A new report published by Bluefield Research suggests that the biggest risk to water infrastructure is not happening on-site within data center facilities, but rather at electric power plants.
Titled The Water-Power Nexus: How Data Centers are Reshaping the U.S. Water Landscape, the report explains that surging electricity demand is shifting water risks upstream to power generation and impacting communities that never anticipated becoming “ground zero for AI infrastructure.”
The artificial intelligence (AI)-driven data center boom is fundamentally transforming the U.S. water landscape, Bluefield says. It notes that by 2030, 72% of total water consumption associated with data centers will occur off-site and be tied to electricity generation — more than double the forecasted on-site cooling demands. Data centers are expected to account for 8.9% of the total U.S. electricity demand by the end of the decade, up from 4.4% in 2023, the report says.
“While data centers use water directly for on-site cooling, the rapid growth in electricity demand is driving up the sector’s overall water use outlook,” says Amber Walsh, research director at Bluefield Research. “Power — not on-site cooling — is becoming the defining water risk for the data center industry.”
The report explains that indirect water consumption linked to electricity generation is expected to nearly double in the next five years, increasing from 54 billion gallons in 2025 to 91 billion gallons by 2030. Bluefield says this uptick is driven by the brutal reality of how power companies are scrambling to meet a 12% surge in electricity demand. Near-term strategies such as delaying coal plant retirements, recommissioning nuclear facilities, and fast-tracking natural gas build-out carry significant water costs.
In sharp contrast, on-site water consumption for data center cooling is decelerating as operators transition to more efficient cooling methods and reclaimed water sources. This on-site consumption is projected to grow modestly from 22 billion gallons to 34 billion gallons over the same period.
“The water story has moved upstream, and it’s not coming back,” says Walsh. “Unlike the installed base of data centers, AI gigafactories and hyperscale campuses are being designed from the ground up with closed-loop cooling, advanced liquid cooling at the chip level, and reclaimed water integration.”
In terms of geographic trends for data center build-outs and associated water demand, Bluefield notes that Texas, Virginia and Pennsylvania have more than $360 billion (USD) in planned investments. However, water resources challenges arise as the growth expands west. The report identifies Arizona as a state where high water stress is coinciding with explosive data center build-out, while other regions across the U.S. adopt reclaimed water and innovative cooling methods for data center demand.
For more details on the report, check out the full press release from Bluefield here.
Source: Bluefield Research
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