Teraco to Expand African Data Centers with $680 Million Investment in Renewable Energy

Feb 1, 2023 10:54 AM ET
  • Teraco Data Environments, Africa's largest data center firm, secures $680 million in debt funding to build a 100 MW utility-scale solar farm and expand its data centers with clean energy.

What happened?

Teraco Data Environments Ltd., Africa's largest data-center company, raised 11.8 billion rand ($680 million) in debt funding led by South Africa-based lender Absa Group Ltd. Just under half of the loan will be used to build out the company's solar capacity and data centers, while the rest will be used to refinance its current facilities located in Johannesburg, Cape Town, and Durban. Samuel Erwin, Teraco's CFO, stated that the company has set a target to generate half of its power from clean energy sources by 2027 and all of it by 2035.

Why does it matter?

The move by Teraco to expand its data centers and transition to renewable energy sources is significant as it aligns with the growing trend among businesses in South Africa to generate their own power due to the country's struggles with power cuts in recent years. Data centers are known to consume high amounts of energy, and the shift to renewable sources can help reduce running costs and emissions. Teraco's planned expansion will almost double its data center capacity to just under 200 MW over the next three to four years, making it a major player in Africa's growing data center market. According to Cisco, Africa currently only accounts for 1% of the world's data center capacity despite being home to almost a fifth of the world's population and growing faster than any other continent.

What's next?

Teraco plans to start building the 100 MW solar farm once it has received necessary approvals from the South African government and public utility Eksom to connect it to the grid. However, negotiations have been slow according to Erwin. Despite this, Teraco remains the largest data center operator in Africa, although new entrants such as Equinix and Amazon Web Services are looking to expand in the continent. The company's planned expansion and investment in renewable energy will not only help meet the increasing demand for data centers in Africa but also position Teraco as a leader in sustainable energy and technology in the region.

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