How AI energy demand could cripple LatAm's weak energy grid

Hydropower outages because of droughts already weaken national operations

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(Michael Molinski is a senior economist at Trendline Economics. He’s worked for Fidelity, Charles Schwab and Wells Fargo, and previously as a foreign correspondent and editor for Bloomberg News and MarketWatch.)

HOUSTON (Callaway Climate Insights) ─ Data centers that fuel artificial intelligence could cripple Latin America’s already weakened energy grid within the next 10 years if they keep growing at their current rate of expansion, forecasts show.

AI will account for 5% of total electricity consumption in Latin America by 2035, according to a report from the Latin American Energy Organization (OLADE). That’s almost double the growth rate of the rest of the world.

“A 165% increase in the number of data centers worldwide is projected between 2023 and 2030, representing an average annual growth rate of 15%,” OLADE said. “At this same rate of expansion, the region will face an unprecedented energy demand related to the operation of AI servers, particularly in critical areas such as algorithm training, query execution, and the complex cooling systems required to maintain operations.”