so greedy and shortsighted that they'd happily build a huge data center on Peurto Rico or Cuba if they could do it cheaply... and officials would approve it because they want the money more than they want reliable electricity and water. The situation in Kenya is the same. Chatbots and electronic hallucinations over people.
We need to start treating AI less like the modern equivalent to the 1950's and 1960's space race and more like the duffel bag full of someone else's gambling money that it is.
Interesting that the Kenyan government is bringing this up. In the U.S. the locals would have forced a referendum that would have resulted in 90% of the voters saying "No!" and it would get built anyway.
This describes the "AI bubble / "damn the torpedo, full speed ahead" plans in the US perfectly!! 👍
I'm not sure if the politicians or the venture capitalists are more short sighted. In one possible scenario the AI buildout would also build so much power infrastructure that average consumer use would be so small in comparison it could be provided for free.
Said another way, technological innovation is not supposed to be a zero sum game played through the financial reallocation of existing resources.
Curious as to how Democrat run States are going to handle this. They want/need the tax revenues, However, Most are shutting down coal and nuclear power plants which are the only way to sustain such power needs for data centers. I don't think wind mills and solar farms are going to cut it.
