While Americans turn against data centers, Brazil offers tax breaks and cheap power, representing a potential ‘release valve’ for U.S. constraints

With communities across the U.S. rebuffing data centers, there’s growing political pressure to curtail their construction. But thousands of miles away, South America’s biggest country is already a top AI market and making the buildout easier.

Brazilians send 215 million messages to ChatGPT messages per day, according to OpenAI, making the country the chatbot maker’s third biggest market for weekly users after the U.S. and India.

Google said it plans to double its cloud infrastructure there by 2030 in response to growing demand, and even signed a sponsorship deal with the Brazilian Football Confederation in March to integrate Gemini across the country’s men’s, women’s, and youth national teams.

Other tech giants are investing too. Amazon Web Services has spent more than $3.8 billion on data center infrastructure there since 2011 and pledged another $1.8 billion through 2034, while Microsoft committed $2.7 billion to cloud and AI infrastructure over three years.

Local demand, rather than American companies moving operations abroad, has driven much of Latin America’s data center growth. But Carlos Barrera, CEO of Atlas Renewable Energy, thinks that could change.

“We do see the region as actually an attractive release valve for some of the U.S. capacity constraints that you see now,” he said.

With a population of almost 214 million people spread out across an area larger than the contiguous 48 U.S. states, Brazil makes sense as a country for hyperscalers to court.

Its electricity supply is also a major draw and costs less than half what it does in the U.S. According to a report from its Ministry of Mines and Energy, the country generates nearly 87% of it from renewable sources, and its rapid growth of wind and solar power has also led to a surplus.

“U.S. backlash isn’t pushing hyperscalers out of the country so much as pushing them toward wherever power shows up first,” James Mercer, a principal at data center advisory firm Metro Colo Advisory, told Fortune.

But Brazil’s cheap electricity could also become more expensive. Barrera said Brazil will need more transmission lines to connect large data centers to the grid, and government officials are split on whether electric bills will go up or not.

Another obstacle to Brazil’s AI growth is the tax code. High federal import taxes made building big data centers more expensive compared to other countries in the region.

To fix that, President Luiz Inácio Lula da Silva signed a law on Sept. 15 cutting taxes on qualifying data center equipment. This contrasts with some U.S. lawmakers proposing taxing data centers’ electricity use and output.