Power & Potential: Brazil's Data Center Revolution

Overview

This episode features Tito Costa, Chief Revenue Officer at Elea Data Centers, in conversation with Megaport host Michael Reid. The discussion focuses on Brazil’s data center market, Elea’s expansion strategy, and why Brazil’s power profile is becoming strategically important for cloud and AI infrastructure.

The central argument is that Brazil has a rare combination of data center demand, renewable energy availability, and power economics. Costa describes a market where almost 90% of the national energy matrix comes from renewable sources, where renewable power is not priced as a premium product, and where clean energy can be available at around $0.06 per kWh. That creates a different starting point from markets where AI infrastructure is constrained by both power availability and sustainability requirements.

At the same time, Brazil’s infrastructure market has its own constraints. Much of the country’s IT infrastructure has historically remained on premises, particularly outside Sao Paulo and Rio de Janeiro. Cloud nodes are concentrated mainly in Sao Paulo, latency between regions can be material, and importing AI equipment into the country can complicate business cases. The conversation presents Brazil not as a frictionless alternative, but as a market where the economics of power, regional demand, and connectivity are changing the data center opportunity.

1. Elea Grew From Acquisitions Into a Distributed Brazilian Platform

Elea was officially founded in 2018 through the acquisition of five data centers from an incumbent provider that was going through a Chapter 11 process in Brazil. Alessandro Lombardi, Elea’s founder and CEO, used those initial facilities as the starting point for a broader Brazilian data center platform.

Since then, Elea has expanded through additional acquisitions. Costa describes the company as having grown from the original five facilities to nine data centers. The later expansion included:

• One additional data center in Rio de Janeiro.
• A second facility in Porto Alegre.
• Two recently acquired data centers in Sao Paulo.
• A Sao Paulo acquisition that also included a land bank and a substation with 100 MW of available power.

The emphasis is not only on the number of facilities, but on where they are located. Elea operates across Sao Paulo, Rio de Janeiro, Brasilia, Curitiba, and Porto Alegre. That geographic spread matters because Brazil’s data center market is not evenly distributed, and many regions outside the largest hubs have lacked multi-tenant, carrier-neutral facilities.

Elea’s operating footprint is described as nine facilities with about 20 MW operational. Its customer base is roughly 150 customers, spread across financial services, banks, schools, universities, enterprise customers, federal branches, and international customers. Costa characterizes the base as diversified rather than concentrated in a single vertical.

2. Brazil’s Renewable Energy Matrix Changes the Power Conversation

Power availability is one of the defining constraints for AI infrastructure globally. Reid frames the broader market as one where demand for GPUs and AI capacity is high, but access to power is increasingly difficult, especially in the United States. Costa’s response is that Brazil is in a materially different position because of its national energy mix.

Brazil’s energy matrix is described as almost 90% renewable. Hydroelectric power remains the largest contributor, at roughly 45% to 50% of the mix. However, Brazil is no longer adding much new hydro capacity. Instead, Costa says the country adds about 4 GW of power each year, and about 95% of that new capacity comes from renewable sources, primarily solar and wind.

That creates a power profile where hydro acts as a renewable baseload foundation while solar and wind continue to expand the overall renewable share. The expected direction is continued growth in renewables, with the discussion pointing toward Brazil reaching nearly 95% renewable power by 2030.

The comparison with other markets is central to the point:

• Brazil is near 90% renewable today.
• Argentina and Chile are described around 30% renewable.
• Mexico is described around 15% to 20% renewable.
• The United States is described around 20% renewable.

The economics are as important as the percentage. Costa says customers in Brazil are not paying a surcharge simply because the power is renewable. The cited power price is around $0.06 per kWh, which makes the Brazilian position unusual: renewable energy is both widely available and cost-effective, rather than a premium add-on.

3. AI Demand Is Creating New Interest in Brazil, but GPU Deployment Still Has Barriers

Brazil’s renewable power position is attracting global attention. Costa notes that major global infrastructure players are already active in the country, including DigitalBridge, Digital Realty, and Equinix. Elea itself is a Brazilian company, although founded by an Italian entrepreneur who has lived in Brazil for many years, and Goldman Sachs is described as holding a minority stake in the business.

Local demand is already significant because Brazil is a large country with nearly 240 million people. That domestic market alone drives cloud usage and digital infrastructure demand. AI adds another layer: companies that cannot access AI capacity quickly enough in the United States are looking for other regions where AI pods or GPU deployments could be established faster.

Costa says he has been having conversations for at least a year with hyperscalers and other major players about the possibility of deploying AI infrastructure in Brazil and the broader continent. However, the current state of deployment is still early:

• There are cloud POPs in the region.
• Costa says there are zero AI POPs in Brazil from the large hyperscalers.
• There is a small artificial intelligence deployment in Uruguay, but not at a scale comparable to the United States.

The remaining barrier is not primarily power. It is equipment logistics and import economics. Shipping GPUs and related equipment into Brazil can look expensive or complicated from the outside. Costa acknowledges the challenge, but argues that the cost is often overstated. With transparent local guidance, there may be ways to reduce import taxes and reshape the business case.

That distinction is important. Brazil’s power economics can make the market attractive, but AI infrastructure decisions still have to account for hardware importation, local execution, and the practical mechanics of getting GPU capacity into the country.

4. Brazil Still Has a Large On-Premises Infrastructure Base

One of the most important market dynamics is that a large share of Brazilian IT infrastructure has historically remained in-house. Costa cites a figure from roughly five years earlier that about 80% of the Brazilian data center market was still on premises. He notes that the number has likely changed, but the underlying point remains significant.

The national average also hides regional differences. Sao Paulo and Rio de Janeiro are the most developed data center markets in Brazil, so their mix is likely more mature. Outside those cities, in markets such as Porto Alegre, Curitiba, and Brasilia, the on-premises share has been even higher because many organizations lacked a local multi-tenant, carrier-neutral data center option.

This is not simply a matter of customer preference. Costa identifies several structural reasons:

• Lack of local colocation options. In some cities, enterprises did not have a professional multi-tenant data center available nearby.
• Latency constraints. Moving all workloads to Sao Paulo was not always practical.
• Application locality. Some applications needed to remain closer to users or local business operations.
• Cloud concentration. Since most cloud nodes are in Sao Paulo, customers outside that region needed a practical path to reach cloud services without moving every workload away from local demand.

Latency is a concrete design factor. Costa says Porto Alegre to Sao Paulo can be roughly 25 to 30 milliseconds. That is enough to make some workload placement decisions non-trivial, especially where applications need to respond locally.

The result is a market where colocation is not only competing with cloud. It is also replacing office-based or self-managed data center environments that were used because no better local option existed.

5. The Porto Alegre Floods Made Resilience a Business Issue

The discussion uses Porto Alegre as a practical example of why purpose-built data centers matter. The city experienced severe flooding, described in the conversation as a Brazilian version of Katrina. Many corporate data centers in lower-lying locations went underwater because they were not prepared for that kind of event.

Elea had been speaking with local enterprises about moving into its data center before the flood. When the flood occurred, the value of a professional facility became much easier for the market to understand. Costa describes equipment arriving at Elea’s data center by boat and the team quickly setting up POPs from affected legacy environments inside its facility.

The broader lesson is that resilience is not only a technical feature. It is an operating discipline. A multi-tenant data center provider can achieve economies of scale around physical security, power, cooling, operations, certification, and risk management that many individual enterprises cannot easily match inside office-based facilities.

Costa is careful not to frame this as a claim that enterprises are incapable of operating their own environments. The point is that dedicated data center operators focus on that problem full time and can invest in capabilities across a larger platform. The flood turned that distinction into a concrete business case.

6. Sustainability Is Embedded in Elea’s Operating and Financing Model

Elea’s sustainability position is presented as more than a marketing claim. Costa says all of Elea’s facilities received I-REC certification, demonstrating that 100% of the company’s energy is renewable.

The company has also tied sustainability targets to financing. Costa says Elea was the first company in the Americas region to release a sustainability-linked bond. Under that structure, the company has specific targets it must meet, and failure to meet those targets increases the interest rate on its debt.

The targets include:

• PUE.
• WUE.
• Percentage of renewable energy usage.
• Women in leadership.

That financing mechanism gives the sustainability strategy financial consequences. It makes the company’s stated environmental and operational targets part of the cost of capital, rather than a separate corporate narrative.

7. Power Generation Is Only One Half of the Infrastructure Problem

Brazil’s power profile is strong, but Costa separates power into two problems: generation and capillarity. Generation is the availability of power in the national matrix. Capillarity is the ability to move that power from where it is generated to where data centers actually operate.

This distinction matters because Elea’s facilities are not in the Amazon basin or directly beside the hydro resources that shape Brazil’s energy mix. Facilities in Rio de Janeiro, Sao Paulo, Brasilia, and other markets still require transmission and distribution infrastructure.

Brazil has an unusual mechanism that can help accelerate distribution. Costa explains that in Brazil, a company can build a power line or power grid connection and later donate it to the utility company. That means a data center operator does not always have to wait for the government or utility to build the required transmission path.

There are limits. Costa notes that private operators cannot access 500 kV lines in this model and are limited to 138 kV. Even so, he frames 138 kV access as meaningful: moving 138 kV to a facility and building from there can support very large power draws, with the conversation referring to almost 1 GW as a possible starting point from that kind of infrastructure.

The important takeaway is that Brazil’s power advantage is not only about renewable generation. It is also about whether operators can practically bring that power to data center sites quickly enough to support demand.

8. Cloud Adoption Has Shifted From “Jump the Cycle” to Colocation-First Planning

Costa describes Brazil’s cloud adoption path as different from more mature markets. Cloud arrived in Brazil around 2014 or 2015, and many organizations were still operating on-premises environments at the time. Some tried to “jump the cycle” by moving directly from on-premises infrastructure to cloud, bypassing colocation.

That approach often created problems because applications were not prepared for the move. Cost was a major factor as well; Reid and Costa discuss sticker shock from cloud bills. The result has been repatriation, with workloads moving back from cloud into colocation.

The market has become more conservative and more deliberate. Instead of assuming that every workload should move directly to cloud, customers are more likely to move first into a professional data center, prepare applications and operations, and then decide what should move next.

Elea’s distributed footprint supports that pattern. Costa gives the example of an umbrella agreement for 10 cabinets across the country. A customer could start in Porto Alegre, then adjust placement as it learns more about its applications and user distribution. For national companies with users in multiple Brazilian markets, that flexibility can support a more practical hybrid architecture than forcing all workloads into a single city or directly into cloud.

9. Automated Network as a Service Addresses a Gap in Brazil’s Connectivity Market

The partnership discussion between Megaport and Elea focuses on connectivity automation. Reid describes Megaport’s vision as providing choice, rapid provisioning, and global reach, including connectivity to cloud on-ramps in many locations. He also describes the ability to provision services in 60 seconds or through code.

Costa says he sees a clear need for that model in Brazil. The country has strong fiber providers, but the market has not been highly automated. Traditional transport provisioning between sites can be slow. A platform that allows a customer to establish a virtual connection, then scale it up or down quickly, would address a capability gap.

This matters because Brazil’s cloud and data center topology creates a repeated connectivity problem:

• Customers may have local workloads in regional cities.
• Cloud nodes are concentrated mainly in Sao Paulo.
• Enterprises need secure, resilient paths from local data centers to cloud access points.
• Traditional provisioning can be slow and manual.

Network as a Service changes the operational model by making network capacity more cloud-like: faster to provision, easier to adjust, and better aligned with hybrid environments where workloads may move between local colocation and cloud.

10. Brazil’s Regional Topology Creates a Strong Need for Local Presence and Cloud Connectivity

Sao Paulo is the dominant hub. Costa says Sao Paulo alone represents about 40% of Latin America’s market share. It is therefore logical that the largest concentration of cloud nodes and data center activity is there.

But Brazil is much larger than Sao Paulo. Costa contrasts Brazil with Australia to make the scale point: Brazil has almost 10 times Australia’s population but, in the discussion’s rough comparison, about half the power. The broader point is that Brazil has large local demand and insufficient data center infrastructure outside its main hub.

Elea’s strategy is to support digitalization beyond Sao Paulo. The company has three data centers in Sao Paulo, but it also operates in the south through Curitiba and Porto Alegre, and in the center of the country through Brasilia. Costa identifies the northern region as underserved, with zero real multi-tenant, carrier-neutral data centers at the kind of 5 MW scale he is describing, aside from smaller ISP POPs and related facilities.

Fortaleza is a partial exception because of submarine cable systems arriving from the United States and Africa. It is an important interconnection hub and has some colocation development. Even so, distance remains a design issue. Costa says latency from Fortaleza to Sao Paulo can be almost 45 milliseconds.

Because most cloud nodes are in Sao Paulo, regional customers need secure connectivity into Sao Paulo even when local applications remain closer to users. Elea already interconnects all of its own data centers, so a customer in Porto Alegre can reach cloud services through Elea’s interconnection into Sao Paulo. Costa argues that combining Elea’s geographic dispersion with Megaport’s platform can provide a more efficient model: local application presence, secure cloud access, and Layer 2 or Layer 3 connectivity without relying on VPN over the public internet.

Key Takeaways

• Brazil’s power mix is a strategic advantage. Almost 90% of the national energy matrix is renewable, with hydro providing a strong baseload foundation and new solar and wind capacity continuing to expand the mix.
• Renewable power is not treated as a premium product in Brazil. Costa cites power around $0.06 per kWh and emphasizes that customers are not paying extra simply to access renewable energy.
• AI infrastructure interest is rising, but imports still matter. Brazil can help address power constraints, but GPU deployment still depends on equipment logistics, import taxes, and local execution.
• The market remains heavily on-premises outside the largest hubs. A historical lack of local carrier-neutral data centers kept many workloads inside enterprise facilities, especially beyond Sao Paulo and Rio de Janeiro.
• Regional latency shapes architecture. Porto Alegre to Sao Paulo can be 25 to 30 ms, and Fortaleza to Sao Paulo can be close to 45 ms, making local workload placement and secure cloud access important.
• Colocation is becoming a more deliberate step in cloud strategy. Many companies that moved directly to cloud without application readiness are now repatriating workloads and planning more carefully.
• Purpose-built facilities provide resilience that office data centers often cannot. The Porto Alegre floods made the value of professional data center operations visible to local enterprises.
• Power delivery is as important as power generation. Brazil’s ability to support data center growth depends on moving renewable power efficiently to facilities, not only on generating it.
• Automated connectivity can unlock hybrid architectures. Fast, software-driven network provisioning helps connect regional data centers to Sao Paulo cloud nodes and global cloud on-ramps.

Conclusion

Brazil’s data center opportunity is defined by a combination of local demand, renewable power economics, and uneven infrastructure maturity. The country has a large population, significant cloud and AI demand, and an unusually clean energy matrix. At the same time, much of the market has historically relied on on-premises infrastructure because carrier-neutral colocation and cloud access were not evenly available across regions.

For AI and cloud infrastructure decision-makers, Brazil offers a serious power story, but not a simplistic one. Renewable energy availability and pricing are compelling, yet equipment importation, transmission access, regional latency, and cloud-node concentration all shape the real business case. The opportunity depends on combining power, facilities, and connectivity into a practical operating model.

The broader message is that Brazil’s next phase of digital infrastructure will not be built only in Sao Paulo or only in public cloud. Regional data centers, colocation, automated interconnection, and secure cloud access all have roles to play. Elea’s distributed footprint and Megaport’s Network as a Service model are presented as complementary pieces of that architecture: local presence where applications and users need it, with flexible connectivity back to cloud and interconnection hubs.