SAHRC: Inquiring Into South Africa Data Center Moratorium Call

• South African civil rights groups are calling for a moratorium on new data center construction due to concerns over scarce water, land, and electricity resources.
• The South African Human Rights Commission has launched an inquiry, receiving over 250 submissions highlighting a lack of transparency regarding data center resource use and environmental impacts.
• An Equinix facility in Cape Town for which rezoning has been approved has drawn criticism, particularly given the city's past water crisis and national electricity supply concerns.
• Data center operators argue their facilities use less resources than US counterparts and increasingly rely on renewable energy, with Eskom currently reporting a power surplus.
• Experts suggest that clear regulations, rather than an unregulated boom, would provide more certainty for serious investors in the South African digital infrastructure sector.

Serious investors are not deterred by clear rules. They price uncertainty, and an unregulated boom is the most uncertain environment of all.

Civil rights organizations in South Africa are advocating for an immediate halt to the construction of new data centers across the country. This demand stems from concerns regarding the unchecked consumption of vital resources such as water, land, and electricity, which these facilities require. The push for a moratorium comes as South Africa positions itself as a leading data hub on the African continent, with President Cyril Ramaphosa actively encouraging more technology companies to establish digital infrastructure within its borders. The nation currently hosts approximately 70% of Africa's total data center capacity, a sector the government views as a significant opportunity in the global digital economy.

The South African Human Rights Commission (SAHRC), the country's official rights watchdog, has initiated an inquiry into the matter. Following a public call for input in May, the SAHRC received over 250 submissions from various interested parties, underscoring the widespread public and civil society concern. This scrutiny mirrors a global trend where the environmental and societal impacts of rapidly expanding data center infrastructure, seen in regions like the United States, are increasingly being questioned.

One particular project that has drawn significant criticism is an Equinix hyperscale facility in Cape Town for which rezoning has been approved. This city famously averted a severe water crisis, dubbed "Day Zero," in 2018, when its water supply was projected to run dry. The new data center's estimated requirement of 160 megawatts of electricity has also raised alarms, given South Africa's recent history of widespread power cuts, locally known as "loadshedding."

The SAHRC's preliminary investigation has highlighted a critical lack of transparency surrounding these digital infrastructure projects. Dr. Eileen Carter, who is leading the commission's initial process, identified the availability, consistency, and clarity of information as a key emerging issue. This includes data related to electricity and water demand, land utilization, specific infrastructure requirements, environmental impacts, and the broader effects on surrounding communities.

Despite the national power utility, Eskom, reporting a power surplus during the recent winter peak-demand season, civil society groups remain apprehensive. They express concern that this surplus power could be disproportionately allocated to data centers, potentially at the expense of other sectors or communities. The historical context of severe water scarcity in Cape Town and the nation's ongoing struggle with reliable electricity supply amplify these concerns, making transparent resource allocation a paramount issue.

A significant challenge identified by experts is the absence of mandatory disclosure requirements for data center operators. Currently, companies are not obligated to provide binding commitments or detailed figures on their projected water, electricity, and land consumption. This regulatory gap means that proposals for new facilities are often evaluated without a clear understanding of their precise resource footprint, hindering informed decision-making and public oversight.

Data center operators, however, contend that comparisons between facilities in South Africa and larger-scale operations in the United States are misleading, asserting that the resource demands of local projects are considerably lower. They point to Eskom's current power surplus as evidence that their operations are not exacerbating the country's energy challenges. Furthermore, many operators emphasize their increasing reliance on renewable energy sources to power their facilities, aiming to mitigate environmental impact.

Sasha Booth-Beharilal, chairperson of the Internet Service Providers Association, has publicly stated that the growth in energy demand from data centers is not contributing to electricity scarcity in South Africa, nor is it a cause of rising electricity tariffs. Booth-Beharilal also noted that local data centers are adopting new technologies to enhance efficiency.

Experts suggest that the call for a temporary halt to new approvals should not be misconstrued as a rejection of foreign investment. Instead, it is viewed as a mechanism to establish clear regulatory frameworks, particularly concerning transparency. Pitso Tsibolane, a senior lecturer in Information Systems at the University of Cape Town, articulated this perspective, stating, "Serious investors are not deterred by clear rules. They price uncertainty, and an unregulated boom is the most uncertain environment of all."

The ongoing inquiry by the South African Human Rights Commission, coupled with sustained pressure from civil society, signals a likely shift towards a more stringent regulatory environment for digital infrastructure projects. Lawyers advising technology companies and investors in South Africa's burgeoning digital sector should anticipate heightened scrutiny for future data center developments. This could manifest as new disclosure requirements, mandating detailed reporting on resource consumption and environmental impact assessments.

Such regulatory changes, while potentially introducing additional compliance burdens, are aimed at addressing the transparency deficits identified by the SAHRC. The increased oversight could lead to longer approval processes for new projects or necessitate more comprehensive impact studies. However, for investors seeking long-term stability, a well-regulated market with clear environmental and resource management guidelines could ultimately reduce operational uncertainties and enhance the sustainability of their investments in South Africa's digital infrastructure.

Lawyers advising tech companies or investors in South Africa's digital infrastructure sector should anticipate heightened regulatory scrutiny, potential new disclosure requirements, and stricter environmental/resource impact assessments for data center projects. This pressure, stemming from civil society groups and the South African Human Rights Commission's investigation, could lead to delays in project approvals or new compliance obligations regarding resource consumption and environmental impact.

Source: Original reporting via Associated Press