Recently, Patagonia, a mountainous region in southern Argentina, has emerged as a candidate site for data centers by global technology corporations.
According to Reuters on the 7th (local time), as global IT and energy corporations focus on Patagonia as a candidate for large-scale data center construction, several data center projects in the region are moving forward in early stages.
Pampa Energía, a major power company in Neuquén Province located in Patagonia, is pursuing a plan to build a data center near its Loma de la Lata thermal power plant. The data center is expected to use up to 500 megawatts (MW) of electricity by tapping energy produced from nearby Vaca Muerta, one of the world's largest shale gas regions. Pampa Energía is presenting power prices to data center operators that have shown interest, aiming to sign initial contracts by the end of 2026.
Earlier, OpenAI also announced in Oct. last year that it would build a data center powered by clean energy in cooperation with local Argentine corporation Sur Energy. The investment is up to $25 billion, with a capacity of up to 500 MW. Sur Energy is currently scouting sites for the data center in Neuquén Province.
Patagonia is located at the southern tip of South America and is known for its jagged peaks, desert terrain, and massive glaciers. On the surface, it appears far removed from the data center industry. Argentina likewise currently has only small-scale data centers, most of which are concentrated in Buenos Aires. Compared with neighboring South American countries such as Chile and Uruguay, it has been relatively behind in the data center industry.
However, it is drawing attention as a new data center candidate because it can reduce server cooling expense thanks to low temperatures, and it has abundant renewable energy such as wind and hydropower, Vaca Muerta, one of the world's largest shale gas resources, and vast undeveloped land all at once.
Ruben Etcheverry, secretary-general of the Neuquén Development Committee, said Neuquén has the advantage of a cold climate that can lower cooling expense and access to both hydropower and natural gas from Vaca Muerta, adding, "What we are envisioning is a data center cluster or ecosystem." He said he has received related inquiries from several companies, including Flexdome, a U.S. green data center corporation.
Another strength is that opposition to data center projects is relatively weak in Argentina. Reuters said that while criticism is strong in the United States that data centers burden local power grids, harm the environment, and drive up utility bills, Argentina has not yet formed the same kind of opposition because few have directly experienced the impact of large data centers.
The Argentine government is also active in attracting foreign investment, including data centers. President Javier Milei is drawing foreign capital through RIGI, a large-scale investment incentive program that provides tax benefits and regulatory stability. In 2024, he visited Silicon Valley in the United States to meet with big tech chief executive officers (CEOs) from OpenAI, Google, Meta, and Apple, urging investment in Argentina, including Patagonia. At the same time, he is strengthening ties with the U.S. administration of Donald Trump.
Steve Sasse, vice president for Latin America at DataCenterHawk, a U.S.-based data center market intelligence firm, said, "As recently as two years ago, no one was talking about Argentina."
However, outdated infrastructure and telecom connectivity are hurdles Patagonia must clear to become a dense data center hub. Hadassa Lutz, co-founder of U.S. data center advisory firm Cloud to Ground, said, "It's not that land with infrastructure already in place is waiting for a buyer. Someone has to build it."