A planned $1 billion artificial intelligence data center in Kenya, spearheaded by Microsoft and Abu Dhabi-based AI firm G42, has stalled due to disagreements over energy guarantees. The project has encountered delays after the Kenyan government declined to meet Microsoft’s demand for guaranteed annual capacity payments. Highlighting the immense energy requirements of the facility, Kenyan President William Ruto noted that powering the full-scale project would necessitate shutting off half of the country’s existing electricity supply.

The initiative, initially announced in May 2024, aimed to construct a geothermal-powered facility in the Olkaria region of Kenya’s Rift Valley. The data center was intended to host Microsoft Azure services for a new East Africa cloud region. The initial phase was designed for 100 megawatts (MW) of capacity, with long-term plans to scale the facility to 1 gigawatt (GW).

However, the energy demands present a significant infrastructure challenge. Kenya’s total installed electricity capacity ranges between 3,000 MW and 3,200 MW, with peak national demand reaching 2,444 MW. Consequently, a 1 GW data center would consume approximately one-third of the nation’s total capacity. Even the initial 100 MW phase would require a substantial portion of the Olkaria geothermal complex’s total 950 MW output.

Despite the current standstill, John Tanui, principal secretary at Kenya’s Ministry of Information, stated that negotiations are ongoing and the project has not been withdrawn, though it requires further structuring. A separate 60 MW data center project involving local developer EcoCloud also remains under discussion.

The Kenyan facility was intended to be the first joint venture between Microsoft and G42 following Microsoft’s $1.5 billion investment in the Abu Dhabi firm. This partnership requires G42 to divest from Chinese holdings and remove Huawei infrastructure. Meanwhile, Huawei continues to expand its African footprint, recently launching a new fiber broadband service with Safaricom, Kenya’s largest telecom operator. Currently, Africa accounts for roughly 1% of global data center capacity.