Microsoft and G42 Scrap Kenya Data Center Plans Over Power Grid Constraints
May 7, 2026
Microsoft and G42 Scrap Kenya Data Center Plans Over Power Grid Constraints
A major data center project in Kenya, jointly planned by Microsoft and UAE-based technology firm G42, has stalled due to insufficient power capacity in the country’s national grid. The setback highlights the growing tension between hyperscale data center expansion and energy infrastructure limitations in emerging markets.
First announced in May 2024, the $1 billion facility was intended to be located in Olkaria, southwest Kenya, and was initially designed to operate at 100MW of capacity using geothermal energy. However, the project’s full envisioned scale reached 1GW—equivalent to roughly one-third of Kenya’s total national power supply of 3GW. Speaking in Nairobi last week, Kenyan President William Ruto acknowledged the challenge, stating: “To switch on that one data center, we would need to shut off power for half the country. That’s when I knew there was a problem.” Ruto is currently pursuing an ambitious goal of expanding Kenya’s power capacity to 10GW by 2030 and is seeking $38 billion in funding for energy and infrastructure development.
According to reports from Business Insider Africa, the project failed to receive clearance from Kenya’s National Treasury after a concept note was submitted. By August 2025, it had become clear that the data center would not meet its original May 2026 launch target. Government officials indicated that the scale of the power demand was a key factor in the project’s derailment. In addition to its geothermal energy plans, Microsoft had said the facility would incorporate “state-of-the-art water conservation technology.”
The data center was part of Microsoft’s broader strategy to launch an East Africa cloud region, which was also targeting a May 2026 launch. Microsoft had said the region would “provide customers access to scalable, secure, high-speed cloud and AI services to accelerate cloud adoption and the digital transformation of businesses, customers, and partners across Kenya and East Africa.” However, as of now, no such region is listed on Microsoft’s website. DCD has contacted both Microsoft and G42 for comment but has not yet received a response.
While the Microsoft-G42 project is halted, other smaller-scale data center developments continue in Kenya. Airtel’s Nxtra is building a 44MW facility in Tatu City, a special economic zone near Nairobi. EcoCloud broke ground on the geothermal-powered ‘Project Eagle’ data center at the KenGen Green Energy Park in Olkaria in 2023. Existing data centers in the country are mostly clustered around Nairobi, operated by companies including Safaricom, iXAfrica, and Digital Realty. The stalled Microsoft project underscores a critical bottleneck for hyperscale cloud expansion in Africa: without parallel investment in national power grids, even the most ambitious digital infrastructure plans may remain unplugged.
Source: datacenterdynamics
