Brazil Consolidates Position as Digital Hub with Accelerated Data Center Expansion

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Written by Yago Rossi for IIR News Intelligence (Cordoba, Argentina)

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Summary

The digital infrastructure sector in Brazil is experiencing unprecedented growth, driven by artificial intelligence (AI) and cloud computing. The country has entered a new stage of technological maturity.

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Installed IT Capacity Reaches Milestone

According to the Brazilian Data Center Association (ABDC), the national infrastructure features hundreds of operational units, reaching a milestone of approximately 1 gigawatt (GW) of installed IT capacity through the end of 2025. Much of this growth is fueled by hyperscale and colocation projects from industry giants such as Ascenty, Equinix, Elea Data Centers, Scala Data Centers and ODATA, primarily concentrated in Brazil's South/Southeast axis.

However, energy demand is expected to grow exponentially; projections suggest that planned capacity requested from the National Electric System Operator (ONS) could reach 13.7 GW by 2035. Currently, Brazil represents over 41% of the Latin American data center market, with a projected annual growth rate of 9.81% through 2030, leading a sector poised to generate R$2 trillion (US$385 billion) over the next decade.

Industrial Info is tracking 96 operational data center plants in Brazil through its Global Market Intelligence (GMI) database, serving as the backbone of Latin America's digital economy. However, the volume of future investment far outpaces current installed capacity: the database identifies 206 active capital projects. Subscribers to Industrial Info's GMI Industrial Manufacturing Project Database can view a list of detailed project reports. Furthermore, the market continues to signal aggressive expansion to meet the demand for large-scale data processing and the growing search for sustainable power generation and distribution.

Operational Timeline: The 2026 Milestone

By the fourth quarter of 2026, the sector expects to see the completion of 23 strategic projects. This period will be characterized by the delivery of infrastructure from major global and local players, most notably the expansions of CloudHQ in Paulínia (SP), Microsoft in Sumaré/Hortolândia (SP), and Scala Data Centers' complexes in Barueri and Jundiaí. These facilities are essential to alleviating the demand pressure for colocation and cloud services in metropolitan areas.

2027/2028 Cycle: The Time of Megaprojects and AI

Outlooks for the 2027-2028 period point toward a transition in scale. Following the consolidation of projects launched in 2024-2025, a new investment cycle is expected to gain momentum starting in late 2026. As of mid-2025, Brazil has recorded 52 grid connection requests for data centers to the National Interconnected System's (SIN) basic network.

Of the 180 projects monitored for this period, the vast majority (80%) were still in the planning phase, while 11.11% were in engineering and 8.89% have already broken ground. Three projects stand out due to their investment volume and power capacity:

• Scala IA City (RS): Located in Eldorado do Sul, this is one of the continent's most ambitious projects, with an estimated capital expenditure (CAPEX) of US$1.54 billion and a projected final capacity of up to 4.75 GW.
• Rio IA City (RJ): Led by Elea Data Centers, the project forecasts an initial investment of R$9 billion (US$1.73 billion) for the first four buildings, with the potential to scale to R$50 billion (US$9.62 billion) and 1.5 GW of capacity by 2028.
• TikTok Pecém Data Center (CE): A partnership between ByteDance, Casa dos Ventos and Omnia (Pátria Investments), this project earmarks R$50 billion (US$9.62 billion) for its first stage, integrating data infrastructure with dedicated renewable energy generation.

Energy and Regulation: The Sustainability Challenge

The viability of these projects is intrinsically linked to the Brazilian energy matrix. The massive energy consumption of new AI centers has driven the sector to seek battery energy storage systems (BESS) solutions to ensure grid stability and 24/7 use of renewable sources. There is also a growing trend of partnerships with major energy players--such as Casa dos Ventos, Serena Energia and Renova Energia--leveraging their extensive sustainable energy portfolios and surplus generation. The industry views this as a potential solution to the issue of curtailment, which stems from transmission infrastructure limitations, particularly in the north and northeast regions.

In the regulatory sphere, the sector is closely monitoring energy transition incentive policies, such as the REDATA program (aimed at promoting investments in data centers nationwide), as well as transmission line and battery auctions, which are critical for delivering the power required by these new hubs. Licensing efficiency and the fulfillment of environmental, social, and governance (ESG) targets have become vital competitive requirements to attract the international capital financing these infrastructures.

Conclusion

The question is no longer whether Brazil will become a relevant player, but how quickly it can scale. Within a five-to-ten-year horizon, the country could emerge as one of the world's top five digital infrastructure powers, provided it addresses three pillars: distributed energy, tax incentives and accelerated decentralization. International confidence is manifesting in solid investments, with the volume of new construction projects expected to outpace completed facilities in the coming years. For global executives, this moment represents a window for strategic positioning that demands immediate action.

For investors, Brazil presents a market with regulatory risks but a big upside, fueled by high connectivity rates, favorable geography and a green energy matrix. If the government provides energy and tax predictability, the country is poised to capture a significant share of the trillions to be invested over the next decade.

Key Takeaways

• Project Pipeline: 202 active projects, with 23 scheduled completions by the end of 2026.
• Short-Term Highlights (4Q26): Expansions by CloudHQ (Paulínia), Scala Data Centers (Barueri/Jundiaí) and Microsoft (Sumaré/Hortolândia).
• 2027/2028 Outlook: Commencement of a new cycle of megaprojects focused on AI.
• Massive Investments: Projects such as ByteDance (Ceará) and Rio IA City (RJ) are poised to spend billions during their expansion phases.
• Key EPC Contractors: Afonso França Engenharia, Racional Engenharia, Engemon, Mendes Holler Engenharia, Zeittec.
• Key Tech Providers: NVIDIA, Cisco Systems, Huawei Technologies, Dell Technologies, Schneider Electric, Padtec and Vertiv.
• Energy Infrastructure: Growing emphasis on BESS and proximity to renewable sources (wind/solar) to support hyperscale demands. This is driving a significant decentralization away from major metropolitan hubs, particularly toward the Northeast region of Brazil.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).