Latin America is rapidly emerging as a critical region for global data centre expansion. With renewable energy, expanding connectivity and growing demand for cloud and AI workloads, the region is attracting increasing attention from hyperscale operators and investors alike.

However, according to Elea Data Centres‘ vice president of international business, Elena Winters, realising this potential requires a careful alignment of infrastructure, regulation, and technology.

She stresses that success in LATAM requires careful coordination between multiple elements: physical infrastructure, regulatory frameworks and technology deployment. These factors, she argues, will ultimately determine whether the region can fully capitalise on its natural advantages and emerge as a sustainable, globally competitive data centre market.

Power reshapes site selection

Across global markets, power has become the defining constraint on growth.

“Power availability has become the primary site selection factor,” Winters reveals. “In the US, hyperscalers prioritise power readiness over land or cost.”

As a result, this shift is reshaping the traditional hierarchy of data centre hubs.

“Markets with constrained grids, like Northern Virginia, may lose market share compared to Texas, where utilities can deliver faster,” she notes.

In mature markets, infrastructure bottlenecks are compounded by social pressures, with “grid constraints and community pushback being major issues”. As a result, operators are increasingly forced to explore unconventional solutions, which include looking at behind-the-meter strategies, as well as gas, nuclear, or alternative options.

Latin America presents a different equation. Winters claims there is an “abundant renewable energy, though market maturity varies”. While power is less constrained than in North America, the broader ecosystem still requires alignment.

She notes: “Power availability is different, but other factors still need fine-tuning.”

Brazil anchors regional growth

Brazil stands at the centre of the region’s data centre expansion, being the most active market for cloud and AI infrastructure and accounting for about 40% of total data centre investment in LATAM.

“Within the country, Sao Paulo is the dominant hub,” Winters reveals.

Beyond Brazil, several markets are gaining traction. “Mexico is a close second, particularly the Querétaro market,” she states. “Chile is attractive for renewable energy, and Colombia is next, though power costs are higher.”

In Brazil, proposed tax reforms could change the market significantly.

“Redata, if passed, reduces taxes and makes investment in Brazil more attractive. Without it, development will continue, but at a slower pace,” she explains. “Growth continues, but Redata would ease entry and unlock billions of dollars in investment.”

Grid challenges as it pertains to renewables

Brazil’s power grid runs mostly on renewable energy. About 90% of its electricity comes from hydro, wind, and solar, making it one of the cleanest and cheapest systems in the world.

Years of steady investment have created more renewable power than the country often needs. This is very different from other regions, where electricity is scarce and prices are rising.

“The key challenge isn’t the reliability of renewables themselves, but ensuring that new, energy-intensive infrastructure is developed where grid capacity already exists and can be used immediately,” she states.

Climate-related events further highlight the importance of operational preparedness, not just generation mix, she claims.

“This is where execution matters. Elea demonstrated this during the 2024 floods in Porto Alegre, when its POA1 facility remained operational and supported critical services while much of the surrounding infrastructure was disrupted.

“The response underscored the value of redundancy, contingency planning, and proximity to resilient grid connections,” she said.

Brazil’s renewable grid represents a structural advantage, which is clean, stable, and affordable, when paired with disciplined site selection and proven operational resilience.

For companies facing higher energy costs and tariffs elsewhere, this combination makes Brazil a compelling long-term option rather than a constraint.

Policy shapes investment

According to Winters, public policy is one of the biggest factors influencing how fast the market can grow, describing it as “critical”.

“Globally, governments are offering incentives, like India’s 20-year tax incentive bill,” she says.

This incentive will give foreign companies operating global data centres in India a 20-year tax break to attract investment in its fast-growing digital infrastructure sector. Finance Minister Nirmala Sitharaman said in the federal budget that overseas firms will not have to pay tax on services they provide to customers outside India until 2047. However, services sold to Indian customers through local units will still be taxed.

Winters believes Brazil must take a similar approach in a bid to “remain competitive.”

Designing for hyperscale and AI

Data centre design is also evolving as workloads become more demanding.

Currently, Elea Data Centres has 9 operational facilities across five markets and is expanding in secondary markets in Brazil, Winters reveals.

“Key factors for hyperscalers: fibre-rich ecosystems, interconnection, long-haul networks, diversity of paths in/out, cost-effective renewable power, and high-density support,” she notes.

AI workloads also increase energy density inside facilities, which affects relationships with utilities and energy providers.

“AI workloads demand more power: traditional racks at 10–15 kW now require 50 kW+ per rack, which changes relationships with energy providers.”

Sustainability is central to Elea’s strategy. Winters reveals the company is committed to 100% renewable energy. Advanced cooling and efficiency measures are already being used, consistent with broader regional goals.

“Rio AI City uses chilled water, air-cooled chillers, free cooling and thermal storage. These systems support a broader environmental goal,” she notes.

Ongoing challenges

Despite strong interest, barriers remain.

“For Brazil, taxation is the main issue,” Winters says. The industry is watching closely for reform. “Redata passing unlocks pipeline capacity; hyper scalers are anticipating it.”

Redata is Brazil’s new special tax regime for data centres, launched in 2025 to attract investment in digital infrastructure. It provides companies with tax breaks on imports, industrial products, and social contributions when building or expanding data centres in Brazil. The goal is to make Brazil a regional hub for cloud computing, AI, and storage, while lowering the cost of investment in these facilities.

Other countries in the region face different challenges. “Other LATAM countries have permitting issues, but for Brazil, the tax incentive bill is critical.”

Future outlook

The outlook for the Latin American data centre market is strong, reflecting both the region’s untapped potential and the growing demand for cloud and AI infrastructure.

According to Winters, this momentum is only set to accelerate. She predicts “significant growth,” highlighting the combination of energy availability, policy reform and technological adoption as key drivers shaping the next phase of expansion.

Power alone, however, is not enough to sustain this growth. Modern data centres rely on connectivity to fully leverage their renewable energy capacity in a bid to serve their clients.

As a result, investment in network infrastructure will be critical to the region’s ability to compete on a global scale.

“Investment in subsea and terrestrial fibre will enable global companies to use LATAM’s renewable energy,” she notes.

This connectivity allows LATAM to integrate more seamlessly with global supply chains, making it an attractive alternative to traditional data centre hubs in North America and Europe.

As hyperscalers and cloud providers continue to prioritise sustainability, operational efficiency, and scalability, the region is positioned to become a core part of the world’s digital infrastructure, with Winters revealing:

“Market maturity is behind the US, but lessons from Northern Virginia can be applied.”