Data Centers, Reviled in the US, Win Support in Brazil’s Presidential Election

(Bloomberg) -- Data centers have become politically toxic in the US midterm campaign. Not in Brazil’s presidential race. 

Ahead of the country’s October vote, both President Luiz Inácio Lula da Silva and right-wing rival Flávio Bolsonaro are making multibillion-dollar data centers and the AI investment that comes with them central to their pitches to bolster Latin America’s largest economy.

It’s a sharp contrast with the US, where voter anger over electricity bills and water use is putting politicians on the defensive even in data-center strongholds like Virginia and Texas.

Lula has evoked data sovereignty, the promise of jobs and increased foreign investment while pushing lawmakers to advance legislation that slashes taxes on information technology equipment for data centers. The bill is scheduled for a Senate vote on Tuesday, and is expected to accelerate megaprojects like the $65 billion Rio AI City development planned for Brazil’s second-largest city. 

“We could see a substantial inflow of money to build data centers here in Brazil,” Lula said last week. 

State and municipal governments from Rio de Janeiro to Ceara, in northern Brazil, are vying to attract US and Chinese hyperscalers for projects that will cost tens of billions of dollars. Bolsonaro has also supported cutting taxes on imported computer chips and equipment to make projects more attractive. 

At stake is Brazil’s bid to become Latin America’s hub for the computing power for AI, ahead of rivals Argentina and Chile that are offering incentives and building infrastructure to compete for the same investments. 

Data centers have faced protests, particularly from Indigenous groups. But opposition hasn’t exploded like in the US, where roughly 70% said they were against local construction of the facilities in a March survey from Gallup.

“People think about it as the development of technology and growth, totally the opposite of the US,” said Andrei Roman, the chief executive officer of polling firm AtlasIntel. “Most of the jobs are unskilled, so people won’t associate them with an immediate threat to their income.”

Still, Brazil risks missing out on the global boom despite abundant renewable power and favorable public opinion. 

The industry is waiting for the promised tax breaks. Transmission lines need to expand to carry wind and solar power to data centers. Brazil is already behind Chile in grid-scale batteries, and two licensing rounds were pushed back from April to December. 

Political Tensions  

The main obstacle to getting Rio AI City and other projects is delays in approval of the bill to cut taxes, said Osmar Lima, Rio’s municipal secretary for economic development.

The lower house of Congress approved the legislation, known as Redata, in February. But it stalled in the Senate during a months-long dispute between Lula and Davi Alcolumbre, the upper chamber’s leader. They’ve since smoothed over ties, and Alcolumbre named a supporter of the bill as its rapporteur ahead of the vote.

“If the legislation happens, the investment will come,” Lima said in an interview.

Even if it passes, there are signs that some hyperscalers are waiting for elections to conclude before committing to major investments. 

Tensions between Lula and Donald Trump, who imposed tariffs in July, have left some US technology companies wary of major commitments to Brazil before its vote. The Trump administration also considers AI a national security priority, and has sought to keep investment into the technology in the US.

I Squared-controlled Elea Data Centers expects its Rio AI City development to accelerate after the election and US midterms in November. 

“Companies may be more cautious about making high-profile commitments and exposing themselves to the political debate,” said Alessandro Lombardi, founder and chairman of Elea, which plans to break ground on the 1.5-gigawatt project as early as this year. “The Brazilian elections just need to pass.”

Little Backlash

Local officials promote the Rio AI City project as a way to turn the beachfront metropolis into a global data center hub, and pushback from locals has been minimal. 

A nearby condo complex highlights the data center as a “landmark for innovation and technology” in a brochure for prospective residents, placing it alongside Rio’s beaches, sports stadiums and nightlife as an attraction.

Last year, Tapestry, a project within Alphabet’s X moonshot lab, partnered with Rio to help prepare the power grid for the data center build out. Existing infrastructure can support the project’s initial 1.5 gigawatts, Page Crahan, Tapestry’s general manager, said.

In the US, surging demand from data centers and strained power grids are spurring a new wave of natural gas generation and putting Big Tech’s climate commitments under pressure. Brazil, meanwhile, is already curtailing surplus wind and solar power and has a large pipeline of renewable projects that could be developed alongside new data centers.

Brazil’s abundant renewable power is Rio’s biggest advantage, according to Crahan. “It’s incredibly unique globally in any economy,” she said.

The US, where data centers barely registered as an issue a few years ago, is a testament to how quickly public sentiment can change. But analysts expect them to grow in Brazil no matter the election result.

Aurora Energy Research, a UK consulting firm, projects Brazil’s data center capacity will more than quadruple to over 4 GW by the early 2030s. 

The pipeline of large projects seeking grid connections is even bigger. Grid operator ONS expects their electricity demand to reach 5.7 GW on average by 2030.

©2026 Bloomberg L.P.