Let's face it: South Africa's power grid isn't winning any awards for reliability. Our data centres are feeling the heat—and not in a good way. These digital powerhouses not only keep our online world spinning but are also fuelling the AI revolution—yet their ever-expanding capabilities hinge on one critical requirement: an uninterrupted power supply.

Renewable energy has emerged as a promising solution to this pressing issue. By harnessing abundant solar and wind resources, coupled with battery storage to account for intermittency, South Africa could secure a stable energy supply for its data centres. This approach not only addresses the immediate need for reliable power but also aligns with national and global sustainability efforts.

The global appetite for digital services is driving unprecedented demand for data centre capacity, with significant implications for energy consumption. The International Energy Agency's 2024 Electricity Report highlighted that data centres, AI, and cryptocurrencies accounted for 2% of global power generated in 2023. This figure is expected to more than double year-on-year until 2026, and some researchers consider even this estimate conservative.

To put this into perspective, a single query to ChatGPT uses approximately as much electricity as it takes to power a light bulb for 20 minutes—about 10 times the energy of a standard Google search. As AI becomes more sophisticated, its energy demands increase correspondingly. Recent sustainability reports indicate that Google's power usage was up 48% in 2023 compared to 2019, and Microsoft's usage was up 29% from 2020 . Each company attributes the rise to AI development.

South Africa's Energy Challenge and Opportunity

South Africa's situation is particularly challenging, with an Energy Availability Factor hovering around 70%—better than Nigeria's 35% but far from ideal. Loadshedding has become a daily reality, hampering the country’s ability to attract and maintain data centres, which are crucial for economic growth and technological advancement.

However, this challenge presents a unique opportunity. Unlike traditional data centres that require proximity to urban centres for low-latency services, AI data centres have more flexibility in their location. They can be strategically positioned closer to renewable energy sources like solar or wind farms, often in more remote areas. This proximity reduces the need for long-distance power transmission, which often results in energy losses and increased costs.

By adopting this approach, South Africa could not only address its data centre power needs but also contribute to broader energy access goals. For instance, excess capacity from these renewable-powered data centres could potentially be shared with local grids, benefiting nearby communities.

Policy Shifts and the Role of Renewable Energy

Recent developments show promise. The Exclusion Norms for solar PV and battery facilities from certain environmental authorization requirements under the National Environmental Management Act (1998) aim to streamline renewable energy project development. Additionally, amendments to the Electricity Regulation Act (2006) make it easier for some projects to bypass licensing requirements from NERSA.

However, setbacks exist. The 2023 tax break for solar panel installations, which led to a 349% surge in rooftop solar capacity , was not renewed for 2024/25. Additionally, a new 10% tariff on imported solar panels, while aimed at boosting local manufacturing, may discourage investment due to increased costs and limited local supply.

Learning from Other African Countries

Looking at examples from other African countries offers valuable insights. In 2013, Burkina Faso exempted solar energy equipment from import duties and VAT, resulting in a surge in demand. Cameroon offers a full VAT exemption on solar PV equipment until 2025, and Nigeria provides income tax holidays to manufacturers in renewable energy production.

Floating solar installations, which have shown promise in Ghana, Rwanda, and Ethiopia, could also be explored in South Africa . These installations generate significant portions of national energy demand while utilizing existing water bodies such as man-made reservoirs and dams, helping to preserve the natural environment.

A Path Forward for South Africa

As South Africa positions itself at the forefront of the AI revolution, it must take decisive steps to incentivize the development of renewable-powered data centres. This not only addresses the immediate power needs of data centres but also contributes to energy security and sustainability.

By leveraging its abundant renewable resources and implementing supportive policies, South Africa can transform its current energy challenges into opportunities. This approach will not only ensure reliable power for data centres but also make the country an attractive destination for sustainable tech infrastructure, driving economic growth and innovation in the process.

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