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When maximizing power efficiency can lead to higher water consumption and community backlash

In sum, what to know:

• Water has become a massive flashpoint – transitioning from an afterthought to a core operational, political, and environmental challenge.
• See-saw effect: Reducing electricity use often forces water consumption to spike, and vice versa.
• Rebuilding trust: To salvage community relationships and secure construction permits, hyperscalers have turned to “water positive” pledges.”

Increasingly, communities and institutional investors are pressing hyperscalers and data center developers to disclose site-level water and power usage, which is driving them to tailor cooling technology to local conditions. The fundamental conflict is rooted in the fact that maximizing power usage effectiveness (PUE) via evaporative cooling can drive up local water consumption (WUE), and that air cooling that consumes no water can increase energy demands. As a result, many data center developers and operators are moving toward an integrated resource management approach that replaces single-metric evaluations with evaluations of facility-side power and water alongside generation-side water footprints.

Some operators are using evaporative cooling in water-abundant regions, and closed-loop or dry-hybrid systems in drought-prone areas. Newer facilities are touting direct-to-chip cooling as a way to mitigate energy-intensive fans and cooling towers, as well as closed-loop and dielectric immersion that recycle internal liquid (like water and glycol) and cut consumption to near zero. The evolution to liquid cooling is being aggressively pushed by changes in AI accelerators. A Nvidia Blackwell Ultra exceeds 1,400W per device, and next-gen chips will aim as high as 2,000W. For that reason, liquid cooling penetration is projected to exceed 53% in 2026 and approach 60% in 2027.

As Ian Khan, creator and host of The Futurist put it, “For most of the last three years, the industry answer has been a shrug wrapped in a sustainability report. That is no longer good enough, and the market has noticed.” He notes the pressure and outright cancellations in some instances as demands for site-level water and power disclosure grow. Transparency is critical, especially when talking about potable versus reclaimed water. Even though agriculture and power generation also draw enormous amounts of water, most communities know the value their farms and of a robust electricity grid, but not so much about AI.

The sheer volume of water and potential for thermal pollution or runoff are sowing distrust in some communities. As reported by the Florida Water and Pollution Control Operators Association, a medium-sized data center might consume on the order of +/-100 million gallons per year for cooling, and a large hyperscaler facility 1 to 5 million gallons of water per day.

To assuage that distrust, some hyperscalers and operators have made “water positive” pledges to strategically source water and to partner with utilities to recycle treated/effluent wastewater for cooling. For example, Google has a new “water stewardship” pledge to replenish more water than it consumes, with 165 water stewardship projects across 97 watersheds. 

Amazon Web Services has announced replenishment projects and investment in dozens of global watershed restoration and community water-access projects. In addition, it is making “new water withdrawals data” available through its AWS Sustainability Console.

As of today, about 57% to 90% of direct data center water usage originates from municipal drinking systems, surface lakes, or local aquifers. Most of the time, pre-treated potable water represents the path of least resistance, especially since most communities lack the “purple pipe” systems to transport treated wastewater from the treatment facility to data center sites.

Increasingly, though, in data center hubs, like Loudoun County, VA, next-gen water generation comprises a mix of potable drinking water, recycled reclaimed wastewater, and water-free air cooling systems. As the largest data center hub in the world, Loudoun is a valuable proving ground. As of 2025,  potable water consumption by data centers there reached nearly 952 million gallons in 2025– accounting for 10% to 15% of total water use. Out of 200+ facilities, reports indicate roughly 40 now use reclaimed water, around 80 use potable water, and another 80 rely primarily on air-cooled systems that do not consume water for cooling.

Some municipalities and regional governments are moving toward zoning or mandating near-zero water cooling, rather than relying on voluntary corporate pledges. Some examples of next-gen thermal management policies come from:

• York County, SC – QTS York County’s $8 billion, 800-acre Mega-Campus will use zero-water cooling technologies, adhering to newly passed York County Council mandates for closed-loop cooling systems. Here, operators will have to use entirely dry-cooling or closed-loop liquid-to-air cooling architectures.
• Greater Phoenix Area, AZ – Colorado River water constraints have pushed zero-evaporation technologies, with Microsoft, Meta, Prime, Aligned and Edged US using zero-evaporation technology and high-temperature closed-loop liquid systems that allow chip coolants to run as hot as 45°C (113°F), efficiently rejecting heat into the desert air via external dry coolers (without evaporating any municipal water).
• Mount Pleasant, WI – Home to early deployments of  zero-evaporation AI data center blueprints. Cooler than the Sun Belt, facilities here can rely on 100% dry air cooling and closed-loop cold plates for the vast majority of the year, preventing the local water table or municipal water systems from being drained.
• Coastal Michigan – lake-source cooling is the name of the game here, pumping naturally cold deep-lake water directly through heat exchangers to cool the servers, then returning the water to the lake slightly warmer. This completely eliminates cooling towers, chemical additives, and evaporation, achieving near-zero operational water consumption while slashing cooling energy use by up to 60%.

With these projects, it is clear that the days of water being an afterthought, or a cheap, abundant utility are gone. Water is a critical gating factor for site selection, even rivaling electrical grid capacity in terms of resource tension, costs, ROI, and community concerns. For this reason, REITs, developers, and data center operators are moving quickly to address the water-power paradox.