The race by technology firms to set up multi-billion-shilling power-draining data centres in Kenya gives a timely boost to the government’s efforts to grow local power consumption and potentially lower the burden of high electricity costs.
Some of the major companies that have built data centres in the country include EADC Liquid, iColo, Konza Technology City, Africa Data Centre (ADC), COMTEC, Access, Safaricom, MTN Business, and Telkom Kenya.
These data centres enable mobile network providers, banks, internet service providers, retailers, and content providers to centralise their computing and networking equipment for the collection, storage, processing, distribution, and access to large amounts of data.
The high electricity consumption by these data centres is a welcome boost to Kenya Power which has been recording a modest increase in electricity demand hurting its revenues.
The Jubilee administration had in 2013 projected local power demand to increase to 10,000megwatts(MW) in 10 years supported by heavy industries such as manufacturers, but this demand has failed to materialise.
This is despite Kenya Power entering into dozens of power purchase agreements (PPAs) with independent power producers (IPPs) to step up the local generation capacity to meet the projected demand.
High power costs
A task force appointed by former President Uhuru Kenyatta to probe these PPAs however noted that demand has failed to increase as expected and puts consumers in danger of high power costs.
It noted that the utility had signed an additional 35 PPAs with an aggregate capacity of 1,938MW beyond the current 32 live operational PPAs whose aggregate capacity is 2,854MW and was in various stages of negotiation for a further 113 PPAs with an aggregate capacity of 4,306MW.
The task force warned of the increased power costs consumers would face in higher tariffs over the delay in the building of large flagship projects and limited manufacturing that makes it impossible for Kenya Power to absorb the cost of all these new projects.
The higher demand being brought by data centres is however helping plug the demand gap lessening the burden of capacity charges where consumers pay for idle power.
“Lack of diligence in on-boarding new capacity can result in higher tariffs if the power generation is growing significantly faster than demand, as the contracts will either be Take or Pay or Take and Pay,” said the task force.
The demand for data centres has grown exponentially in recent years due to a sharp growth in demand for internet and cloud-based services, and this demand has piqued the interest of global financiers who are sinking billions of shillings in data centres.
With this demand, companies running data centres are planning to open new data centres, especially in Nairobi and Mombasa to meet the growing demand.
ADC Managing Director for East Africa Dan Kwach told Smart Company the firm will invest $200 million (Sh24.57 billion) to build three new data centres within the next 18 months.
Two of these will be built in Nairobi and another in Kigali, Rwanda with the World Bank’s International Finance Corporation (IFC) as one of its investors.
Its existing data centre, which has a capacity of 800 racks, can consume 4MW at full capacity. Mr Kwach said the data centre currently consumes 60 per cent of its capacity.
“We have acquired land next to our existing data centre (at Sameer Business Park) to build a 20MW new data centre which will help us to meet the growing demand for our services. We will have a groundbreaking for the project early next year,” said Mr Kwach.
When the expansion is complete, said Mr Kwach, its data centres in the country will have the capacity to consume up to 50MW at full use.
The data centre is also connected to a 1MW solar plant to supplement its grid power.
iColo, which has three data centres - one in Nairobi and two in Mombasa - says it also acquired a piece of land next to its facility in Nyali dubbed MBA2 to build a new data centre to expand its capacity.
iColo chief executive officer Ranjith Cherickel said its data centre in Nairobi can consume up to 10MW, and MBA2 in Nyali can use up to 1.6MW with the planned data centre expected to further raise its demand for power.
The company has installed solar of 700 kilowatts (kW) and is planning to upgrade this capacity to reduce its power bills.
“We expect demand for data centre services to continue growing which is why we are readily positioning ourselves to provide these services with the new data centre that will be adjacent to this one (MBA2),” said Mr Cherickel.
Another firm Masinga Data is planning a Sh6 billion green facility along the Tana River in Masinga.
The Masinga Data Centre is being set up by US-based software firm Cloudoon Inc located in Delaware.