Doha:MENA The Cabinet's Information and Decision Support Center (IDSC) recently reviewed the challenges associated with financing electricity infrastructure for data centers in Africa. The review focused on determining who should bear the cost if actual power consumption falls short of projections, amid expectations that global data center electricity consumption will double by 2030.
According to State Information Service Egypt, the review addressed a question posed to the World Economic Forum (WEF) in the context of projections from the International Energy Agency (IEA) that global electricity consumption by data centers will double by 2030. This comes as around 600 million people in Africa continue to lack access to electricity.
The report highlighted that numerous African countries are seeking to attract investments in artificial intelligence and data centers due to the potential benefits of capital, cloud computing capabilities, and digital services. However, large-scale projects may necessitate the construction of power generation plants, transmission lines, and substations, which could pressure electricity utilities to invest before demand reaches projected levels. Investors, on the other hand, require assurances of electricity availability before committing their capital.
A specific example illustrating this challenge is the experience of Microsoft and G42 in Kenya. In 2024, the companies announced a $1 billion digital initiative featuring a geothermal-powered data center and an Eastern African cloud region, with plans to develop connectivity, skills, and local artificial intelligence capabilities. However, by 2026, delays emerged due to discussions over the project's scale, electricity requirements, and payment guarantees.
The report provided a hypothetical scenario in which a project requests 300 megawatts of electricity but initially uses only 100 megawatts or cancels subsequent expansion plans. In such cases, some electricity infrastructure assets could remain underutilized, yet their costs would still need to be recovered. If a utility borrowed money to finance these assets and project revenues were insufficient to cover the costs, the financial burden could fall on the utility's balance sheet, be passed on to consumers through electricity tariffs, or be borne by the government if public guarantees had supported the financing.
In South Africa, the report cited examples of companies securing their own electricity supplies. Teraco is developing a 120-megawatt solar power plant, with electricity transmitted through Eskom's and municipal networks to its data centers. Similarly, Africa Data Centers has signed a 20-year agreement to secure 12 megawatts of solar power for its facilities.
The report noted that contractual arrangements could help distribute costs and risks through connection fees, developer contributions to infrastructure financing, and phased grid expansion aligned with project development. Other mechanisms include setting minimum demand or payment requirements, signing long-term contracts, and providing credit guarantees.