South Africa Targets US AI Data Centers as Eskom Seeks Buyers for Surplus Power

South Africa is looking to turn the data-center gold rush into a new engine of growth.

Eskom, the country’s state-owned power utility, is discussing sales of surplus electricity to US hyperscalers, the Financial Times reported on August 12. Mteto Nyati, chairman of Eskom’s board, said the utility is in talks with Amazon, Microsoft and Google.

Eskom now has excess power after years of shortages caused by breakdowns at power plants. A recent recovery plan helped restore generating capacity, lifting reserve power during this winter’s peak hours to about 6 gigawatts, the most comfortable level in a decade.

Demand, however, has weakened. Alternative energy sources such as solar have spread across South Africa, while sluggish economic growth has also reduced industrial electricity consumption. With supply outstripping demand, Eskom’s revenue base has come under pressure.

That has created an opening for data centers. Hyperscalers, which need vast amounts of electricity as AI data centers proliferate, are expanding their investment footprint into Africa. Eskom aims to make power demand from data centers a new growth driver as it tries to counter weak revenue.

Chris Hattingh, executive director at the Centre for Risk Analysis in South Africa, said the key question is whether Eskom can keep data-center operators as long-term core customers rather than serving only as a backup supplier, as those operators expand their own power generation. Even so, he said South Africa’s data-center gold rush represents a real growth opportunity.

South Africa’s data-center market is growing rapidly. The country hosts about 70% of the African continent’s data centers, supported by advanced fiber-optic infrastructure and a mature financial industry. Last month, South African authorities approved a plan by US data-center company Equinix to build two data centers in Cape Town with roughly 170 megawatts of capacity.

US market research firm Arizton Advisory & Intelligence projects South Africa’s data-center market will at least double by 2031 to more than $5 billion, driven by rising AI investment.

Kim Mi-ri, Hankyung.com reporter mirimiri@hankyung.com