Teraco to build utility-scale solar as it secures billions in new funding

Teraco Data Environments, Africa’s largest data centre company, raised R11.8-billion in funds to assist with its expansion plans and power build-out, said chief financial officer Samuel Erwin.

Just under half of the loan financing, which was led by Absa Group, will be used as growth capital to build out the company’s solar capacity and data centres, Erwin said. The rest will be used to refinance its current facilities, which are spread across Johannesburg, Cape Town and Durban.

“We have set a target to generate half of our power from clean energy sources by 2027, and all of it by 2035,” Erwin said.

In an effort to meet that target, the company will build a utility-scale solar farm capable of generating 100MW of power and is adding solar panels to the roofs of its data centres, he added.

South Africa has struggled with crippling power cuts in recent years and many of the country’s largest businesses have started to build facilities to generate their own power. Data centres are generally high-power users and shifting to renewable energy sources can help keep running costs low while reducing emissions.

Teraco will start building the 100MW solar farm once it has the necessary approvals from government and public utility Eksom to connect it to the grid, Erwin said, adding that negotiations have been slow.

Africa is home to almost a fifth of the world’s population and is growing faster than any other continent, yet it only accounts for 1% of the world’s data centre capacity, according to Cisco. That capacity needs to be expanded to meet the demand of more people and businesses using the Internet and cloud services.

Read: Teraco breaks ground on JB5, its next big data centre

Teraco’s planned expansion will almost double its data centre capacity to just under 200MW over the next three to four years, Erwin said.

Read: Digital Realty seals blockbuster Teraco acquisition

A deal by San Francisco-based Digital Realty Trust to buy a majority stake in Teraco last year valued the company at about US$3.5-billion. Teraco remains the largest data centre operator in Africa, although new entrants such as Equinix and Amazon Web Services are looking to expand on the continent.  — (c) 2023 Bloomberg LP

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