South Africa's 'data centre gold rush' could lead to a resource shortage

The rapid expansion of data centers has made South Africa the continent's largest digital hub. Critics warn that the industry's appetites for electricity and drinking water could worsen the shortages of millions of people.

Cyril Ramaphosa, the president of South Africa, has praised the rapid growth of data centers as being essential to the security of the country and its business. He also called for protection of the environment and human rights in the face of this boom.

South Africa, Africa's largest economy, boasts an advanced digital infrastructure. It is connected to a network of?international undersea cables and houses 70% of all data centres on the continent. These servers are used to power cloud computing, artificial intelligence, and other technologies.

Microsoft and Amazon, two of the world's largest tech companies, have invested billions in cloud and AI infrastructures in South Africa. The sector is expected more than double in size to $5 billion in 2031 according to a March report by Arizton Advisory & Intelligence, a U.S. market research firm.

Data centres require large amounts of energy to run servers and water for cooling the rooms in which they are located. South Africa has recently struggled to meet these basic needs due to climate-change related drought and an ageing power grid, exposing potential risks.

A small data centre uses as much electricity as thousands of homes and hundreds of thousands litres of drinking water per day.

'BRAGAWATTS'

The scene at Teraco Data Environments' data center in Johannesburg's Industrial Zone, South Africa's biggest operator, resembles the set of the movie "Charlie and the Chocolate Factory". Shiny metal pipes, tiny multicolored wires, rows and cabinets, and a low, constant buzzing sound.

Bryce Allan is Teraco's Head of Sustainability. He said that South Africa's data centers are smaller and less resource-intensive than other countries. They also require less technology because they don't focus on AI training.

He said that the market in Europe is far different from the United States where residents of Texas and California have been campaigning against data centres. New York announced last week a statewide ban on data centres due to concerns about their impact on the environment.

He said that the "explosion of AI" in the States, with the announcements of gigawatt projects, the numbers from operators who have chosen to use evaporative coolers, and how much water they would be wasting, is a real problem. "When people hear about AI coming to South Africa they associate the U.S. model and translate it to here."

Teraco claims that it uses closed loop cooling which recirculates water.

Allan stated that a 30-megawatt data center using a closed-loop system would use the same amount water per year as an average restaurant.

South Africa hosts over 50 data centres, with a total capacity of 350 Megawatts. This is less than 1% the global average.

Allan stated that some developers in South Africa had overestimated the amount of power their servers would require.

He said: "Those 'bragawatts,' cause a problem because reality isn't as sexy." It takes years to ramp up these facilities even to half their capacity.

Teraco is owned by Digital Realty in the United States. It runs off of South Africa's grid, and has diesel generators as backup. The company is currently building a 120 MW solar farm in South Africa’s Free State, which will contribute to the grid once it starts operating next year.

The company expects to get 70% of their energy from renewable resources by the end 2027, and 100% by 2035.

Economic NECESSITY

In South Africa, data centres that run on clean energy are crucial to reducing the strain on resources.

Cape Town, in 2018, warned that it would face "Day Zero" when the water supply would be cut off due to low reservoir levels. It imposed restrictions on the public to avoid the worst case scenario.

In 2023, the government had to implement almost daily power outages, also known as loadshedding across the country to deal with a growing demand that an aging infrastructure couldn't handle. However, this situation has since eased.

Solly Malatsi is South Africa's Minister of Communications and Digital Technologies. He said that the government "takes serious" concerns over whether data centres would intensify competition between electricity and water.

Malatsi noted that "a number of mitigation measures have become standard practice in the industry, such as scheduling heavy workloads during off-peak hours and using closed-loop liquid-cooling systems which reduce water consumption by a significant amount."

South Africa has an?national policy which calls for environmentally sustainable data centers, and Malatsi stated that a just transition to energy that is equitable for the communities is a commitment of national importance.

He said that the sector was "critical" to economic competitiveness. It supports everything from cloud computing and financial services to AI systems which will shape the next decade's economic activity.

Activists are calling for more transparency and consultation with the community as data centres sprout up all over the country. They have also criticised Cape Town's approval last week of the new facility by Equinix based in the United States, which has facilities around the world.

Daniel Hartford who is responsible for AI infrastructure accountability with the non-profit Foxglove opposing the Equinix site, said that there wasn't enough information about how much water the facility would consume.

(source: Reuters)