Data center market in Brazil faces growth potential amid high costs

The data center market is projected to experience exponential growth over the next five to ten years, driven largely by the advancement of artificial intelligence and increasing digitalization. Rafael Segrera, president of Schneider Electric for South America, notes that the segment's share in his company's business has risen from less than 10% five years ago to nearly 30% today. The sector is expected to see annual growth exceeding 10% through 2030.

Despite this potential, Brazil faces significant hurdles in expanding its global market share, which currently stands at 1.78% of the world's 1,299 data centers. According to Brasscom, the cost of building a large-scale data center in Brazil is approximately 34% higher than in the United States. This discrepancy is primarily attributed to a high tax burden on computing equipment, which averages 35% in Brazil compared to 5% to 10% in other nations.

Additionally, the energy-intensive nature of these facilities requires significant power. The Empresa de Pesquisa Energética (EPE) has noted that while renewable energy sources attract projects, the connection of large consumers will necessitate reinforcements to the transmission grid. To attract more international investment, experts suggest Brazil must provide legal certainty and clearer regulations alongside financial incentives.