Growth of data centre investments in Brazil

April 2025  |  SPECIAL REPORT: INFRASTRUCTURE & PROJECT FINANCE

Financier Worldwide Magazine

April 2025 Issue

The rapid advancement of data technologies, including artificial intelligence (AI) and cloud computing, is one of the most dominant global trends in recent years.

The significant growth of these technologies has driven a critical and escalating need for robust and reliable power infrastructures and supply, ensuring that the associated data processing systems and technologies can operate seamlessly.

The vast amounts of data processed by AI, cloud computing and similar technologies reside in data centres distributed worldwide. This trend has led to an exponential expansion of data centre installations globally, making data centres a critical pillar of modern digital economies.

Brazil, a country recognised as a key player in the global economic landscape, is actively participating in this global data centre expansion. According to sector studies, the number of data centres in Brazil saw a staggering 628 percent increase between 2013 and 2023.

Brazil currently hosts 162 listed data centres, predominantly concentrated in the state of São Paulo. This rapid expansion highlights the country’s strategic position within the broader trend of data centre proliferation, positioning it as a competitive player in the global market for digital services and infrastructure.

This remarkable surge in data centre development in Brazil, coupled with an optimistic outlook for continued growth, can be attributed to a variety of factors. Among these are Brazil’s economic conditions, its advantageous geographical location and a relatively stable regulatory framework. However, a crucial technical aspect driving this expansion, which is the focus of this article, is Brazil’s capacity to supply these data centres with reliable and renewable power.

The country’s renewable energy infrastructure provides an essential factor for the growing data centre market, offering a competitive edge over other regions that are more reliant on non-renewable power sources.

Data centres, by their very nature, are high-energy consumers, operating 24/7 to handle vast amounts of data traffic and ensure uninterrupted services. The power consumption of data centres, especially as their numbers increase and technologies such as AI and cloud computing become more present in our day to day activities, raises important environmental considerations. In regions that rely on non-renewable sources for power generation, this growing demand for power can lead to negative externalities such as increased carbon emissions, contributing to global climate change.

This is where Brazil’s distinctive competitive advantage comes into play. The country’s electricity matrix is predominantly powered by renewable sources, such as hydro, wind and solar power. This renewable energy mix provides Brazil with an abundant supply of clean power, allowing data centres to source energy with a significantly lower environmental impact compared to regions that rely heavily on fossil fuels, for example. For players seeking to align their operations with sustainable practices and decarbonisation goals, Brazil’s renewable energy opportunities present a compelling advantage.

Given that data centres typically require power at voltages of 2.3kV or higher, they are eligible to participate in Brazil’s free energy market. This allows data centre operators to directly negotiate power purchase agreements (PPAs) with power generators and traders, ensuring greater cost predictability and the option to source power from renewable resources.

The availability of renewable energy PPAs in Brazil is particularly attractive for companies committed to environmental, social and governance practices. By securing renewable power sources through PPAs, companies can enhance their market reputation, demonstrating their commitment to sustainability.

These PPAs may also play a crucial role in helping businesses meet decarbonisation and environmental targets. Furthermore, companies can also pursue international certifications such as International Renewable Energy Certificates. This makes Brazil an increasingly desirable location for companies looking to enhance their green credentials and meet the growing global demand for environmentally responsible operations.

Brazil’s power sector authorities have recognised the accelerating growth of data centres and are actively working to enhance regulatory frameworks that support these facilities and strengthen the country’s overall power infrastructure reliability. The National Electric Energy Agency (ANEEL), in collaboration with the Ministry of Mines and Energy (MME) and the Energy Research Company, is working on strategies to address the challenges associated with the rapid growth of data processing and storage services.

One of the key areas of focus is the effective expansion of the transmission network, not only for data centres but also to accommodate the exponential growth of power generation in Brazil, while also addressing key regulatory and operational challenges.

A crucial part of this effort is Public Consultation No. 23/2024, with the contributions currently being analysed by ANEEL. This consultation aims to refine the cost allocation and responsibilities for large consumer loads – such as data centres – connecting to the transmission system.

The following issues are being discussed in the context of the consultation: (i) financial guarantees for access opinion requests; (ii) financial guarantees upon contract for the use of the transmission system (CUST) signing; (iii) linking the start of the use of the transmission system to the execution of the CUST; (iv) defining termination charges; and (v) establishing conditions for ANEEL’s authorisation for connection before the execution of the CUST.

At the same time, the MME’s Energy Efficiency Indicators Steering Committee Resolution No. 1/2024, published in February 2024, outlines a comprehensive regulatory agenda designed to support the growth of digital infrastructure while reducing the carbon footprint of the country. It is expected that these regulatory changes will attract significant digital investments, with studies predicting that total investments in this sector could reach BRL60bn by 2030.

These investments will not only drive the development of data processing capabilities in Brazil, which is critical to the sector’s expansion, but will also serve as a catalyst for the further development of Brazil’s transmission infrastructure.

Direct access to the transmission system offers enhanced reliability, especially for high-voltage consumers such as data centres. This trend is evident in the increasing number of transmission grid access requests from data centres. In September 2024, the total requests for transmission system access had reached 9GW, compared to just 2.5GW in May 2024. This represents a 3.6-fold increase over a span of only four months.

The transmission system access process begins with an assessment by the MME, which evaluates the initial connection proposal to ensure that the lowest overall cost solution is being adopted. After receiving the MME’s approval, applicants can request an access opinion from the National Electricity System Operator, which is a condition for entering into a CUST. Depending on the specifics of the connection request, ANEEL’s authorisation may also be required.

For smaller data centres, connecting to the distribution network is also a viable option, particularly in urban areas with existing distribution infrastructure. This alternative, governed by ANEEL Normative Resolution No. 1,000/2021, is typically used for connections at medium and low voltages and involves signing contracts for the use of the distribution system and connection to the distribution system.

These agreements outline the responsibilities of both the consumers and the distribution companies. This possibility offers a faster connection process and lower initial costs, making it a common choice in urban areas where distribution networks are already established.

As the global demand for data services continues to rise, driven by the proliferation of AI and data-centric technologies, the expansion of data centres is expected to continue. Countries that offer favourable environments for data centre investments – such as Brazil, with its renewable energy infrastructure and evolving regulatory framework – will attract significant public and private sector investments.

In conclusion, Brazil is emerging as a key player in the global data centre market. With its competitive advantage in renewable energy and the supportive regulatory framework, the country offers an exciting environment for data centre investments. As the sector continues to grow, Brazil is expected to be at the forefront of the global data centre industry, playing an important role in supporting the digital economy both regionally and globally.

 

Fabiano Gallo is a partner and Breno Cintra and Marcos Silva are associates at Campos Mello Advogados. Mr Gallo can be contacted on +55 (11) 3077 3500 or by email: fabiano.gallo@cmalaw.com. Mr Cintra can be contacted on +55 (11) 3077 3500 or by email: breno.cintra@cmalaw.com. Mr Silva can be contacted on +55 (11) 3077 3500 or by email: marcos.silva@cmalaw.com.

© Financier Worldwide

BY

Fabiano Gallo, Breno Cintra and Marcos Silva

Campos Mello Advogados

©2001-2025 Financier Worldwide Ltd. All rights reserved. Any statements expressed on this website are understood to be general opinions and should not be relied upon as legal, financial or any other form of professional advice. Opinions expressed do not necessarily represent the views of the authors’ current or previous employers, or clients. The publisher, authors and authors' firms are not responsible for any loss third parties may suffer in connection with information or materials presented on this website, or use of any such information or materials by any third parties.