Scala Data Centers, Latin America’s leading sustainable hyperscale data centre platform, has joined forces with the Brazilian state of Rio Grande do Sul and the Department of Economic Development (Sedec) to announce in September 2024 South America’s largest and most innovative digital infrastructure initiative yet, the Scala AI City.

By leveraging Scala’s pioneering expertise and the proactive regulatory framework supported by the state
government, this partnership will establish Brazil’s first dedicated data centre industrial district in Eldorado do Sul.

In alignment with the project timeline, in May 2025, the Ministry of Mines and Energy approved a 5 GW ramp-up connection for Scala AI City to Brazil’s National Grid.

This approval ensures years of growth for Scala AI City, the first and only gigawatt-scale data centre campus in Latin America, with 4.75 GW planned at full build-out.

Additionally, in the same month, Brazilian Finance Minister Fernando Haddad announced plans to expedite tax relief on capital goods, machinery, and equipment used in data centres, ensuring these investments and data centre service exports are exempt from federal taxes.

The positive collaboration among governors, legislators, industry leaders, and investors, all working to position Brazil as a green and competitive hub for digital and AI infrastructure, has been instrumental in achieving these milestones.

This convergence of factors reinforces Scala’s position as the leader in the hyperscale market in Latin America and its ability to serve global AI demand, enabling the company to consistently deliver unmatched, sustainable, and high-performance data centre solutions.

The capabilities of Scala AI City

This project is a monumental step towards the digital future of Latin America and positioning Brazil as a leader in the artificial intelligence (AI) revolution. Involving an initial investment of US$500 million, the company estimates that it could reach US$50 billion upon full realisation.

The technological focus of the Scala AI City aims to support the most demanding AI and ML workloads as high-performance computing becomes increasingly pervasive. Scala already operates 13 data centers, 7 of which are located at the largest data centre campus in the region, situated in Barueri, São Paulo.

Once fully completed, the campus will feature 17 buildings and three power substations, making it one of the ten largest in the world, with 450 IT MW (or 600MW of total capacity), equivalent to the energy consumption of Brasília, the capital of Brazil.

To ensure that new builds can support AI training workloads reliably and efficiently, Scala utilises its future-proof design, featuring rack densities of up to 150kW, a stark contrast to the 20kW or less racks typically intended for other uses.

The system is liquid-cooling ready, which is a refrigerant-based cooling method that offers greater energy efficiency for this type of application.

As with any Scala data centre design, sustainability will be a central development pillar. Scala AI City will rely on 100% renewable and certified energy and adopt cutting-edge technologies to minimise its environmental impact.

Thanks to the milder climate in Southern Brazil, the data centres will be more efficient and designed to operate with a PUE (Power Usage Effectiveness) of ~1.2 and a WUE (Water Usage Effectiveness, which measures the efficiency of water use in the facilities) of zero, since it uses water closed circuit loops and air cooling.

Redefining the future of technology and economy in the region

Eldorado do Sul was chosen as the location of this project, not only because of its geographical features, abundant energy supply, and real estate capacity that allows for continuous expansion over decades, but
also because of its proximity to São Paulo, Rio de Janeiro, Buenos Aires and Montevideo.

Some of these cities are linked via the 2,500 km Malbec submarine cable, and, as Scala AI City gains scale, submarine cables may also branch off to Rio Grande do Sul for direct connections and expansion.

Combined with interconnection to its existing data centre in Porto Alegre, these features will provide Scala AI City with low-latency connectivity, access to mission-critical resources, and the opportunity to integrate with regional and global hubs, ultimately securing long-term growth with sustainability.

Therefore, the expansion potential is enormous, with the possibility of reaching 4.75GW.

Scala AI City is not only elevating Brazil to a new technological level but also driving the state’s economic and social recovery and promoting the sustainable development of various industries.

The construction of Scala AI City is expected to generate over 3,000 direct and indirect new jobs in the first phase alone, with plans to employ significant numbers of local labour and suppliers.

This project will also boost the larger ecosystem surrounding the energy, civil construction, and telecommunications industries, creating a cycle of opportunity at both regional and global levels.

As the region’s economic development grows, other companies from the digital infrastructure supply chain will be enticed to move into the area and develop it further.

Showcasing the power of collaboration

In addition to advancing Brazil and Latin America, the establishment of Scala AI City highlights the strength of strategic partnerships across both private and public sectors.

These collaborations have the potential to drive significant transformation within the industry and, through collective efforts, shape the future of nations and communities.

Already at the forefront of the hyperscale market in Latin America, Scala is further empowered to consistently deliver unmatched, sustainable, and high-performance data centre solutions to its customers.

Aires and Montevideo. Some of these cities are linked via the 2,500 km Malbec submarine cable, and, as Scala AI City gains scale, submarine cables may also branch off to Rio Grande do Sul for direct connections and expansion.

Combined with interconnection to its existing data centre in Porto Alegre, these features will provide Scala AI City with low-latency connectivity, access to mission-critical resources, and the opportunity to integrate with regional and global hubs, ultimately securing long-term growth with sustainability.

Therefore, the expansion potential is enormous, with the possibility of reaching 4.75GW.

Scala AI City is not only elevating Brazil to a new technological level but also driving the state’s economic and social recovery and promoting the sustainable development of various industries.

The construction of Scala AI City is expected to generate over 3,000 direct and indirect new jobs in the first phase alone, with plans to employ significant numbers of local labour and suppliers.

This project will also boost the larger ecosystem surrounding the energy, civil construction, and telecommunications industries, creating a cycle of opportunity at both regional and global levels. As the region’s economic development grows, other companies from the digital infrastructure supply chain will be enticed to move into the area and develop it further.