FEATURE
What is curtailment and why does it matter?
Curtailment refers to the forced reduction of electricity generation, usually from renewable sources, to maintain grid stability.
It typically occurs when supply exceeds demand, or when transmission infrastructure cannot move electricity to where it is needed. In Brazil, curtailment has become more frequent as renewable capacity has expanded faster than grid infrastructure.
The impact is significant. Energy that could be used productively is instead wasted, leading to financial losses and reduced efficiency across the system. In 2025 alone, Brazil recorded hundreds of millions of dollars in losses linked to curtailed renewable generation.
Curtailment is not just a technical issue. It is a signal that grid planning, transmission investment and demand coordination are not keeping pace with energy generation.
When those inefficiencies coexist with growing curtailment, the question is no longer simply who uses electricity. It becomes whether the system is being planned well enough to reduce waste and convert available energy into value.
The most meaningful benefits of sitting near strong electrical infrastructure are practical. These sites can offer lower connection costs, better reliability and availability from the highvoltage network, a greater likelihood of securing capacity at that point of connection, lower operating costs tied to energy infrastructure and a more realistic path for serving large loads above 10 MW.
That is a more accurate rationale than suggesting line-loss reductions alone justify the decision.
Not all data center loads look the same
Another point that warrants greater precision is how data center demand is described.
Cloud data centers often have relatively stable and predictable load profiles, which can be valuable in a system increasingly shaped by intermittent sources.
But that profile does not apply equally across the sector. AI-focused facilities may have much larger fluctuations in demand and those
Why siting and coordination matter
Geographic location remains highly relevant and not all data center models have the same flexibility.
This is where data centers enter the discussion more constructively.
It would be overly simplistic to argue that data centers do not need to be near metropolitan areas or that they can broadly be located anywhere near generation assets.
Geographic location remains highly relevant and not all data center models have the same flexibility. Some workloads, particularly AI- or compute-intensive operations, may allow for greater distance from dense urban centers. But that is not a universal strategy nor should it be treated as one.
The better approach is coordinated planning among developers, utilities and regulatory bodies so that the expansion of generation and transmission can progress alongside the growth of digital infrastructure. Where possible, and where it makes operational and economic sense, data centers can be brought closer to power generation plants or underused transmission hubs. The objective isn’ t to suggest that proximity alone solves system inefficiencies. It’ s to improve the feasibility of new connections and reduce unnecessary infrastructure strain.
Data centres and energy demand in perspective
Data centres are often portrayed as a major strain on power systems, but the data tells a more balanced story.
In Brazil, data centres accounted for just 1.7 % of total electricity consumption in 2024. Even with rapid growth, this figure is expected to reach only 3.6 % by 2029.
By comparison, industrial activity represents around 36 % of electricity use, while residential consumption accounts for roughly 28 %.
This context is important. While data centres are energy-intensive and require careful planning, they are not the primary driver of system pressure.
Instead, their role in Digital Transformation means they can become part of the solution, particularly when located strategically and integrated into broader grid planning efforts.
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