Scala Data Centers is taking a bold step into artificial intelligence (AI) with the announcement of Scala AI City, a massive data center campus planned for Rio Grande do Sul. This ambitious project, announced in September 2024 with the state government, aims to establish Brazil as one of the leaders in AI technology, leveraging the country’s abundant renewable energy resources.
A Colossus in the Making
Scala Data Center aims for its AI City to be Latin America’s largest and most advanced data center complex. The announced scale of the project is staggering:
- Initial investment: $500 million
- Initial capacity: 54 MW of IT
- Potential capacity: A colossal 4.75 GW of IT, spread across over 2.000 acres
- Power density: can be above 100kW per rack
- Potential total investment: $90 billion
Source: Scala Data Centers PR
These figures highlight the magnitude of Scala’s vision. This “city” of data centers will provide the infrastructure for cloud computing and AI development and create a thriving technology hub, attracting investment and generating regional jobs. Scala argues there is a latent cloud demand in the southern region of Brazil and other Latin American countries, considering, for instance, that Argentina has limited data center capacity. As the AI “city” evolves to address mainly the processing of AI/ML workloads – which demand higher energy and efficiency loads than cloud demands- Scala plans to support also global demands from markets where there is a shortage of clean energy, such as many markets in the United States and Europe, for example.
Green Energy: An Advantage of Brazil for AI
AI development is incredibly energy-intensive. Training complex AI models requires vast computational power, which translates to high electricity consumption. Brazil’s commitment to renewable energy becomes a crucial advantage here.
Brazil is a global leader in renewable energy production, with a significant portion of its electricity generated from hydroelectric, wind, and solar sources. This energy production provides Scala AI City access to clean, sustainable energy, minimizing its environmental impact and supporting the development of green AI.
In addition, Scala plans to have the lowest Power Usage Effectiveness (PUE) level in Latin America, equal to or below 1.2, a benchmark for the energy efficiency of the IT infrastructure load.
Why was Rio Grande do Sul chosen for this massive investment?
Scala conducted intensive due diligence to study the location to guarantee the project’s viability in all its competencies, including reliable power supply, environmental, connectivity, economic, regulatory, and customer proximity.
The selected location of Eldorado do Sul, in the metropolitan area of the State’s capital, Porto Alegre, has an economy historically focused on agribusiness, but with an underutilized energy load capacity, a legacy of the investment made in the region’s transmission system over the last few decades. In the vicinity of the “AI City” project, a power substation with idle capacity will supply the data center’s energy demand.
Beyond energy capacity availability and reliability, critical for such a colossal project, the location in Eldorado do Sul, in the metropolitan area of the State’s capital, Porto Alegre, had the following characteristics analyzed:
- Site Selection: In May 2023, Eldorado do Sul had nearly 98% of its area flooded in the worst natural disaster in Brazil’s south region history, but Scala’s chosen area wasn’t affected.
Environmental: As Scala has been doing in all its data centers since 2021, the Scala AI City will be powered by certified renewable sources. Roughly 90% of Brazilian energy mix comes from renewable sources and the grid was well designed, allowing Scala to leverage it for the campus. Additionally, the data centers should maintain the zero Water Usage Effectiveness (WUE) approach, meaning Scala won’t consume significant amounts of water in the cooling systems. Finally, the colder climate, compared to other regions of Brazil, should help reduce the data center’s energy consumption. - Connectivity: Scala has another data center in Rio Grande do Sul, located in the central region of Porto Alegre, which will connect to the AI city. This center is a connectivity hub to significant traffic exchange points (IXs) in the south of Brazil. Potentially, as the AI city gains scale, submarine cables may also branch off to Porto Alegre, such as the Malbec submarine cable, for direct connections to major metropolitan areas in Brazil (Sao Paulo and Rio de Janeiro) and Latin America (e.g., Buenos Aires, Montevideo, and Santiago); submarine cable landing stations in Rio Grande do Sul, in addition to the current terrestrial fiber routes, would help the “AI City” become a hub for AI/ML in Latin America.
- Economic: Brazil’s south region has a burgeoning technology sector with a skilled workforce and many startups. Scala stated that the construction of Scala AI City should generate more than 3,000 new direct and indirect jobs in the first phase, in addition to boosting a vast ecosystem involving sectors such as energy, civil construction, and telecommunications, among others, creating thousands of jobs that will drive the region’s economic development.
- Regulatory: The Government of Rio Grande do Sul actively promotes the development of the technology sector and has provided strong support for Scala AI City. However, details of the agreement and incentives have yet to be shared.
- Customer proximity: Rio Grande do Sul’s location provides convenient access to other major cities in the South and Southeast of Brazil and neighboring countries.
A Catalyst for Innovation
Scala AI City is poised to catalyze innovation in the south of Brazil and beyond. By providing the necessary infrastructure and resources it will empower universities, businesses, and the Government to leverage AI technology to improve their productivity and innovation. To embrace all these new wave of innovation and rapid changes in digital infrastructure sector, Scala lies on its Center of Excellence – multidisciplinary team with over 400 architects, engineers, designers, and data center specialists focused on deploy it by using the Scala’s FutureProof methodology. According to Scala, FutureProof is a design and construction methodology that allows its building to host highly customized environments that cover AI-related topologies, such as liquid cooling and high-density racks. This new infrastructure could lead to breakthroughs in healthcare, finance, agriculture, and environmental protection.
With its commitment to renewable energy and its strategic advantages, Scala argues that Brazil has the potential to become a significant participant in the global AI landscape.
All big tech companies and cloud providers have large Environmental, Social, and Governance (ESG) programs and challenging goals. With the projected investments required in super AI data centers, they must rely on more than just data centers in North America and Europe that are supplied by nuclear energy, generating pollution and associated higher costs. Not to mention that countries in Europe are phasing out nuclear energy. Germany and Italy have already shut down all nuclear power plants; Belgium, Spain, and Switzerland won’t allow new nuclear power plants and will shut down current ones as they end their operational life.
Brazil has abundant renewable energy production and the potential to produce much more.
Scala AI City can help Brazil materialize this opportunity and serve the needs of technology companies and cloud providers as they expand their infrastructure.
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