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Data Centres: Boom and Backlash
18OCT

Kenya halts $1bn Olkaria over power

3 min read
13:11UTC

Kenya suspended the $1bn Microsoft-G42 geothermal data centre at Olkaria, after President Ruto warned the full build would mean switching off half the country.

IndustryDeveloping
Key takeaway

Kenya suspended a $1bn data centre because one campus would consume a third of its national power.

Kenya's government suspended the $1 billion Microsoft-G42 geothermal project at Olkaria in the Rift Valley, a hold that surfaced in early May. President William Ruto put the reason plainly: at full scale the campus would draw so much power that, in his words, "building it would mean switching off half the country".⁠1

Olkaria's full 1 GW target would draw roughly a third of Kenya's entire installed capacity of about 3 GW. Microsoft, the project's hyperscaler partner, and G42, the UAE artificial-intelligence firm co-developing it, were not blocked by planning objections or activist pressure but by the raw size of the load against a small national grid.

Geothermal is about as clean and dispatchable as electricity gets, running steadily day and night without the weather dependence of wind or solar. Kenya still could not host the campus, which is the point worth holding: the thing freezing data-centre expansion is rarely how dirty the power is, and almost always how much of it a single campus demands against the capacity already in place.

The pattern crosses hemispheres. When Johor in Malaysia paused approvals after a water-rights protest, the binding limit was resource and grid capacity rather than generation type. Kenya reached the same ceiling from the opposite direction, with clean power in the ground and simply not enough of it to spare.

Deep Analysis

In plain English

Kenya's government stopped a $1 billion joint project between Microsoft and the UAE technology company G42 to build a large data centre powered by geothermal energy in Kenya's Rift Valley in May 2026. The site, called Olkaria, sits above one of the world's most powerful natural heat sources, where underground steam can generate electricity cheaply and cleanly. At full build the project would need 1 gigawatt of power, which is about one-third of everything Kenya currently generates across the entire country. President William Ruto said building it at full size would mean switching off half the country to divert power to the campus. The project is not cancelled but suspended: Kenya and the developers need to either shrink the project or wait for Kenya's national grid to grow large enough to support it.

Deep Analysis
Root Causes

Olkaria's geothermal resource rank among the ten most productive geothermal zones on earth, which is precisely why Microsoft and G42 chose it. The resource quality attracted a project scale, 1 GW, that reflects the resource rather than the grid it connects to.

Second, Kenya Power's transmission infrastructure was built for a national peak demand of approximately 2.2 GW, with the 3 GW installed capacity figure reflecting nameplate generation rather than deliverable capacity to all load points.

A 1 GW data-centre campus in the Rift Valley would require transmission reinforcement along corridors built in the 1980s and 1990s for a fraction of that load. The $1 billion project cost did not include the grid reinforcement bill, which Kenya Power and the government would absorb.

What could happen next?
  • Risk

    Hyperscale operators targeting African geothermal and solar resources face a structural grid-capacity ceiling in every Sub-Saharan market: national installed capacity averages 3-8 GW, making 1 GW projects nationally significant rather than locally significant.

  • Opportunity

    A staged 150-200 MW build at Olkaria would stay within Kenya Power's incremental capacity addition programme and could generate around $150 million in annual electricity revenue for the national utility, a viable model for sub-1 GW African data-centre investment.

First Reported In

Update #6 · Oregon bills data centres, not homes

Data Center Dynamics· 10 Jun 2026
Read original →
Different Perspectives
Nexus Core Systems
Nexus Core Systems
Hired FiveNines Group, in a deal announced on 8 October, for early design, feasibility and permit work on a 20 MW AI data centre near Casablanca. It is the first named site of a planned 180 MW programme, still at concept design.
MC Digital Realty
MC Digital Realty
Began building the 24 MW KIX15 data centre in Osaka Prefecture on 7 October, due to open in the fourth quarter of 2028. The joint venture of Digital Realty and Mitsubishi Corporation says it will then run 10 data centres in Japan with about 220 MW of IT capacity.
KT Cloud
KT Cloud
Said on 7 October that it and Hyundai Engineering will build a 50 MW AI data centre at Cheongna, Incheon, from the fourth quarter of 2026. Completion is due in the first quarter of 2030, part of KT Cloud's target of more than 1 GW of AI capacity by 2031.
Town of Trebbin
Town of Trebbin
Said on 7 October that work has begun on two data-centre buildings and a substation under building permits already granted. The operating permit under the Federal Immission Control Act is still with Brandenburg's environment agency, so the town postponed its public presentation.
Óscar López, Digital Transformation minister
Óscar López, Digital Transformation minister
Said in Madrid on 8 October that he hopes to approve the data-centre royal decree shortly, with urgent processing to reach the cabinet before the 29 November election. He said the final text will take the more than 600 submissions into account, without saying what changes.
Hydro-Québec
Hydro-Québec
Defended its proposed Tarif CD before the Régie de l'énergie du Québec from 1 to 9 October, a rate for data centres of 5 MW or more that adds a premium when peak demand stays below 60% of forecast. Industrial consumers filed their own wording for the clause on who the rate covers.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.