Inside the Stalled Microsoft-G42 Kenya Data Center Deal

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Back in 2024, Microsoft and G42 announced a comprehensive $1 billion initiative with Kenya’s Ministry of Information, Communications, and the Digital Economy during Kenyan President William Ruto’s state visit to the US.

The initiative featured a state-of-the-art geothermal-powered data center campus in Olkaria, in Kenya’s Rift Valley, a major geothermal area near Lake Naivasha.

Moreover, the facility was designed to run entirely on renewable geothermal energy and was promoted as incorporating advanced water conservation technologies, although few technical details were publicly disclosed. The campus was also expected to host Microsoft Azure services for a new East Africa Cloud.

During the announcement of the deal, President Ruto said, “This partnership is bigger than technology itself. It is about the coming together of three countries with a common vision of a nation empowered by technology, where every citizen has the opportunity to thrive in the global digital landscape. It’s about building a future where Kenya flourishes as a digital leader.”

State of the Deal

As of May 2026, the project has stalled due to power capacity, infrastructure, and payment guarantee issues.

Kenya’s total installed electricity capacity is estimated at roughly 3,000–3,200 MW. While the initial phase of the project was expected to consume about 100 MW, discussions around future hyperscale expansion raised concerns over how Kenya’s grid would support substantially larger energy demands. President Ruto publicly noted that a full-scale 1 GW data center could require “switching off half the country.” Even the first phase would place considerable pressure on available geothermal supply and supporting infrastructure in Olkaria.

Although Kenya remains Africa’s leading geothermal producer, available generation capacity, transmission upgrades, and industrial allocation priorities continue to present major challenges for energy-intensive AI infrastructure projects.

Moreover, Microsoft and G42 reportedly sought government guarantees for annual capacity purchases through take-or-pay style commitments. However, the Kenyan government was unwilling to commit at the requested level.

Despite no visible progress on the deal, Principal Secretary John Tanui has maintained that the project has not been withdrawn and that discussions are still ongoing, though it “requires more structuring” around scale, energy supply, and other technical considerations.

The project was widely highlighted as a green initiative powered by reliable baseload geothermal energy, aligning with rising global demand for cleaner AI and cloud infrastructure.

However, questions remain over the specifics of its promised state-of-the-art water conservation measures should the project ultimately move forward.