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Data Centres: Boom and Backlash
6MAY

Kenya halts $1bn Olkaria over power

3 min read
13:52UTC

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
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