Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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• Latin America is becoming a global hub for data center construction, attracting billions in investment from Big Tech due to the AI boom, nearshoring advantages, and the region's potential in the tech sector.
• The data center market in Latin America is projected to double in valuation by 2030, with Brazil, Mexico, and Chile leading the growth, and other countries like Colombia, Peru, Costa Rica, and Panama emerging as new investment centers.
• While the data center boom brings economic benefits and development, it also presents challenges related to the competition for scarce resources and a potential increase in human rights lawsuits, necessitating sustainable planning for long-term growth.

Latin America is emerging as a global hub for data center construction as Big Tech floods the region with new projects to power the AI boom. The “industrial sunbelt” spanning across Brazil and Mexico, plus the geopolitical advantage of nearshoring and the great potential of the Latin American tech sector, has led Silicon Valley to invest heavily in data centers spanning from North to South America.  It’s estimated that large data center firms invested more than USD $2 billion in Latin America in 2024 alone, and that rate of expenditure is only going to increase. An April report published by Research & Markets suggests that the region's data center market is on track to double in valuation by just 2030 to reach USD 14.30 billion. 

“The market is dominated by the usual countries—Brazil, Mexico and Chile—with Colombia, Peru, Costa Rica and Panama as emerging centers for investment,” reports global white-shoe law firm White & Case. “The most active data center companies in the region include Scala, Equinix, Cirion, Ascenty, Kio and Odata,” the report goes on to detail.

While future data center demand growth is difficult to project, McKinsey estimates that global demand will likely rise between 19 and 22 percent annually between 2023 to 2030, reaching a total annual demand of 171 to 219 gigawatts. In a more extreme scenario, McKinsey says that demand could feasibly rise by a whopping 27 percent to reach 298 gigawatts. 

“This contrasts with the current demand of 60 GW, raising the potential for a significant supply deficit,” McKinsey reported in October, 2024. “To avoid a deficit, at least twice the data center capacity built since 2000 would have to be built in less than a quarter of the time,” the report went on to say.

All of those data centers will require massive amounts of energy capacity, as well as land and water resources. These needs, combined with economic and political factors, make the Latin American sunbelt an ideal location for a large chunk of the data center growth push. These countries are able to access abundant solar resources and produce renewable energy cheaply using cheap green technologies from China, an increasingly important trading partner for emerging economies in Latin America and elsewhere.  

“New localization rules and the push for nearshoring to the U.S. have led Latin America to rise as a digital infrastructure hub, due to its growing startup ecosystem, strategic proximity, and renewable energy capacity,” writes Techloy in an article published earlier this week. Brazil and Mexico’s geographical positioning in the global sunbelt makes them ideally situated for large-scale solar energy projects capable of powering a “digital infrastructure hub with carbon-neutral commitments.”

This is going to usher in a new gold rush, providing an influx of cash to these emerging economies. A single large data center typically costs hundreds of millions of dollars, and the economic impact of such an investment can yield “productivity gains, infrastructure upgrade, industrial integration and overall economic development,” according to Bloomberg.

But while the data center boom will bring a fresh wave of investment and development to Latin America, it will also bring plenty of challenges and negative externalities. These companies will be competing for vast amounts of scarce resources, potentially stripping critical materials from communities that desperately need them. As Mongabay has noted, the spread of the clean energy revolution in Latin America has had a direct correlation with an uptick in human rights lawsuits. 

“Addressing how these resources can be leveraged sustainably to support data processing and AI infrastructure is an urgent task for the region and a potential new source of growth and development if Latin America and the Caribbean is able to provide solutions to the AI global value chains,” states a recent University of Oxford research paper. 

Walking this tightrope will be absolutely critical to support the global AI boom without looting the resources of vulnerable communities. If planned properly, however, Latin America’s data center gold rush could be a win-win for clean energy development and local economies.

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By Haley Zaremba for Oilprice.com 

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