The discussion around energy and climate has been closely linked to AI development over the past year. The rush by tech companies to build new data centers has significantly impacted the U.S.’s efforts to reduce emissions.
Brazil sees this situation as an opportunity. Although the AI sector’s energy demands haven’t focused on Brazil so far, Brazilian authorities are trying to attract tech companies to establish operations there. They emphasize Brazil’s location as a key South American hub and its favorable regulatory policies. However, the country’s biggest advantage is its power grid: a substantial portion comes from renewable sources, and Brazil already has a strong infrastructure for transmitting electricity nationwide.
During discussions with Brazilian officials this week, the topic was a major point of interest. “Our message to the world, based on our plan, is that AI [power demand] can be met using renewable energy sources,” stated Luis Manuel Rebelo Fernandes, Brazil’s deputy minister of science, technology, and innovation, at the Web Summit in Rio de Janeiro.
Early indications suggest this strategy is working, with numerous data centers being developed across Brazil, supported by significant investments from major tech companies like Amazon and Microsoft.
This development is important for Brazil and the broader Latin American market. It also shows the potential benefits of clean energy. As some emerging market countries increasingly rely on solar power for electricity, they could attract foreign investment, not only from the AI sector but also from any company seeking to produce goods sustainably.
Brazil’s clean energy story began well before climate change became a global priority. Starting in the late 19th century, Brazil constructed dams to power its industries, utilizing its extensive network of waterways for energy production. By the 1960s, the country was building large-scale dams that independently supplied much of its power. Since dams are not always close to cities, Brazil developed a large transmission system to create an integrated network. (This contrasts with the U.S., which has a complicated system with three main regions and regulatory authority divided between states and the federal government.)
Essentially, Brazil didn’t develop a clean energy grid for environmental reasons. However, as large companies continue to pursue their climate goals (even with less public emphasis), the grid provides a significant advantage.
“Brazil is in a good position,” said Luciana Aparecida da Costa, director of infrastructure, energy transition, and climate change at BNDES, the Brazilian development bank, in São Paulo. “But we know we must compete with other countries to attract this investment.”
Despite the advantages of its electrical grid, Brazil 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 the situation in the U.S.
To address these concerns, the Brazilian government is prioritizing support for new renewable energy generation alongside new data centers. Funding to ensure this is a key component of the country’s plan launched last year. “Every expansion of high performance computing is linked in the plan to the development of dedicated sources of renewable energy,” Fernandes said.
Private companies are also pursuing this approach. For instance, in April, Reuters reported that ByteDance, the parent company of TikTok, was considering a substantial data center investment in Brazil, accompanied by new wind power facilities, as the company expands its AI operations.
It’s clear that the U.S. and China are currently leading the AI race. They are where the AI models are being developed and where the majority of capital is being invested. However, Brazil’s strategy, and its initial success, highlights the competitive appeal of clean energy in the global market.
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