Mexico's Querétaro State Becomes Data Centre Hub Amid US Power Grid Constraints

Mexico's Querétaro state is becoming the data centre capital of Latin America, with companies like Microsoft and Amazon Web Services building large data centre facilities. The state's central location and support from the municipality and central government have made it an attractive location for tech firms. The data centres use large amounts of water for cooling systems, raising concerns about water usage in drought-hit Mexico.

Mexico's Querétaro state is rapidly transforming into the data centre capital of Latin America, driven by strategic factors that include its central location and supportive local and federal government policies. Tech giants like Microsoft and Amazon Web Services (AWS) have established significant data centre facilities in the region, highlighting Querétaro's potential as a key player in the global data centre market.

The state's strategic location between Mexico City and other major cities such as Monterrey and Guadalajara has made it an attractive destination for tech firms. The low risk of natural disasters and cheaper land costs further enhance Querétaro's appeal. The state's support from both the municipality and the central government has been instrumental in facilitating the establishment of these large-scale data centres.

However, the growth of data centres in Querétaro, while beneficial for economic development, has raised significant concerns regarding water usage. Data centres require substantial amounts of water for cooling systems, and the state's drought-prone climate exacerbates these concerns. The rapid expansion of data centres driven by the growing need for artificial intelligence (AI) and cloud computing is placing additional strain on Mexico's water resources.

According to a recent analysis by PolicyNote+, the global market for data centres is expected to grow significantly, with Latin America's share estimated to be 1.4 percent of the global market. Brazil, the region's largest market, has seen a 628 percent growth in the sector from 2013 to 2023, driven by AI demand. However, the analysis also highlights that the expansion of data centres is raising concerns about water consumption and environmental sustainability, particularly in regions with water scarcity [2].

In Querétaro, the water usage concerns are particularly acute. The state's data centres are estimated to consume large amounts of water for cooling purposes, which could strain local water resources, especially in drought-prone areas. While the state's central location and support from the government have made it an attractive destination for tech firms, the environmental implications of data centre expansion need to be carefully managed.

The Mexican government is aware of these challenges and is working to address them. The country's ongoing issue with water scarcity, particularly in the north, has led to implementation policies driving the sector towards a more sustainable use of water. However, the expansion and growth of the data centre industry are already putting pressure on government and communities.

As data centres continue to grow in Querétaro, it is crucial for stakeholders to balance economic development with environmental sustainability. The state's strategic location and supportive policies have made it an attractive destination for tech firms, but addressing water usage concerns will be key to ensuring the long-term viability and sustainability of the data centre industry in the region.

References:
[1] https://www.wealthprofessional.ca/news/industry-news/nvidia-bets-on-a-us4-trillion-ai-boom-as-investors-question-data-centre-momentum/390097
[2] https://fiscalnote.com/blog/ai-data-centres-global-energy-water