Microsoft and G42 to Build $1bn Geothermal Data Center in Kenya

Microsoft Corp. and G42, a leading artificial intelligence firm from the United Arab Emirates, are set to construct a $1 billion geothermal-powered data centre in Kenya. This initiative marks the first phase of a multiyear plan to expand cloud-computing capacity in East Africa.

G42 will spearhead the initial investment and oversee the construction of the facility in Olkaria, a region rich in geothermal resources. This sustainable energy source is crucial for a continent often plagued by power outages and aligns with Microsoft’s climate goals. The first phase of the project, with a capacity of 100 megawatts, is expected to be operational within two years.

The full project is projected to eventually require up to one gigawatt of electricity, according to G42 CEO Peng Xiao. However, the companies have not disclosed the full timeline or total cost of the project.

Microsoft plans to utilise the data centre’s cloud-computing power to establish an East African region for its Azure products, significantly enhancing service delivery in the region. Currently, Kenyan customers rely on data centres located in South Africa. Additionally, the Kenyan government has committed to migrating more of its services to the cloud, a move that Microsoft anticipates will drive overall demand. The data centre will also support AI services and potentially serve neighbouring countries such as Uganda, Rwanda, and Tanzania.

The announcement comes as US President Joe Biden prepares to welcome Kenyan President William Ruto to Washington, highlighting the strategic importance of Africa in global competition. Chinese companies like Huawei have made significant investments in Africa, building data centres and smart infrastructure. In contrast, the US and UAE collaboration aims to strengthen digital technology availability across the continent.

On Friday, Microsoft, G42, and Kenyan officials will sign a letter of intent, facilitated by the US and UAE governments. Microsoft President Brad Smith emphasised the historic nature of this investment for Kenya and the collaborative potential between Microsoft and G42.

Earlier this year, Microsoft agreed to invest $1.5 billion in G42, a deal orchestrated by the Biden administration to limit Chinese access to AI technology. As part of the agreement, G42 ceased its business with Chinese firms, including Huawei, and adopted US technology. Smith has joined G42’s board, and G42 will use Azure for its AI applications.

G42’s expansion into Kenya is part of the UAE’s broader strategy to increase its geopolitical influence in Africa. The UAE has pledged approximately $100 billion in investments across the continent over the past two years. G42’s involvement in Kenya includes developing AI models for agriculture and language processing for Swahili and other African languages. Additionally, Microsoft’s cybersecurity division will enhance regional security and aim to provide wireless broadband to 20 million Kenyans by the end of next year.

“This investment will take several years to yield positive financial returns,” Xiao said. “But our commitment is driven by the long-term potential of establishing a strong presence on the continent.”