Brazil’s data centers after the vote: Execution takes center stage

In this analysis, Marina Domingues, VP & Head of U.S. New Energies, explains what Brazil’s data center policy needs after the vote.

With the election settled, the presidency continuing for four more years and a newly elected Congress taking office in February, Brazil’s data center policy now hinges on execution, requiring tight coordination between parliament and the executive branch. Most clean tech policies can advance through decrees and agency rules, but data centers are an exception: Unlocking hyperscale investment requires Congress and the executive branch to align statutory tax incentive deadlines with regulatory definitions that are still to be written.

At the center is the Redata tax regime (Law No. 15,504/2026), enacted in September to position Brazil as a premier hub for high-performance computing and artificial intelligence. For investors seeking to deploy hyperscale infrastructure, its tax exemptions are neither automatic nor permanent: They are time-bound and contingent on meeting strict operational criteria. Still pending are the executives’ decision on whether natural gas generation qualifies as low-emission power, and critical details on energy-efficiency metrics, local-content requirements and compliance verification.

Rystad Energy’s risk assessment reflects this uncertainty, cutting Brazil’s announced data center pipeline by roughly two-thirds, from 21 GW to about 7 GW. Our risk modeling also factors in severe grid congestion and limited access to reliable power, which raise the country’s risk profile for data center development.

Requires Congressional action and executive coordination

• Grid reform and batteries: Congress is fast-tracking PL 3716/2026 to reallocate battery storage integration costs from generators across all system users before ANEEL conducts its inaugural capacity auction in December.

Handled solely in the executive branch and agencies (no Congress required)

• Biofuels and SAF: Executive agencies continue setting rules under the Fuel of the Future program (Lei do Combustível do Futuro), advancing ethanol blend targets, biomethane mandates, and Sustainable Aviation Fuel (SAF) regulations through National Energy Policy Council (CNPE) resolutions and ANP/ANAC rules.

• Hydrogen: Framework implementation proceeds under executive regulation for the Rehidro special tax regime alongside Minister of Finance guidelines for financial tax credits.

• Offshore wind: Presidential decrees are currently being drafted to define marine area leasing frameworks and technical criteria for future offshore wind auctions.

• Carbon capture utilization and storage (CCUS): Following statutory authorization under recent clean energy legislation, regulatory agencies are directly drafting safety standards and geological storage authorization rules to establish Brazil's carbon capture framework.