South Africa’s Eskom targets data centers for new power customers     

Eskom is in talks with some of the world’s biggest technology companies to supply electricity to their data centers as South Africa’s state-owned utility looks for new customers for surplus power after more than a year without load-shedding.

The strategy is a sharp change for Eskom, which spent years struggling to keep its aging power stations running. Now, with electricity supply more reliable, the state-owned utility is looking to industries that can absorb large amounts of power, including data centers supporting cloud computing and artificial intelligence. 

“We are having discussions with the Amazons, the Microsofts, the Googles,” Eskom Chair Mteto Nyati said. “We love those discussions because those are power-hungry sectors — that’s exactly what we need right now.”

Data Centers Offer New Demand 

Eskom entered winter with about 6 gigawatts of surplus peak capacity, giving it one of its strongest reserve margins in almost a decade. The improvement followed a recovery plan that helped reduce unplanned breakdowns and pushed South Africa past 12 months without load-shedding for the first time since 2018. The problem now is demand. 

Years of power cuts encouraged households and companies to invest in solar and other alternatives. At the same time, weak economic growth reduced industrial electricity use, leaving Eskom with less revenue while it continues to carry about R359 billion ($22.3 billion) in debt. 

“We’ve got this power that we cannot sell,” Nyati said. “That’s the reality of the situation.” 

South Africa’s data center industry could help change that. The country hosts about 70% of Africa’s data centers, supported by its fiber networks and established financial sector. 

The market is expected to more than double to above $5 billion by 2031, according to Arizton Advisory & Intelligence. 

Companies including Nvidia, Cassava Technologies, Huawei Cloud and Oracle Cloud Infrastructure have announced major data center investments across Africa. In Cape Town, plans approved for two Equinix facilities are expected to require about 170 megawatts of electricity.

Eskom faces a new challenge 

The growth comes with a catch. Data centers need large and uninterrupted power supplies, and many operators are building their own generation capacity or buying electricity from solar projects rather than relying entirely on Eskom. 

“The data center gold rush is real,” said Chris Hattingh, executive director at the Centre for Risk Analysis. “Whether Eskom is the one who profits from it … is the open question.” 

Eskom has about 2,000 megawatts of generation capacity in cold storage that could be brought back online, but analysts warn that new projects could place additional pressure on the grid. 

The utility has also signed discounted electricity agreements with energy-intensive businesses, including the Glencore-Merafe Chrome venture. 

Eskom’s energy availability reaches 66%

Eskom’s improved performance has helped its energy availability factor rise to about 66% this year from roughly 50% in 2023. A government debt-relief package worth R254 billion (roughly $16 billion) has also eased some financial pressure. 

Still, municipal debt remains a concern. Local authorities owe Eskom about R118 billion ($7.3 billion). “If that amount is allowed to go up, all of the good work that was done … is going to go out of the window,” Nyati said. 

Eskom, established in 1923, is wholly owned by the South African government. The utility operates across the electricity value chain, including generation, transmission and distribution, and also participates in electricity trading within the Southern African Development Community.