Quick Facts
- Microsoft’s planned 1 gigawatt data center would consume roughly one-third of Kenya’s total power capacity of 3,200 megawatts
- The project stalled after Kenya could not guarantee annual capacity payments Microsoft required
- Kenya’s peak electricity demand hit a record 2,444 megawatts in January 2026, leaving little room for major new consumers
Microsoft’s $1 billion artificial intelligence data center project in Kenya remains stalled after the government said meeting the facility’s power requirements would force the country to cut electricity to half its population.
The project, a partnership between Microsoft and Abu Dhabi-based AI firm G42, broke down when the Kenyan government failed to meet Microsoft’s demands for guaranteed annual capacity payments. The companies asked Kenya to commit to purchasing a fixed amount of computing capacity each year, but talks collapsed when officials could not meet the required threshold.
President William Ruto told reporters the power demands made the project impossible. “We would need to switch off half the country for the data center to be powered,” 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.”
Kenya’s total installed electricity capacity sits between 3,000 and 3,200 megawatts. The data center’s first phase targeted 100 megawatts, with plans to scale to 1 gigawatt. At full capacity, the facility would consume roughly one-third of the country’s total power generation.
The facility was planned for the Olkaria geothermal region in Kenya’s Rift Valley, about 100 kilometers northwest of Nairobi. G42 was set to lead construction, with the facility running Microsoft Azure services in a new East Africa cloud region.
John Tanui, Kenya’s Ministry of Information Principal Secretary, said the project remains under discussion. “It is not failed or withdrawn,” Tanui said, noting power requirements are still being structured. Microsoft and G42 may ultimately scale back the project, according to reports.
The stalled project highlights infrastructure constraints facing AI data center expansion in emerging markets. Microsoft is spending $190 billion on capital expenditures in 2026, adding approximately 1 gigawatt of data center capacity every three months globally. Nearly half of planned U.S. data center builds this year have been delayed or canceled due to electrical infrastructure shortages.
The original deal, announced in May 2024 during President Ruto’s visit to Washington, was partly structured to counter China’s growing digital presence in Africa. Microsoft invested $1.5 billion in G42 in April 2024 for a minority stake.
Kenya accounts for more than three-quarters of fresh data center capacity expected in East African markets by 2030, while Africa currently hosts roughly 1% of the world’s data center capacity.
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