The Water Consumption Question: Data Centres and Utilities
The surge in data centre development across the US has water utilities thinking about how they will meet growing water demands, according to the Black & Veatch 2025 Water Report.
The report, based on a survey of 680 water sector stakeholders, indicates utilities are beginning to recognise that data centres – particularly those supporting AI operations – require significant water resources for cooling systems.
Although data centres are a key consideration for these water companies, the report questions how far this reach is. In fact, more than half (54%) of respondents said “no” when asked if their organisation has factored in the rise of data centres and technical manufacturer water needs into their short and long-term resource planning.
- 21% of respondents say they are seeing data centre/AI data centre activity in their area
- 50% of respondents say they have neutral policies when it comes to encouraging the building of data centres and/or technical manufacturing
- 11% say they have policies that encourage their building, 2% say they have policies that discourage their building and 37% are unsure
- 36% of respondents say that within the water authority, perception as it relates to water usage by data centres and/or technical manufacturing coming to their area is neutral - the same percentage say they are unsure
The report states: “As data centre locations balance out across the US landscape, many communities are proactively completing water arithmetic, assessing the would-be impact of data centres on water and wastewater systems to sort out how much their infrastructure assets can handle.”
How is water used inside a data centre?
Large data centres that are used to power AI often require large quantities of water to keep essential systems cool.
Whilst the technology industry is eager to start developing the cooling solutions required that support this innovation, there are concerns that it could throw up additional sustainability challenges. Notably, data centres using higher levels of water could have an impact on national water supply.
As more companies turn to AI for their solutions, causing widespread global demand, data centre operators are having to turn to more solutions to keep essential systems that house AI cool - hence increasing their water use.
A single data centre can have cooling towers that require millions of gallons of water each year to prevent critical infrastructure from overheating.
Read more about data centre water use with advice from Digital Realty HERE.
Black & Veatch highlights water utility preparation gaps
Water utilities appear unaware of the full impact that data centre growth could have on water supply, according to the Black & Veatch report. Critically, more than half of respondents (54%) admitted they have not factored the proliferation of data centres and technical manufacturer water needs into their short- and long-term resource planning.
An additional one-third of utilities surveyed weren’t sure if their organisation had developed such plans.
“As demand for technology, AI and cloud computing increases along with corresponding demand for water, water utilities can be aware of the trend and ready to engage with ecosystem players to forecast supply,” the report advises.
Despite increasing media coverage of data centre water usage, the report also found only 14% of utilities have experienced direct demand from data centres in their service areas. While the impact of data centres has not been fully realised, the report suggests that it will be felt more in more rural areas in the near future as more are developed.
"This report highlights the challenges our water clients are facing, from cybersecurity threats to aging infrastructure, AI adoption and the impacts of climate change.
"As they face these new challenges, utilities must rethink how they deliver water — advancing smarter sustainability practices, adapting to new regulations and modernizing systems to ensure long-term reliability and resilience. With AI-driven data centre growth and an increase in cyberattacks against our water infrastructure, the need for resiliency has never been more clear."
Tech giants start to pursue water-positive innovation
Major technology companies are starting to establish ambitious water conservation targets for their data centre operations.
One example is Microsoft, with the company announcing in December 2024 that it would be adopting a new approach to cooling data centres that eliminates evaporative water loss. This strategy is designed to help the company save more than 125 million litres of water annually per data centre.
Microsoft describes these as “zero-water evaporated designs” where water flows past heat-generating processing chips, transferring heat to chillers before recycling through the system.
It plans to pilot this closed-loop system in Phoenix and Mount Pleasant, Wisconsin, with implementation beginning in late 2027.
Other technology leaders are pursuing similar water stewardship programmes. Google is collaborating with communities worldwide to enhance clean water availability, while AWS employs AI to protect water resources across multiple countries.
Meta has also reported that it helped to restore 1.5 billion gallons of water in 2024.
Is water reuse the solution to confront rising data centre demands?
The report also reveals a mixed perception of data centre water usage. Notably, 13% of respondents rated their perceptions about water usage by data centres and technical manufacturing as slightly or very negative, both within water authorities and their wider communities.
Meanwhile, 11% of water utilities reported actively welcoming new demand from data centres or technical manufacturing, with 2% discouraging them. Half of respondents have described their enterprises as neutral toward data centre development, “as communities balance economic growth and change with natural resource supply.”
While only 12% of utilities have seen increased demand for recycled or repurposed water on account of data centres, this figure is expected to grow as data centres expand and water reuse gains traction as a cooling solution.
- only 34% of respondents are “very confident” in the resiliency of their water systems, a sharp 11-point drop from 2024 (Source: Black & Veatch)
“While the tech industry long has relied on data centres to run everything from social media to financial transactions and email, new AI technology requires ever-increasing computational power,” the report says.
“As the need for this technology grows, so does the need for data centres and the investment appetite.
“As global law firm White & Case noted in December, most technology companies have ambitious water-positive targets for their data centres’ operations and increasingly are exploring and applying technologies to reduce and minimise water usage.”
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