Digital Realty subsidiary Teraco has commenced construction on a 120MW utility-scale solar PV power plant in Free State, South Africa.
Teraco will use the plant's capacity to power its data centers in the country as part of a broader strategy to form its own low-carbon energy base to support client cloud and artificial intelligence computing applications.
“This represents a unique holistic approach since Teraco plans to not only own its data centers but also to power them with a renewable energy source, creating a sustainable path to growth,” said Jan Hnizdo, CEO at Teraco.
The plant is projected to reach operational status in late 2026. Teraco has partnered with JUWI and Subsolar to develop the plant, with JUWI appointed to design and manage the procurement, construction, and commissioning.
Teraco acquired grid capacity allocation from South African electricity public utility Eskom in February and the wheeling arrangements between Eskom and the municipalities of Ekurhuleni and Cape Town in the interim period.
The wheeling agreement, which permits power to move from renewable energy producers in outlying areas via existing transmission and distribution systems to end users in urban areas, is the first of its kind in South Africa.
Teraco has eight data centers in the country, seven operational and one in development. They are spread across Cape Town, Durban, and Johannesburg. In November 2023, the firm completed an expansion project at its DB1 facility in Durban, doubling its capacity to 2.2MW.
In addition, Teraco has agreed to upgrade Eskom’s transmission infrastructure to support its ability to transmit the power produced across the national grid successfully.
Eskom has been undergoing a period of reform in 2024 to modernize its ailing grid infrastructure. It recently signed a memorandum of understanding (MoU) with Infrastructure South Africa (ISA) to boost investment and accelerate infrastructure development. As part of the MoU, ISA will assist Eskom in developing business cases that align with the utility’s projects. At the same time, Eskom will identify high-impact projects from its development pipeline that need financing.
The construction start also closely follows the South African Government's announcement that data center operators should reduce their reliance on the grid and start “self-provisioning” energy.
The government's push is an attempt to support the country's nascent power purchase agreement (PPA) and renewable sectors.
Several data centers have signed PPAs in the country to power their operations. For example, in March 2023, Africa Data Centres signed a 20-year PPA with Distributed Power Africa to supply 12MW of renewable energy to power its operations.
However, the sector remains firmly in its infancy. The South African grid is much-maligned, with dwindling and aging infrastructure that has led to regular load-shedding - where parts of the country are taken off the grid for a designated period of time - for most of the decade.
The country also remains highly reliant on coal, representing 85 percent of its energy mix, which is expected to continue to provide the majority of power for the next decade.
