Driven recently by the development of artificial intelligence tools, the global data center market has grown and may present opportunities for the Brazilian electricity sector. However, for Brazil to take advantage of this opportunity, it is essential to solve bottlenecks, especially in the connection with the energy transmission and distribution system. This was the main conclusion of the experts who participated in a debate on the topic, held in August in São Paulo by the law firm Veirano Advogados in partnership with PSR.

“Today, there is a lack of connection and coordination between all sectors to unlock this potential demand in the data center segment. Brazil has an energy supply, and the outlook points to great investment potential. Making electric power infrastructure viable at an affordable cost can contribute significantly to the country’s economic development,” said Mateus Cavaliere, head of Planning and Market Intelligence at PSR, who participated in the debate.

According to the Energy Research Company (EPE), as of June of this year, data center projects with processes for connection to the basic grid filed with the Ministry of Mines and Energy (MME) totaled a potential demand of 2.5 gigawatts (GW) by 2037.

Investors in the data center sector highlight two main concerns regarding the Brazilian electricity sector: the cost and reliability of the energy supply. Data from the Brazilian Agency for Industrial Development (ABDI) indicate that electricity costs represent approximately 30% of the total operating costs of a data center.

Typical data centers have a continuous and constant consumption profile, 24 hours a day, all year round, which makes the security of the electricity supply essential for the proper functioning of the equipment and for meeting the demands of the sector. Considering global decarbonization goals, the more renewable the energy source used by data centers, the better. In this sense, Brazil positions itself as an important competitor in the dispute for the global data center market.

“Brazil has great opportunities. But despite having energy generation at one of the lowest costs in the world, the energy bill is one of the most expensive. Our transmission network is one of the largest in the world, but the connection process for data centers is still complex. So Brazil needs to work on sector integration, in addition to improving regulation and tax issues so that we do not lose this opportunity to other countries,” said Celso Dall’Orto, head of Planning and Market Intelligence at PSR, highlighting the country’s opportunities and challenges.

To face these challenges, PSR has developed studies focused on the optimized expansion of supply, generation, transmission and distribution of energy, in addition to issues related to resilience and the attributes of all sources, aiming to make the Brazilian electrical system more robust.

In addition to Mateus and Celso, the debate also included the participation of Lívia Amorim and Ana Claudia Beppu, partners at Veirano Advogados; Marcos Siqueira, COO of Ascenty in Latin America; and Daniel José Tavares de Souza, technical consultant for the Energy Transmission superintendence of EPE.

To learn more about the opportunities and challenges of the Brazilian electricity sector in serving the growing data center market, access the article on the subject and the August/2024 edition of the Energy Report.