Brazil is experiencing a significant surge in its data center industry. The sector’s revenue, estimated at $1.3 billion in 2023, is projected to reach $1.9 billion by 2027.
This growth reflects a global trend in data center energy demand, expected to increase by 16% annually until 2026. The Brazilian market consists of three main operator types.
Hyperscale companies like Google, Amazon, and Microsoft run large data centers for their own needs and cloud services. Wholesale firms provide data center services to major clients while managing the space.
The third group includes companies that sell part of their capacity to various corporate clients. Data center location is crucial, considering both latency and data storage regulations.
Most Brazilian data centers are in São Paulo’s metropolitan area. Rio de Janeiro, Fortaleza, and Porto Alegre are also seeing expansion. The capacity of data centers is measured in megawatts (MW) of IT energy.
Brazil currently has about 580 MW installed, with expectations to exceed 2 GW by 2028. This figure excludes cooling energy, which accounts for about 50% of a data center’s total energy consumption.
Licensing processes remain a challenge, often taking up to 18 months. The average investment per MW of IT power is $10 million.
Growth of Data Centers in Brazil
Data centers for cloud services and AI support have different capacities. Pre-pandemic, large data centers ranged from 5 to 10 MW. Since 2022, major installations have increased to 20-50 MW.
Scala, a key player in the Brazilian market, focuses on hyperscale clients. The company has 300 MW of contracted capacity in Latin America. In Brazil, Scala operates nine data centers with three more ready to start operations.
The potential for AI support is driving further growth. Data centers for algorithm training can exceed 500 MW capacity. Scala recently announced a $526 million investment in a 54 MW data center in Eldorado do Sul.
However, Brazil faces competition from other countries with clean energy matrices. High import taxes on equipment pose a challenge. Robust energy transmission networks and telecommunications infrastructure are also necessary for growth.
Despite these challenges, the data storage and processing sector in Brazil continues to grow rapidly. With proper incentives and reduced bureaucracy, Brazil could become even more attractive for international investments in large-scale AI-focused data centers.
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