Chile is considering reallocating land earmarked for green hydrogen projects for the installation of hyperscale data centers, while that industry is experiencing a global slowdown, Gonzalo Mardones Hernández, chief of staff to Chile’s minister of energy, told BNamericas.
The official explained that the government is seeking to prevent those projects from being abandoned and to make them available to users with high energy demand, such as Google, Amazon Web Services (AWS) and Anthropic, until green hydrogen regains momentum.
Chile is also mulling increasing the cap on power generation associated with data center projects, reviewing tariffs on the import of computer equipment and harnessing surplus renewable energy in the north of the country — close to 6 GW per year — to attract hyperscale investments.
BNamericas: How are the conversations going between the finance, energy and environment ministries regarding the artificial intelligence project and its impact on data centers?
Mardones: Last year, the artificial intelligence bill was passed in Congress — it managed to be approved in the Chamber of Deputies — which established a more or less rigid framework for the development of the industry, with principles similar to those established by the European Union.
In this new administration, it is being shifted a bit toward faster development of the industry.
In Chile there is high potential for data centers to be installed. In the north of the country we are wasting around 6 GW per year, where we believe that together with the installation of the battery and the transmission it could be a good place for data centers to be set up. That is why we believe that a substitute indication had to be included —which is what it is called in Chile, a modification to what has already been approved— so that it can continue its course on a different track, with a view to facilitating data center investment rather than establishing overly rigid frameworks.
BNamericas: But is a reduction in tariffs for computers also part of the discussions?
Mardones: It is being studied; currently there is a facilitation of the installation of data centers in Chile. Depending on the size, some types of sites do not go through a broad environmental assessment. It is a fast track for the installation of data centers, just like plants of less than 9 MW.
We are also thinking about and studying expanding that minimum so that power generation is linked to data centers and they can install a Bring Your Own Power system.
BNamericas: So, more than 9 MW, but shared with generation, which would be like Behind The Meter or Bring Your Own Power.
Mardones: That’s right. And the rest, well, I can’t really comment much on the rest because it is currently being discussed so it can be submitted with an amendment to Congress, but this Government’s vision is to facilitate investment in the installation of data centers in Chile.
BNamericas: Anyway, there are issues such as tariff exemptions for the import of AI computing for data centers on the table. Is this being considered?
Mardones: These are parallel conversations. At this moment, a mega reform is being discussed in Congress that includes several tax incentives, where the corporate tax is being reduced, for example, from 27 to 23%. So, within those measures, the issue of data centers is included in a certain way.
But in this new specific project on artificial intelligence, we believe it is necessary to go a little further.
We have made proposals to the Ministry of Finance to consider certain electrical infrastructure as strategic infrastructure for the development of this industry, where it will be necessary to evaluate perhaps some —I don’t know if exemptions, but reductions— for the components of the data center industry.
BNamericas: The Government’s idea is also to decentralize data centers to the north —in Antofagasta, helping to minimize solar curtailment— and also to the south, in Patagonia, partly because it is colder. How is that going? Is there industry demand for facilities there?
Mardones: In the north, what we at the Ministry of Energy are doing is bringing the stakeholders together. On that we are working well in coordination with the Ministry of Science, which has the National Data Center Plan.
We, on the Energy side, have all the know-how and the connection with the energy industry, while on the Science side they already have high-level conversations with AWS, with Google, with Anthropic. So we want to bring both worlds together and have demand meet supply.
In Chile we have three points: in the north, the curtailment due to renewable energy —we believe that in any case this needs to be strengthened with BESS in order to ensure supply security for hyperscale data centers—; in the center of the country there is already a large installed capacity of data centers, it is easier from a logistics standpoint to set up there, mainly because of connectivity; and in the south we believe there is a great opportunity while the green hydrogen industry is being developed, which we see has lost some of its interest and momentum worldwide.
So that these projects do not die, but instead meet perhaps high-energy-demand customers such as Google, Anthropic, AWS, and while the green hydrogen industry takes off again, that capacity can be used to develop the hyperscale data center industry.
BNamericas: Is it like skipping the line, or is it a temporary substitution?
Mardones: That’s right, or a temporary replacement by the green hydrogen industry that did not develop as they thought, and then will be developed, because millions of dollars were invested in green hydrogen and, of course, we do not want Chile to waste it.
BNamericas: And what about connectivity? I understand that it is also an important factor for these new points.
Mardones: We believe that on that point we are covered, although the terrestrial digital infrastructure networks need to be improved. We have more than 68 thousand kilometers of submarine cables: in southern Chile with the Magallanes cable, in the north —where we want to install a mega data center or facilitate the installation of one— we have the Prat cable, and in central Chile that is already covered.
As you know, Chile has one of the largest connectivity indicators in the world, in fact. That is why we believe these three pillars come together for investment: first, energy, where we can even reach 20 or 30 dollars per MWh; second, connectivity, as I just said, with very broad installed capacity; and third, permits.
Chile has already understood that for investment to come and for it to develop, the installation of industry must be facilitated, and that will reduce processing times, perhaps reduce the tax burden, and see industry as a participant in the construction of public policy rather than as a mere regulator.
BNamericas: Does the Government then have an interest in a mega data center already in Antofagasta, in the north?
Mardones: We are looking at the possibilities of places where we can show companies what their potential is. We have that fully identified. In any case, the data center industry demands or requires low energy cost values —less than 50 dollars per MW—, which I believe we can cover, and connectivity. So we have cross-checked all that information and we have five or six large sites.
It is also important to say that, within the territory of the Antofagasta region, where it could be installed, 90% of the land is public.
So there is a facilitation by the State to transfer those lands, grant a commodatum, create a campus, and quickly urbanize so that data centers and industries can arrive and set up.
(The original version of this content was written in Spanish)
