Tech Companies Scouting Argentine Patagonia for AI Data Centers
Tech companies are scouting Argentine Patagonia for AI data centers, as reported by Reuters. Wind, Vaca Muerta gas, and 30 years of promised tax stability have put the far south on the shortlist. Almost none of the projects have broken ground yet.
Key Points:
- Energy Resources: Patagonian wind is one of the most consistent onshore resources globally, while Vaca Muerta shale formation in Neuquén offers gas at competitive prices.
- Tax Incentives: Argentina’s incentive regime for large investments (RIGI) provides 30 years of stability on tax, customs, and foreign exchange rules, a 25% corporate income tax rate, and the right to repatriate investment without central bank approval. A proposed successor scheme (Super RIGI) raises the entry threshold to $1 billion and cuts the income tax rate to 15%.
- Interest from Hyperscalers: Developers and energy firms are courting hyperscalers for data center projects, with initial agreements targeted by the end of 2026 and site tours planned for February.
Notable Projects:
- OpenAI: Signed a letter of intent with Argentine developer Sur Energy for a 500MW facility in Patagonia, with expected investment of around $25 billion and a first phase of 100MW due in 2027 (part of the Stargate program).
- Pampa Energía: Proposing a 500MW site in Neuquén powered by Vaca Muerta gas, at an infrastructure cost of about $900 million, plus a smaller 30MW first stage in Bahía Blanca.
- FlexDomes: Planning a 120MW first stage with a $1.4 billion cost.
- Green Capital: Aiming for 300MW in Chubut for $3 billion, with ambitions to reach 3,000MW eventually and leasing roughly 1,300 square kilometers of land south of Trelew for wind and solar farms.
- Amazon and Alphabet: Named among companies looking into opportunities.
- Genneia and Vista Energy: Local energy firms involved in various projects.
Observations:
The unique proposition lies in combining high-quality energy resources with attractive tax incentives, challenging the notion that distance from users matters less for AI workloads. The success of these projects hinges on whether Argentina’s 30-year guarantees can be maintained into the future.