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In the last decade, the U.S. electric power sector turned away from coal to embrace wind turbines and solar panels, two energy generating sources that require little water for operations and cooling.
Together with the installation of more water-efficient natural gas-fired power plants, the energy shift has been a net benefit for the country’s water resources – a “reduction in the relative risk that our power sector is facing due to water temperatures and water scarcity,” as Jordan Macknick of the National Renewable Energy Laboratory put it.
New considerations are now in the mix. Due to political changes and rising electricity demand to power the AI frenzy, the durability and continuation of that risk-reduction path is less certain for the electric power sector than it was a few years ago.
Energy-hungry data centers are being proposed and constructed at breakneck speed, kickstarting growth in U.S. electricity demand for the first time in nearly two decades.
Today, data centers account for 4 percent of the nation’s electricity use. By 2028, according to Lawrence Berkeley National Laboratory, data center demand could soar, to between 6.7 and 12 percent of all the electrons consumed nationally.
At the same time, the difficulty in building new transmission lines and the Trump administration’s open hostility to wind and solar – going so far as to cancel the Revolution Wind project off the Massachusetts and Rhode Island coast that was 80 percent complete – is casting a pall over electricity-generating sources that consume little water yet are still seeing vigorous growth in the face of gathering political headwinds.
Data center energy demand, said Dan Reicher, a former assistant secretary of energy in the Clinton administration, is at a junction, one that points not only at the computing industry’s carbon intensity but also its energy-related water use.
Will water-intensive thermal generation like coal and nuclear be revived? The Trump administration ordered the J.H. Campbell coal plant in Michigan, slated for closure, to remain open. Will hydropower and geothermal – two renewable energy sources the Trump administration favors – see their fortunes rise? Will the data center buildout proceed as rapidly as some forecasts suggest?
These changes have the potential to rewrite the twinned narratives of energy and water.
“I think we’re at a very important inflection point right now with the composition of our electricity grid,” Macknick said. “If we do see a resurrection of coal plants or a push for more thermal technologies that utilize recirculating or once-through cooling technologies, we could see a reversal in that trend of water usage and see increases in the water intensity of our electricity sector, which could in turn potentially lead to more risks for our reliable electricity supply.”
Electric Growth
From Arizona and Georgia to New Jersey and Minnesota, data centers have been the target of public pushback due to the water used directly in their operations to cool racks of data-crunching, heat-producing servers. Supplying cooling water to these facilities has taxed water supply infrastructure and strained local water sources. Berkeley Lab estimated direct water consumption for data centers to be 66 billion liters nationally in 2023.
A second form of data center water use has received less attention – the water consumed to generate the electricity that powers these facilities. In aggregate, this indirect use is a much higher number – some 800 billion liters, according to Berkeley Lab.
For data centers, water and energy are two sides of a coin. As servers undertake more intensive computing processes to power generative AI, they produce more heat. In a circular system, that waste heat could be repurposed. But most data centers operating in the U.S. today do not reuse their heat. They instead dissipate it through cooling systems. This is where operators encounter trade-offs between water and energy.
The most energy-efficient means of evacuating waste heat from the server racks is through water. Where water is constrained, data centers can use recirculating systems or huge fans to cool their equipment. Conditioning the air, however, gobbles electricity. Along with the energy that powers the servers, how that energy for cooling is produced determines a data center’s indirect water footprint.
The U.S. electricity mix is not what it was a decade ago. During that transitional period, power generated by burning coal has dropped by more than half, now accounting for only 15 percent of the nation’s electricity. Coal, which needs water for cooling, has been supplanted by natural gas and renewables, particularly solar and wind.
Forecasts for data center energy growth vary, but the direction is the same: up and up. Western Resources Advocates, a research and advocacy group, says that the largest electric utilities in five Colorado River basin states are collectively forecasting annual demand growth of 4.5 percent through 2035.
Efficiency improvements have helped to lighten the load. The Big Tech hyperscalers – Google, Microsoft, Meta, Amazon – that operate the largest data centers tout their efforts to wring more performance out of less power. Google claims better processors allow the company to generate six times more computing power per unit of electricity compared to five years ago.
“Data centers are more efficient and getting more efficient by the day,” said Reicher, who was the director of climate and energy at Google from 2007 to 2011.
Despite the efficiency gains, the data center expansion, in aggregate, is so massive that total energy demands continue to climb. Berkeley Lab noted that data center electricity demand more than doubled between 2017 and 2023.
How to accommodate this buildout without stressing water supplies is a matter of serious inquiry. Macknick and his colleagues at the National Renewable Energy Laboratory are working to identify the best locations for data centers taking into account land, proximity to end users, and energy and water availability.
Reicher said the energy mix in the U.S. is changing because of new priorities in the Trump White House and the Republican-led Congress. How the political turn affects the energy market is an open question, Reicher said. But the administration’s actions – canceling offshore wind, limiting access to equipment, cutting federal funding, and imposing tariffs – are substantial barriers.
“There’s a whole circle of issues that are cutting into the deployment of solar and wind, not just the generating facilities themselves, but adjunct storage capacity, adjunct transmission capacity,” Reicher said. “So we’re really messing things up in a pretty serious way when it comes to this and therefore with all those implications upstream or downstream for water use.”
Macknick mentioned three strategies that data center operators are considering. One is rebooting shuttered fossil fuel and nuclear power stations. Microsoft signed a deal with Constellation Energy in 2024 to reopen Unit 1 at Three Mile Island nuclear plant, in Pennsylvania. Another is to build new natural gas plants. A third is to sign power purchase agreements for renewables. Last year Google signed contracts for 8,000 megawatts of clean energy.
“It’s hard to really parse out what are the trends that will in time be successful,” Macknick said. “I think right now all those options are simultaneously being considered and people are wanting to see what will work, what will be possible, given the large amount of uncertainty that all energy companies are currently facing right now.”