Sustainable Operations: Why Data Centers Are Turning to Renewables

Latin America is drawing increasing investment in data centers thanks to its strategic advantages—most notably, the availability of renewable energy agreements that ensure operators’ competitiveness and energy efficiency.

The data center market in Latin America is undergoing rapid expansion, fueled by the surge in digital services and growing demand for connectivity. According to a report by Mordor Intelligence, the Latin American data center construction market was valued at approximately USD 5.14 billion in 2024 and is projected to reach USD 7.81 billion by 2029, reflecting a compound annual growth rate (CAGR) of over 8.71% during the 2024–2029 period.

However, this growth brings a critical challenge: the sustainability of the energy supply. With 12.9% of the world’s data centers located in Latin America, the region is establishing itself as a hub for technological investment while simultaneously facing an unprecedented rise in energy demand. Brazil, Chile, Colombia, and Mexico are leading this expansion, prompting the need for stable, efficient, and sustainable energy solutions.

Renewable energy is emerging as a strategic enabler for the sector. Not only does it offer a reliable and cost-effective power supply, but it also supports companies in meeting environmental regulations and reducing their carbon footprint. In a context where energy demand is expected to continue rising, integrating clean energy sources is a strategic decision that enhances long-term profitability and secures the industry’s future.

Energy Demand: A Challenge Proportional to Growth 

Energy requirements have escalated commensurately as information technologies advance and data center capacity expands. Exponentially scaling technologies—such as artificial intelligence (AI)—currently consume approximately 4.3 GW of power globally, with projections estimating that figure could reach between 13.5 and 20 GW by 2028.

Data center energy consumption follows a steep upward trajectory. According to the International Energy Agency (IEA), by 2026, data centers are expected to consume more than 1,000 TWh—equivalent to Japan’s total energy demand. If this trend continues, global consumption could triple by 2030, representing a 200% increase. This accelerated growth presents a formidable challenge for the industry, which must implement sustainable energy solutions to ensure long-term viability.

In this global context of energy transformation, numerous Latin American countries have initiated regulatory frameworks to promote decarbonization by reducing CO₂ emissions. This, in turn, catalyzes the adoption of renewable energy sources and technological innovations that optimize energy utilization, such as liquid cooling systems and AI-driven energy management platforms.

Corporate Pathways to Renewable Energy 

To secure energy, operational, economic, and reputational advantages, major corporations are spearheading the transition to renewable energy to decarbonize their operations—some, like Apple, Microsoft, and Google, even committing to 100% clean energy utilization.

To facilitate this transition, companies typically leverage two complementary strategies. The first is self-generation (behind-the-meter) through renewable sources, such as deploying photovoltaic arrays on facility rooftops.

This on-site renewable generation approach circumvents the public grid and conventional meters, enabling data center operators to reduce energy expenditures, exercise greater control over their power consumption, and eliminate transmission fees. However, this strategy encounters physical constraints, as generation capacity is inherently limited by the square footage available at each facility.

For energy-intensive operations like data centers, a burgeoning alternative is a direct connection to an operational renewable energy plant. By producing and consuming electricity at the same location, operators can maintain cost control, circumvent transmission tariffs, and access more competitive pricing from clean sources. This energy autonomy becomes imperative as global electricity prices escalate and data demand intensifies.

As a strategic partner for enterprises in Latin America and beyond, Atlas Renewable Energy is positioned to deliver customized behind-the-meter solutions. These offerings are innovative, secure, and sustainable—bolstering operational resilience and facilitating a successful energy transition.

The second complementary strategy involves establishing power purchase agreements (PPAs) with renewable energy producers, securing a contracted volume of energy at stable, long-term prices. These agreements enable expeditious decarbonization of electrical consumption while enhancing market competitiveness. According to the International Renewable Energy Agency (IRENA), in 2023, solar photovoltaic and wind power sources were up to 56% more cost-effective than conventional energy.

Access to Government Incentives

Government incentives are instrumental in attracting investment in the data center sector across Latin America. The following outlines key programs and policies in various countries:

In Brazil, data centers have been classified as energy-intensive operations, which may grant them access to preferential electricity rates. This classification is fundamental for reducing operational expenditures and enhancing the appeal of infrastructure investments.

Chile has implemented regulatory frameworks that expedite solar and wind energy projects.  These initiatives promote clean energy adoption and help stabilize energy costs for data center operators.

Colombia offers substantial tax incentives and access to renewable energy infrastructure, positioning the country as an emerging technology hub. Reduced tax rates and the development of more than 20 data processing centers reflect a conducive environment for technological investment.

Mexico is a strategic destination for data centers, with the state of Querétaro emerging as a preeminent location. It hosts 50% of the country’s data center power capacity across 26 active projects from industry leaders such as AWS, Microsoft, and Google. The government provides tax deductions of up to 100% for investments in renewable energy, fostering energy efficiency throughout the sector. However, streamlining project approval processes will strengthen investor confidence and sustain sectoral growth.

Scaling Capacity 

Data centers must be scalable to maintain a competitive advantage in an ever-expanding market. In Latin America, this scalability has been enhanced through the proliferation of hyperscale data centers powered entirely by renewable energy.

A noteworthy example is ODATA’s data center in Brazil, which has transitioned to a self-producer of renewable energy, ensuring that its entire electricity supply derives from sustainable sources. These facilities enable enterprises to expand their infrastructure rapidly while adapting to fluctuations in demand without compromising operational efficiency or environmental sustainability.

Additionally, expanding digital infrastructure and strategic partnerships with telecommunications providers have significantly enhanced regional connectivity—essential for ensuring reliable interconnection between data centers and delivering superior service quality. Implementing modular architectural designs has been instrumental in this process, enabling data centers to expand in a streamlined and sustainable manner.

This modular approach facilitates the incorporation or removal of units as demand dictates, optimizing spatial and resource utilization. Each module encompasses essential components such as servers, storage arrays, and networking equipment, enabling more agile and cost-effective operations.

Ultimately, the integration of renewable energy is essential to sustainably addressing the escalating demand for data processing capabilities and ensuring that the expansion of digital infrastructure proceeds without detrimental environmental consequences.

Renewable Energy to Enhance Energy Efficiency of Data Centers in Latin America

In an industry characterized by high energy consumption, data centers face increasing regulatory and market pressures to minimize their carbon footprint. This is especially relevant in a region where electricity consumption is constantly rising, driven by growing digitization and the adoption of emerging technologies such as artificial intelligence, IoT, and 5G.

In this context, turning to renewable energy allows them to significantly reduce their operational costs and offer more competitive services, and it ensures the predictability and stability of these costs in a changing energy market environment.

The rise of renewable power purchase agreements (PPAs) has provided data centers with a key tool to manage their long-term energy needs efficiently. These contracts not only contribute to reducing emissions and aligning with global sustainability goals but also offer fixed energy prices, protecting companies from energy market volatility.

Atlas Renewable Energy has been a key strategic partner in this transition, facilitating renewable PPA agreements with leading players in the data center industry in Latin America, such as V.tal and Odata. In the case of V.tal, the company signed an agreement to supply renewable energy covering 100% of the operations of its data centers in Brazil, directly contributing to the company’s decarbonization goals.

Similarly, Atlas has closed a PPA with Odata to provide clean energy to its operations in Brazil, ensuring a stable and competitive supply while reducing its carbon footprint.

The future of data centers depends on competitive, stable, and environmentally friendly energy solutions. Atlas Renewable Energy: the strategic partner in the transformation towards sustainable leadership.

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This article was created in partnership with Castleberry Media. At Castleberry Media, we are dedicated to environmental sustainability. By purchasing carbon certificates for tree planting, we actively combat deforestation and offset our CO₂ emissions threefold.