The global energy and climate narrative has become increasingly linked to AI’s impact on energy demand over the past year. As tech companies rush to build new data centers, they’ve complicated the U.S. emissions reduction story. In this context, Brazil sees an opportunity to attract these companies by highlighting its strategic advantages.
Brazilian officials are actively courting tech firms to set up operations in their country, emphasizing its location as a hub in South America and its supportive policy environment. However, the most significant selling point is Brazil’s electricity system, which is powered by nearly 90% renewable energy. The country already has a well-developed transmission infrastructure that efficiently distributes electricity across the nation.
During a visit to Brazil this week, it became clear that this topic is on everyone’s mind. “Our message to the world, based on our plan, is that AI power demand can be satisfied through the use of renewable energy sources,” stated Luis Manuel Rebelo Fernandes, Brazil’s deputy minister of science, technology, and innovation, during a panel at the Web Summit in Rio de Janeiro.
There are indications that Brazil’s strategy is yielding results: numerous data centers are currently under development across the country as major tech companies like Amazon and Microsoft invest heavily in the sector. This development is significant not only for Brazil and the Latin American market but also illustrates the competitive advantage that clean energy can provide.
Brazil’s Clean Energy Advantage
Brazil’s clean energy story began long before climate change became a global concern. Starting in the late 19th century, the country constructed dams to power its industry, utilizing its extensive waterways for energy production. By the 1960s, Brazil was building large-scale dams that now provide a significant portion of the country’s power. To distribute this energy, Brazil developed an extensive transmission system, creating an integrated network that differs from the more complex and fragmented system in the U.S.
“Brazil is well positioned,” noted Luciana Aparecida da Costa, director of infrastructure, energy transition, and climate change at BNDES, the Brazilian development bank, during an interview in São Paulo. “But we know that we have to compete with other countries to attract this investment.”
Challenges and Opportunities
While Brazil’s electric grid is a significant selling point, the country still faces challenges. Climate change has impacted water levels, raising concerns about the reliability of hydropower. Additionally, a rapid increase in electricity demand could strain the grid, similar to what’s happening in the U.S. To address these concerns, the Brazilian government has made it a priority to support new renewable energy generation alongside the development of new data centers.
Funding for this purpose is a key component of the country’s $4 billion AI plan, launched last year. “Every expansion of high-performance computing is associated in the plan with the development of dedicated sources of renewable energy,” Fernandes explained.
Private companies are also taking similar steps. In April, Reuters reported that TikTok’s parent company, ByteDance, was considering a substantial data center investment in Brazil as part of its AI expansion, which would include new wind power generation.
Global Context and Implications
It’s clear that the AI race is currently dominated by the U.S. and China, where AI models are being developed and where most capital is being invested. However, Brazil’s pitch and its initial success serve as a reminder of the competitive appeal of clean energy in the global market. As emerging market countries increasingly transition to solar power, they may attract foreign investment not just from AI companies but from any foreign investor looking to produce products cleanly.
