The arrival of more data centers in Brazil will require a redoubled effort from power system operators to balance the country’s already strained grid. According to experts interviewed by Leafnatural gas-fired thermal power plants and more transmission lines will have to come online to meet this new energy demand, generating additional costs for consumers.
To process information, data centers consume a lot of energy. To give you an idea, the Ceará centers announced by ByteDance (owner of TikTok) with Casa dos Ventos and Omnia earlier this month, for example, are expected to consume, almost without interruption, the same amount of energy necessary for a city of more than 3 million inhabitants.
In September, President Luiz Inácio Lula da Silva signed an interim measure granting financial incentives to data centers. The measure, expected to become law by February, is critical to ensuring the economic viability of data centers that are being analyzed by regulators, according to the industry. Together, these centers will consume 6 GW (gigawatts) and after 2030, consumption could exceed 15 GW, as new structures are installed.
On the one hand, this new energy demand is very attractive to solar and wind power producers, who see data centers as a solution to ONS (National System Operator) cuts to their facilities during the afternoon, when solar panels and wind turbines produce more energy than the country can consume. In October alone, these producers recorded losses totaling 1.1 billion reais.
But, on the other hand, if during the day the arrival of new loads has the potential to resolve power outages, at night – when solar panels stop working – new sources of electricity will have to meet the demand required by data centers, which could increase Brazilians’ electricity bills.
“Today the operation of the electrical system faces two dilemmas: during the day there is an excess of energy and at the beginning of the night it is lacking. So, if you enter a data center you solve the problem for a few hours of the day, but at the beginning of the night it will be a God who will help us in the operation, because it will not be turned off”, explains Victor Hugo Iocca, director of electrical energy of Abrace, an association that represents large consumers of energy.
When the solar panels stop working, operators activate thermal energy, generated by burning natural gas, a costly and time-consuming process in Brazil, as well as polluting. These thermal power plants are financed by energy consumers. For comparison, in the last auction for the purchase of thermal power plants, in 2021, each MWh (megawatt hour) cost between R$544 and R$2,000, while in the last solar and wind auction, in 2022, the price did not exceed R$180.
Experts point out that with the arrival of data centers, more thermal power plants will be needed because there are location limitations for the construction of new hydropower plants. Additionally, Brazil does not have energy storage systems capable of storing solar and wind energy in times of surplus and distributing it in times of shortage.
On Tuesday (16), the ONS highlighted in its operation plan until 2030 that, depending on the adjustment of the country’s electricity network in the coming years, it is possible that the arrival of data centers will further worsen the levels of power outages.
The operator says that if more intermittent energy is included in the system, in addition to rigid thermal plants – which must be activated hours in advance to start operating – more energy will be generated throughout the day, compounding excess electricity production in the afternoon.
On Wednesday (17), for example, Casa dos Ventos announced the construction of a wind farm of almost 900 MW in Piauí to serve data centers.
The continuous operation of data centers, which cannot be shut down, also complicates the situation for operators. Those arriving in Brazil – mainly artificial intelligence and services for businesses such as banks and streaming services – operate 24 hours a day and cannot reduce their energy consumption because they rely on external demand for processing.
“Traffic happens in real time, so processors work when there is movement on the Internet,” says Roberto Rossi, president of Schneider Electric in Brazil, which works to increase the energy efficiency of data centers.
Experts say one way to encourage owners of these data centers to find more flexible models is to implement dynamic pricing in the energy sector. In this format, already adopted in other countries, energy becomes more expensive for large consumers in times of shortage and less expensive in times of excess.
“This price signal would force the data center to modernize the system,” says Victor Hugo Iocca, director of Abrace.
COSTS PASSED ON TO CONSUMERS
Brazilian consumers will pay not only for the thermal plants that will power the data centers, but also for the new transmission infrastructure. As most projects are located in São Paulo, far from regions where production is surplus, new lines will have to be built.
“Access to the grid requires the construction of a data center substation, in addition to transmission lines and a network substation, and we are the ones who pay for the latter two,” explains Edvaldo Santana, former director of Aneel (National Electric Energy Agency).
Experts recommend that large energy consumers finance their own installations so as not to burden other consumers. In the United States, the growth of these complexes has inflated energy prices.
“Organically, consumers themselves benefit from existing infrastructure, but this logic cannot be applied to inorganic growth. A data center, for example, requires a specific investment, such as network reinforcement, and this must be paid for by large charges and not socialized,” explains Jerson Kelman, former director of Aneel and columnist for Leaf.
On the 8th, the federal government issued a decree creating a sort of annual auction dedicated to projects interested in connecting to the system in points where infrastructure is not sufficient. This should slow the expansion of transportation networks, but does not shift costs to businesses.
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