Sustainability and Infrastructure Challenges in South Africa’s Data Centre and AI Market

Environmental Factors Shape South Africa’s Data Centre and AI Hub Market

South Africa stands on the brink of becoming a key player in global data centre development. However, developers must prioritize environmental impact mitigation when choosing locations for new data centres. At the recent Pan African Data Centres Exhibition and Conference in Johannesburg, sustainability and development challenges dominated the conversation. Here, we break down the key environmental factors influencing data centre growth in South Africa.

AI Driving Economic Growth

AI is expected to bring substantial economic benefits to Sub-Saharan Africa, with projections estimating up to $136 billion by 2030. South Africa alone could realize over $52 billion, especially in sectors like consumer retail, hospitality, manufacturing, professional services, finance, energy, and mining. The government has responded with a national AI policy framework, released in October 2024, which outlines the need for skills development, infrastructure investment, financing, incentives, regulation, and governance to support AI growth.

One critical aspect highlighted is the need for enhanced digital infrastructure, including supercomputing capabilities to back AI research. This signals a supportive environment for data centre projects, which are essential to AI’s success.

Environmental Challenges and Energy Considerations

Data centres require immense processing power, leading to increased energy consumption. Globally, they account for between 1% and 1.5% of total energy use, with estimates projecting a rise from 460 TWh in 2022 to over 1000 TWh by 2026. South Africa’s energy landscape poses unique challenges. The country has faced frequent power outages caused by a strained grid managed by Eskom, the state utility. Although load shedding has lessened recently, reliable and clean electricity access remains a concern.

The national grid’s limited transmission capacity restricts the addition of new power sources, affecting where data centres can connect. Developers must weigh the risks of relying on an aging, coal-dependent grid prone to interruptions and consider whether they can implement flexible energy consumption strategies during peak demand.

Alternative energy solutions are gaining traction. Many data centres globally are adopting behind-the-meter systems, such as on-site solar panels, battery storage, and gas generators, to ensure consistent power supply. South Africa is also exploring mini-grid options—localized grids independent of the national system—which could support decarbonization and reduce grid dependence. Additionally, the rise of wheeling—where electricity generated in one place is sold and transmitted to users elsewhere on the grid—is opening new avenues for sourcing clean energy.

Water Use and Sustainability

Beyond energy, water is a crucial resource for data centres, used extensively for cooling servers and controlling humidity. AI-driven demand will increase water consumption sharply. Research shows that generating responses like those from ChatGPT requires significant water usage, with global AI water withdrawals expected to reach between 4.2 and 6.6 billion cubic meters by 2027—comparable to the annual water use of entire countries like Denmark or half of the UK.

South Africa faces water scarcity, receiving about half the global average rainfall, compounded by high evaporation and climate change. Regions such as Gauteng and the Western Cape, with dense populations and limited freshwater, are especially vulnerable. Nature-based solutions, including invasive plant removal and improved river management, are helping address water shortages in urban areas, but infrastructure issues remain.

For developers, proximity to coastal areas offers some relief due to easier water access. However, innovative approaches like water articulation systems—which enable closed-loop water recycling—are key to sustainable operations away from the coast. Embracing circular water use and adhering to sustainable waste management practices, including extended producer responsibility, will strengthen the long-term viability of South African data centres.

Advantages of Special Economic Zones

When entering new markets, data centre developers consider legal frameworks, permitting processes, access to skilled labor, financing, and materials. Environmental sustainability is now a critical factor. South Africa’s special economic zones (SEZs) offer compelling benefits: tax incentives, access to infrastructure, and plug-and-play energy solutions.

Examples include the Coega SEZ near Gqeberha, Dube TradePort, and Saldanha Bay. These zones provide support through development corporations acting as single points of contact for permits and licenses, including water licenses. For developers focused on balancing operational needs with environmental impact, SEZs present attractive options.

For those interested in developing skills and knowledge in AI to better understand these opportunities, resources like Complete AI Training’s latest courses offer practical learning paths.