Brazil, aiming to become an advanced hub in computing and artificial intelligence, is implementing a new tax law titled Law No. 15,504/2026. This law, which was approved last September, seeks to attract large investments in data infrastructure. However, achieving this goal depends on close cooperation between parliament and the government.
Legal and Executive Challenges
While many clean technology policies can be easily advanced through government decrees and regulations, data centers face greater challenges due to the need for coordination between the legislative and executive branches. For investors, tax exemptions related to these centers are not automatically granted but are also dependent on specific operational conditions. These conditions include determining whether electricity generation from natural gas is considered low-emission energy, as well as details related to energy efficiency criteria and local content requirements.
Reduction in Projected Capacity of Data Centers
Risk analysis by Rystad Energy indicates that due to these uncertainties, the announced capacity of data centers in Brazil has significantly decreased from 21 gigawatts to about 7 gigawatts. This reduction in capacity is due to severe network congestion and limitations on access to sustainable energy in the country, which increases the risk of developing data centers. These issues could lead to delays in the establishment of data centers and attracting necessary investments.
Additionally, network reforms and the costs of integrating battery storage, which are currently being approved in Congress, could help address these issues. Congress is advancing the PL 3716/2026 proposal to transfer the costs of integrating battery storage from producers to other system users. This proposal could somewhat improve the energy situation in the country.
In the field of biofuels and sustainable aviation fuels, executive agencies are regulating laws under the "Future Fuels" program. These laws include ethanol blending targets and requirements for biomethane and sustainable aviation fuels (SAF). Furthermore, the implementation of the hydrogen framework is also progressing under the supervision of the Ministry of Finance.
Overall, Brazil faces many challenges and opportunities in developing data centers. Creating a suitable legal environment and increasing cooperation among various government sectors can help achieve the country's long-term goals in modern technologies and data infrastructure.
