US-listed Equinix faces challenge over South African hyperscale data centre

US-listed Equinix is facing opposition over proposed plans for a massive data centre project in South Africa, in a test of how a country long blighted by power cuts and water shortages manages the rapid build-out of AI infrastructure.

An appeal by campaigners is seeking to overturn the approval granted in July for the development of one of Africa’s largest hyperscale facilities close to Cape Town International Airport, according to documents seen by the FT.

Equinix, which operates hundreds of data centres around the world, is seeking to expand its footprint in Africa’s most developed economy to meet soaring demand from global technology companies.

However, the appeal filed by tech justice group Foxglove and campaigner Housing Assembly argues the plan for a 122,500-square-metre facility was approved under rules meant for warehouses, even though the two proposed data centres were a “fundamental change in the nature and intensity of the approved land use”.

The city tribunal that gave the approval for a planning application submitted on Equinix’s behalf had insufficient information to assess the impact on communities and resources, the appeal argues, particularly the facility’s potential water consumption. Proceeding without that information was akin to “closing the stable door after the horse has bolted”, it said.

The dispute highlights the tensions at the heart of South Africa’s data centre boom, with huge investment despite the constraints created by shortages of power and water.

Cape Town and the surrounding areas have frequently suffered droughts severe enough that authorities have been forced to impose drastic water-saving measures to avert shutting off municipal taps. South Africa has also only recently emerged from years of debilitating power cuts.

South Africa already hosts about 70 per cent of the continent’s data centre capacity, while investment in new facilities in the country is projected to more than double to more than $5bn by 2031, according to market research group Arizton Advisory & Intelligence.

The country is part of a broader wave of emerging economies expected to drive the next phase of data centre growth, as operators face growing opposition to projects in the US and Europe. The pipeline in emerging markets is almost twice the size of existing operating capacity, according to an S&P Global report.

But turning that into operating facilities depends on overcoming infrastructure hurdles. Growth was “limited by power availability”, S&P Global said, adding that data centres may need to generate their own energy “that can bypass the main grid while also managing local water use”.

Foxglove, which in the UK recently won a challenge against a data centre in Buckinghamshire, said it was “confident” in its case and that there was a “good prospect of overturning this unlawful decision”.

Eddie Andrews, Cape Town deputy mayor, said: “The city cannot comment until such time as the appeal process has been concluded.”

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Equinix denied that it had submitted a planning application in Cape Town, saying it had “completed the purchase of the land” and it had “no immediate plans to develop the site”.

However, a planning application submitted to the city and reviewed by the FT named Equinix as developer and operator of two proposed data centres. King Air Industria, a South African property company, is also listed as a developer on the application.

The proposed facility would “form part of a fleet of similar facilities that is owned and operated by Equinix, a multinational company, all over the world”, the application added.

The appeal could set a precedent for South Africa, which has no dedicated framework for big data centres, unlike some countries that have specific rules for permitting, power and water use.

If successful, the developers could be forced to submit a fresh application with fuller disclosure of the project’s resource demands. A decision is expected in the coming weeks.