Brazil is currently seeking to improve its data center infrastructure by implementing new energy laws. With the formation of a new Congress and the continuation of the presidency for another four years, the country's data center policies rely on close coordination between the legislative and executive branches.
Tax Laws and Data Center Development
Most clean technology policies can progress through decrees and executive laws, but data centers are an exception. To attract massive investments, Congress and the executive branch must align the timing of legal tax incentives with regulatory definitions that still need to be written. In this regard, the Redata tax regime (Law No. 15,504/2026), which was approved in September, aims to turn Brazil into a prominent hub for high-performance computing and artificial intelligence.
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Challenges and Risks of Development
For investors looking to implement massive data infrastructure, tax exemptions are not only not automatic but also not permanent. These exemptions are time-limited and conditional on meeting strict operational requirements. One important executive decision is still pending, regarding whether electricity generation from natural gas will be recognized as low-emission power. Additionally, important details about energy efficiency criteria, local content requirements, and compliance verification are also under review.
According to risk assessment by Rystad Energy, the announced data center pipeline in Brazil is expected to decrease by approximately two-thirds, from 21 gigawatts to about 7 gigawatts. Our risk modeling also points to heavy network traffic and limited access to reliable electricity, which increases the risk profile of the country for data center development.
Congress Reforms and the Future of Renewable Energy
Congress is accelerating the process of Law PL 3716/2026 to transfer the costs of battery storage integration from producers to all users of the system. While biofuel and sustainable aviation fuel (SAF) programs are progressing under executive laws. Additionally, the implementation of the hydrogen framework continues under executive regulations. Furthermore, presidential announcements are being prepared to define frameworks for leasing marine areas and technical criteria for future offshore wind energy auctions.
Finally, with the recent passage of legislation on clean energy, regulatory agencies are drafting safety standards and land storage licensing laws to create a decarbonization framework in Brazil.
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