Initial facilities target mid-2027 operation; expansion could reach 280 megawatts
U.S. technology company Crusoe announced Thursday a partnership with Paraguayan developer Araico to build artificial intelligence data centers powered by the Itaipu hydroelectric dam. Crusoe expects the initial facilities to begin operating by mid-2027, and the company plans to expand computing capacity to 106 megawatts, with options for further development reaching approximately 280 megawatts.
The project would be Crusoe’s first dedicated AI cloud operation in Latin America. The facilities would provide computing power to customers in the United States and Latin America. Araico would develop the site and its infrastructure, while Crusoe would install and operate the computing equipment.
The agreement was announced after Deputy Secretary of State Christopher Landau’s visit to Paraguay from Monday to Wednesday, during which he met with President Santiago Peña and Foreign Minister Rubén Ramírez Lezcano. U.S. officials said the data-center project could become one of the largest private investments in Paraguay’s history. Landau said the agreement had the potential to be the country’s largest foreign private investment and to deepen the longstanding ties between the United States and Paraguay.
Landau also said the Itaipu project had been a dream while he lived in Paraguay as a boy in the 1970s, and he described his visit to the completed works as a joy. He said U.S. investors had signed a deal to build a data center nearby drawing on the abundant hydroelectric energy.
The project would rely on electricity generated by Itaipu, one of the world’s largest hydroelectric plants, jointly operated by Paraguay and Brazil on the Paraná River. That electricity would be supplied and sold to the development through Paraguay’s state-owned utility, ANDE, which manages the country’s electricity network.
Paraguay has promoted its abundant hydroelectric power and comparatively low electricity prices as advantages for attracting technology companies and other energy-intensive industries. A megawatt measures how much electricity a facility needs at a given moment. As data centers expand and install more powerful computers, they require greater amounts of electricity to operate and cool their equipment.
Araico had previously announced plans for a $12 billion AI campus in Yguazu, in eastern Paraguay. Company executive Alejandro Zuccolillo told ABC Color in September that the development would begin with 6 megawatts of electricity and expand in stages to approximately 280 megawatts.
The $12 billion figure remains Araico’s projection for its broader development and has not been confirmed as the value of the newly announced Crusoe partnership. Neither the State Department nor Crusoe disclosed the total investment or financing arrangements for the initial data-center deployment.
Zuccolillo said Araico had proposed paying ANDE $45 per megawatt-hour, a measure of the electricity consumed over time, with annual price adjustments. He said using Paraguay’s electricity to provide computing services internationally could generate greater economic value than exporting the power itself.
The proposed electricity arrangement has raised questions among ANDE workers. Adolfo Villalba, secretary-general of the utility workers’ union Sitrande, told ABC Color on Thursday that union representatives had been informed of a starting rate of $48 per megawatt-hour, with annual increases of 2.5% and periodic price reviews. Villalba said the project would initially receive 6 megawatts, with electricity supply increasing gradually to 280 megawatts. He questioned whether the proposed price would provide the greatest possible benefit to Paraguay and called for greater transparency about the agreement.
Guillermo Krauch, a former engineer at ANDE, told UPI that the initial electricity demand would be relatively small but warned that the expansion of data centers and other large industrial projects could place increasing pressure on Paraguay’s power system. Krauch said he was not arguing that such projects should not come and that Paraguay needed to figure out how to prepare as quickly as possible.
Krauch said Paraguay has become attractive to major electricity consumers because of its relatively low power costs and hydroelectric generation, which produces electricity without the direct greenhouse gas emissions associated with burning fossil fuels.
According to the latest figures available to him, companies involved in cryptocurrency mining, industrial development and other energy-intensive activities have requested nearly 7,000 megawatts of electricity from ANDE. Krauch said those requests represent potential demand rather than electricity already being consumed. He said Paraguay needed to move much faster to expand its electricity generation capacity and strengthen its infrastructure, adding that growing demand from major investors was putting even more pressure on the power system.
Krauch cited an assessment by the Paraguayan Institute of Electrical Sector Professionals warning that electricity supply could face greater risks beginning in 2028, particularly if river levels fall and new generating capacity is not developed. He also referred to ANDE projections indicating that additional power plants and major infrastructure would need to be operating by 2031 to meet the country’s growing electricity needs.
Paraguay relies heavily on hydroelectric power generated along the Paraná River. Krauch noted that Itaipu and Yacyreta, the country’s two largest electricity sources, depend on water from the same river, leaving production vulnerable to prolonged droughts. He said Itaipu was unable to generate its usual amount of electricity during a 2021 drought because of low water levels in the Paraná. He said Paraguay has plenty of water now thanks to recent rainfall, but that it is unknown what conditions will look like six months or even two years from now.
Krauch said the developers were also considering producing their own electricity as the project expands, rather than relying entirely on ANDE for additional supply.