Argentina's Patagonia region is emerging as a potential alternative location for AI data centers as developers face limited energy and land availability in traditional markets. According to a Reuters investigation in September, companies are evaluating Neuquén and Chubut provinces for large-scale data center projects that would leverage the region's cold climate, hydroelectric power, wind resources, and other energy sources including Vaca Muerta gas.
The shift reflects growing pressure on established data center hubs. Northern Virginia, a major center, now has a vacancy rate of only 0.3%, according to CBRE's Global Data Center Trends 2026 report, which notes that power availability, grid restrictions, and local construction resistance are reshaping site selection across North America and Europe.
According to PwC's Global Data Centre Outlook, total capital expenditure for global AI infrastructure is projected to reach $31.6 trillion by 2050, with annual data center spending rising from $800 billion in 2026 to $1.8 trillion mid-century. Power availability is expected to be the primary factor influencing where investors locate new facilities.
Current Projects in Development
Multiple infrastructure projects are under consideration in Patagonia. In Neuquén, Pampa Energía is developing a project at its Loma de la Lata thermal power plant site with capacity to deliver approximately 500 MW of electricity, though full build-out would cost nearly $900 million.
FlexDomes is seeking investors for a $1.4 billion Neuquén project starting with 120 MW. Green Capital plans a Chubut project beginning with 300 MW and potentially expanding to 3,000 MW, with the company leasing 501 square miles for wind and solar power generation to reduce reliance on the national grid.
The most prominent initiative is Stargate Argentina. OpenAI and Sur Energy signed a letter of intent in October 2025 to develop the first Stargate project in Latin America, with Argentine authorities estimating the facility would produce 500 MW at a $25 billion investment.
Supporting Policy Framework
Argentina's RIGI framework provides incentives and legal stability for major projects. Decree 105/2026 extended the enrollment window by another year from July 8, 2026, and includes artificial intelligence among covered technology activities.
Sur Energy partner Emiliano Kargieman said the Stargate Argentina project represents a historic opportunity to combine renewable energy potential with AI infrastructure at a global scale. OpenAI CEO Sam Altman stated the effort could help Argentina become an AI hub for Latin America.
Challenges Ahead
The Inter-American Development Bank identifies reliable, affordable energy, strong connectivity, and a stable regulatory environment as key components for attracting data center investment to Latin America. While Patagonia offers abundant energy and favorable regulatory conditions, project success will largely depend on connectivity and financing.
McKinsey analysts note that Patagonia competes as a supply-advantaged market rather than a demand-driven one with established digital ecosystems. The region's value proposition targets customers with high-electricity-consumption workloads willing to relocate operations if energy, connectivity, and financial conditions align.
These projects currently represent proposals rather than operational capacity, with their viability dependent on financing availability, fiber infrastructure, transmission systems, and customer commitments.
