The ‘data centre city’, boasting an initial IT capacity of 54MW – greater than the entire Argentine market – will drive the economic recovery of Rio Grande do Sul.
The government of the Brazilian state of Rio Grande do Sul, through the Department of Economic Development (Sedec), and Scala Data Centers, a leading Latin American platform of sustainable data centres in the Hyperscale market, have signed a letter of intent to enable the construction of the largest and most innovative digital infrastructure project in South America, Scala AI City.
The ‘data centre city’ represents an initial investment of US$500 million (around BRL 3 billion) in the first phase alone, marking a decisive step toward positioning Brazil as a central hub in the global Artificial Intelligence (AI) revolution and transforming Rio Grande do Sul through the economic potential of digital infrastructure.
With the signing of this document, the state commits to enabling the necessary regulatory and governmental support, creating the country’s first data centre industrial district.
Scala AI City will be established in a strategic area of Eldorado do Sul, in the metropolitan region of Porto Alegre, the capital of the state. The site was chosen for its proven safety from natural disasters (including climate events), abundant energy supply and real estate capacity allowing continuous expansion over decades.
This development will be interconnected with Scala’s SPOAPA01 data centre in Porto Alegre, which benefits from low-latency connectivity infrastructure and a strategic position for integration with major global hubs.
Additionally, the planned connection to the Malbec submarine cable, which links São Paulo, Rio de Janeiro and Buenos Aires and is expected to pass through the capital of Rio Grande do Sul, offers a significant competitive edge. This location ensures scalability, high resilience and uninterrupted operations.
“The announcement of an investment in a region so affected by the recent floods is already highly significant, but it goes beyond that,” said Governor Eduardo Leite. We are looking at an initial investment of US$500 million with the potential to reach US$90 billion when fully realised. We must be ambitious and bold with this project, not just dreaming, but actively working to make it a reality.
“Our commitment is to work diligently at the national level to create a favourable regulatory environment for data centres and issues related to AI.
“This moment is like a wave that gives us a chance to ride, but it is fleeting. If we do not build this favourable environment immediately, we risk seeing the energy transition happen in other countries, leaving us behind. Acting now is crucial to ensure that Brazil doesn’t fall behind in this important global transformation,” Leite added.
For the state’s Economic Development Secretary, Ernani Polo, the announcement demonstrates that the technology market in Rio Grande do Sul is attractive and growing. “We are an innovative state with many technology-oriented initiatives. Scala’s investment proves that the state has much to offer the sector, such as proximity to Mercosur countries and a favourable business environment,” Polo said.
“Today, we take a monumental step toward the digital future of Latin America with the creation of Scala AI City,” said Marcos Peigo, CEO and Co-founder of Scala Data Centers. “This project, born from a visionary partnership with the Rio Grande do Sul government, represents an initial investment of US$500 million and the construction of what could be the largest and most innovative digital infrastructure project on the continent.
“We are not only elevating Brazil to a new technological level but also driving the state’s economic and social recovery, generating thousands of jobs and promoting the sustainable development of various industries. Scala AI City will be a milestone of innovation, positioning Rio Grande do Sul and Brazil as global leaders in the AI revolution.
“This is a historic moment that redefines the future of technology and the economy in the region, with the potential to change the future of our country,” added Peigo.
The construction of Scala AI City will 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.
Scala is committed to prioritising local labour and suppliers, promoting the socioeconomic development of the communities surrounding the project and attracting companies from its supply chain to the region.
The initial IT capacity of Scala AI City will be 54MW – which is about 7x more than the capacity currently installed in Greater Porto Alegre and larger than markets such as Argentina and Uruguay.
Additionally, the expansion potential is enormous, with the possibility of reaching 4,750MW spread across more than 1,730 acres, making the new campus a unique opportunity for Brazil to establish itself as a global leader in the information technology landscape.
The project will utilise a FutureProof design, allowing the installation of racks that support AI training workloads, with capacities exceeding 150kW, in contrast to the 20kW or less intended for other uses.
The system also plans to use liquid cooling – a refrigerant-based cooling method that offers greater energy efficiency for this type of application.
Sustainability will be a central development pillar, relying on 100% renewable and certified energy and adopting cutting-edge technologies to minimise its environmental impact. With the aid of the milder climate in southern Brazil, the data centres will be more efficient and achieve a Power Usage Effectiveness (PUE) not exceeding 1.2 – the lowest in Latin America – and a Water Usage Effectiveness (WUE) of zero, meaning no water will be used in the cooling systems.
The development of Scala AI City is supported by strategic partnerships with global and local stakeholders, ensuring that the project meets the highest international standards.
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