Plans from Microsoft and UAE-based G42 to establish a data center in Kenya have hit a roadblock.

As reported by Business Insider Africa, the project has been stalled due to a lack of available power capacity.

Kenya's President William Ruto said in Nairobi last week that the scale of the project would significantly impact the country's power grid. The proposed data center's 1GW capacity would be a third of the country's 3GW supply.

Ruto said: “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." President Ruto is currently aiming to increase Kenya's power capacity to 10GW by 2030, and is seeking $38bn in funding for energy and infrastructure expansion.

Microsoft and G42 first proposed the data center in May 2024, planning $1 billion in investment. The data center would be based in Olkaria, south-west Kenya, and target an initial 100MW of capacity powered by geothermal energy. Originally, the companies said it would be up and running in the next two years.

In addition to being planned to run on geothermal energy, Microsoft said it would feature “state-of-the-art water conservation technology."

Government officials told Business Insider that a concept note for the project submitted to the National Treasury failed to receive clearance, and by August 2025, it was clear the project wouldn't meet its May 2026 launch date.

Update -

A new report from Bloomberg suggests that the issues are instead related to negotiations about a capacity contract from the Kenyan government led to the project breaking down.

Citing people familiar with the matter, Bloomberg reports that Microsoft and G42 had asked the government to commit to leasing a certain amount of capacity annually, but the government was unable to meet the commitment requested, and thus talks broke down.

The project is still in discussions, according to Bloomberg, but may be scaled back.

Original story resumes -

DCD has contacted Microsoft and G42 for comment.

The data center was also part of Microsoft's plans to launch an East Africa cloud region to “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.” Also targeting a May 2026 launch, no such region is listed on Microsoft's website at the time of writing.

While the Microsoft data center is halted, other projects are proceeding in the country, though at a much smaller scale. Airtel's Nxtra is constructing a 44MW data center in Tatu City, a special economic zone outside Kenya’s capital, Nairobi. EcoCloud broke ground on the 'Project Eagle' geothermal-powered data center at the KenGen Green Energy Park in Olkaria in 2023. Existing data centers are mostly located around Nairobi, with operators including Safaricom, iXAfrica, and Digital Realty.