Kenya Suspends $1 Billion Microsoft Data Centre as Power Shortfall Halts Construction

Kenya has suspended the development of a $1 billion hyperscale data centre, a flagship project intended to be built in partnership with Microsoft and the United Arab Emirates-based artificial intelligence firm G42. The decision follows a public admission by President William Ruto that the country currently lacks the electricity generation capacity required to sustain a facility of this magnitude.

First announced in May 2024, the project was envisioned as a major step for the regional digital economy, aiming to provide cloud services through Microsoft’s Azure platform. However, the scale of the facility has proven incompatible with the existing national grid. President Ruto, speaking in Nairobi, noted that the data centre would require approximately 1,000 megawatts (MW) of power at full scale.

This requirement represents nearly one-third of the country's total installed capacity, which currently stands at roughly 3,000 MW. President Ruto stated that switching on the facility under current conditions would necessitate cutting off power to half the country. The project was originally slated to be operational by May 2026, but progress had already slowed significantly by late 2025.

Beyond the energy constraints, administrative and financial hurdles have contributed to the suspension. A concept note prepared by the Ministry of Information, Communications and the Digital Economy was reportedly submitted to the National Treasury but failed to secure the necessary funding approvals. This lack of fiscal clearance effectively halted further movement on the project.

Internal government reports from August 2025 had already indicated that the May 2026 completion target would be missed. While the initial phase of the project was expected to draw around 100 MW from the Olkaria geothermal fields, the ultimate vision for a 1-gigawatt (GW) site highlighted the structural limitations of Kenya's infrastructure.

Construction at the Olkaria site has not commenced, and the original timeline for the first phase of operations has now lapsed. In addition to power supply issues, negotiations reportedly faced complications regarding annual payment guarantees sought by the investors. The government was unable to agree on the level of financial commitments requested to underwrite cloud demand.

Ambassador Philip Thigo, a special technology envoy, later suggested that the President's remarks were intended to highlight the urgency of expanding energy infrastructure rather than a permanent cancellation. He emphasized that the government remains committed to scaling national capacity to 10,000 MW by 2030 to eventually accommodate such energy-intensive investments.

The suspension serves as a reminder of the gap between digital ambitions and the physical infrastructure required to support them. For now, the focus shifts toward upgrading the national grid and expanding generation to meet the high-power demands of the global technology sector.