ASUNCIÓN, PARAGUAY / ACCESS Newswire / March 26, 2026 / While Silicon Valley scrambles for power and the global AI industry faces an unprecedented energy bottleneck, a landlocked South American country is sitting on one of the largest untapped clean energy surpluses on Earth – and a growing number of international companies are taking notice.
Paraguay generates nearly 100% of its electricity from renewable hydroelectric sources, primarily through two binational dams: Itaipú, shared with Brazil, and Yacyretá, shared with Argentina. Itaipú alone is a 14,000 MW facility whose annual output regularly rivals China’s Three Gorges Dam. Yet Paraguay consumes only a fraction of its share. The country’s half of Itaipú could power the nation approximately three times over. Historically, the surplus has been ceded to Brazil under treaty terms that critics – and increasingly, Paraguayan officials – argue vastly undervalue the resource.
That dynamic is now shifting. In March 2026, the foreign ministers of both countries announced substantial progress on revising the Itaipú Treaty’s Annex C, the pricing and distribution mechanism that has governed the dam’s output for over fifty years. Simultaneously, Paraguay has attracted a wave of investment commitments in data center and AI compute infrastructure, including projects from X8 Cloud – which has announced plans for what could become the largest AI data center complex in South America, with investment estimates ranging from $10 billion to $50 billion over 30 years – and Hive Digital Technologies, which is expanding its hydro-powered facility in Yguazú to 400MW.
The country’s appeal is straightforward: abundant renewable energy at some of the lowest rates in the Western Hemisphere, a 100% clean generation matrix, investment-grade sovereign credit ratings from all three major agencies, a simplified corporate formation framework (the EAS, or Empresa por Acciones Simplificada), and a tax regime known locally as the “Triple 10” – with corporate, personal, and value-added tax rates each capped at 10%.
From a small-town ISP to a 100MW data center: building proof on the ground Christian Kaatz has spent more than twenty years building infrastructure across Paraguay, and his career arc mirrors the country’s emerging transformation.
At 18, Kaatz co-founded an internet service provider in Villarrica, a small city in Paraguay’s interior. Over two decades, he grew that company from dial-up connections on US Robotics modems and Linux servers to a fiber-optic network serving thousands of customers, partnering with Ufinet to execute the first joint GPON fiber deployment in the region – a model that Ufinet later expanded across South America.
In 2021, Kaatz made a decisive pivot. He sold his stake in the ISP and joined Penguin Group as Chief Data Center Officer, where he was tasked with designing, building, and operating a 100MW data center powered by hydroelectric energy adjacent to the Itaipú dam. The role put him at the intersection of power infrastructure, high-performance computing, and telecommunications at national scale. He managed teams across networking, security, a microelectronics laboratory, electrical substation operations, and maintenance – overseeing a facility that drew directly from the same renewable energy grid that is now attracting global AI and cloud companies to Paraguay.
During this period, Kaatz also became a recognized public voice for responsible energy-intensive industry in Paraguay, appearing on national television and in international press to advocate for legal frameworks that would allow Bitcoin mining and data center operations to create jobs and build infrastructure within a regulated environment.
“The debate in Paraguay has always been polarized,” Kaatz explains. “One side says these industries consume too much energy and benefit too few people. My position has been consistent since 2020: unless there is a labor-intensive industry being blocked by energy consumption, we are better off using our energy domestically and generating value for the state – rather than ceding our surplus to Brazil at a fraction of its worth.”
Infrastructure that stays: the hidden benefit of energy-intensive industries
Kaatz argues that the conversation around data centers and compute infrastructure in Paraguay misses a critical point: the permanent infrastructure these projects leave behind.
“Whether a specific data center survives long-term or not, the infrastructure it demands stays in the country,” he says. “The distribution lines, the electrical substations, the enhanced telecommunications backbone – all of that remains and benefits every citizen.”
He points to his direct experience designing network infrastructure for AI compute workloads. A project he was involved in required building a network capable of supporting 25MW of AI processing capacity. To make that operational, Paraguay’s internet backbone would need to expand to more than double its current bandwidth. The uptime requirements of AI operations would, by necessity, force improvements in connectivity reliability and cost across the entire country.
Latency, location, and the numbers that matter
A frequent objection to Paraguay as a compute destination is its geographic distance from major markets. Kaatz pushes back with specific data: Paraguay sits approximately 15 milliseconds from São Paulo and under 100 milliseconds from the U.S. East Coast.
“For AI training workloads, batch inference, and non-real-time processing, those numbers are more than competitive,” he says. “When you combine that latency profile with our energy pricing, renewable generation, and grid availability, the value proposition is hard to beat for the right workloads.”
The 5GW ceiling – and why it’s a feature, not a bu
Paraguay’s current installed capacity creates a ceiling of roughly 5GW of available power – a constraint that Industry and Commerce Minister Marco Riquelme has acknowledged publicly. In March 2026, Riquelme traveled to Silicon Valley and met with executives from OpenAI, Nvidia, Crusoe, Lambda, and other major AI infrastructure companies, stating publicly that Paraguay is positioned to become a global reference in data processing for artificial intelligence.
Kaatz agrees with Riquelme’s assessment of the constraint but frames it as an opportunity: “The 5GW ceiling is real, but it can be addressed through alternative energy sources, private investment in generation capacity, and the natural pressure of industrial demand. That pressure is exactly what a developing economy needs. Investors who come for compute will inevitably see the energy generation opportunity as well.”
Regulation, governance, and the case for imperfect progress
On the regulatory front, Kaatz is candid. “Paraguay is not known for efficiency in controls, taxes, or regulations. We can’t even agree on traffic laws,” he says. “But that shouldn’t stop progress. Let the infrastructure come. Let the investment come. The environment will be forced to adapt – toward better governance, better management of resources, and ultimately better outcomes for every Paraguayan.”
He points to the EAS corporate framework as a positive step – a streamlined structure for forming companies that has lowered barriers for foreign investors – while acknowledging that much of Paraguay’s institutional infrastructure still needs to mature.
“Progress doesn’t wait for perfection,” Kaatz says. “Perfection follows progress.”
A career built on stranded resources
From selling ice as a seven-year-old in his family’s business, to rewinding electrical motors at ten, to climbing telecommunications towers as a teenager alongside his ham-radio-amateur father, to building one of Paraguay’s first regional ISPs, to designing a 100MW data center – Kaatz’s career has followed a single thread: finding stranded or undervalued resources and building systems that turn them into value.
“My father did anything and everything to grow, learn, experiment, and enjoy building,” Kaatz reflects. “That is the one truth about myself – about my past, my present, and my future.”
Today, Kaatz is focused on large-scale energy infrastructure development, applying the same pattern at continental scale. He divides his time between Paraguay and the United States.
Paraguay at a glance: key facts for international investors
Paraguay’s GDP grew approximately 6% in 2025, with projections of 4.2%-4.5% for 2026. The country holds investment-grade ratings from Fitch, Moody’s, and S&P. Inflation is targeted at 3.5%, with the central bank holding rates steady at 5.5% in a neutral monetary stance. The country’s hydroelectric matrix generates virtually zero-emission electricity, and its geographic position offers competitive latency to both North American and South American markets. The IDB is financing $130 million in digital infrastructure modernization, including a sovereign cloud and Tier III government data center. Paraguay hosted the IDB Annual Meetings in March 2026, reinforcing its positioning as a credible destination for international capital.
Contact:
Christian Kaatz
Email: [email protected]
Phone: +1 (201) 589 7542
Web: https://kaatz.info
SOURCE: Christian Kaatz
