The answer is, as always, It Depends.
It depends on who you ask and what you’re reading. But you can make some determinations for yourself.
First off, what is a data center, really?
It’s nothing more than a big warehouse full of computers. They clear the land, they pour a slab of concrete, throw up a metal or poured concrete wall building, and then fill it with electrical infrastructure and computer equipment. That’s it. It might have a small amount of office space for the people that need to work there, but from a structure standpoint it’s no different than an Amazon warehouse or a Sam’s club or a Costco or any other large footprint building.
Where they differ is power requirements. A modern hyperscale AI datacenter is going to need at least 10 megawatts of input power. Some datacenter builders are talking about gigawatt inputs. That’s the crux of the issue in most places. The power grid in most areas can barely supply 10 MW to a site. And in reality, these facilities need redundant power feeds coming in from different directions, so a site that consumes 10MW of power needs two 10MW inputs. The utility is going to want to make sure they can feed them both at the same time, so that’s really 20MW of potential load they have to build out for.
Nobody can get to a Gigawatt unless they’re generating their own power on site. More on that later.
What about water?
What about water? The news is full of stories about datacenters using ridiculous amounts of water. What’s up with that?
Well, conventional datacenters have been air cooled. That means the equipment has fans and heat sinks and draws cool air in the front and spits hot air out the back. Giant air conditioners then remove the heat from the air and expel it outside. There’s no water involved. These systems use conventional refridgerant like any other commercial A/C unit.
Well, modern AI equipment is liquid cooled. They typically use a hot water cooling loop where the coolant is about 45 degrees Celsius (113 Fahrenheit). Why so hot? Well, the coolant has to be warmer than the outside ambient air, or else it will take in heat from the heat exchanger outside instead of shedding it. But this cooling loop is closed. Once they fill it with water, they don’t use more. It’s at most a few hundred to a few thousand gallons in capacity. If you water your lawn regularly, you probably use more than that every month.
Where the consumption happens is when the ambient temperature exceeds the temperature of the coolant. When that happens, the most common strategy is to spray water directly onto the heat exchangers. This is evaporative cooling. This is the method that “consumes” water.
But “consumes” is loaded. The water is used, yes. But it is sprayed onto a hot radiator and evaporates. It will fall back to the ground at some point somewhere else as rain or dew. The water isn’t lost. The question becomes, “Where does the water for the evaporative system come from?”
Well, looking to things like power plants, they are usually located next to a natural water supply. A River. A large lake. The water for the evaporative system is taken from that source. If that happens, then typically there’s no effect on local water supplies or utility rates. The water comes out of the river, it comes back down as rain. Everybody’s fine.
If you decide to take your evaporative coolant from the local municipal utility, well, that can be a problem. Don’t do that. If you see a datacenter project, ask the question, “Are you using evaporative cooling, and if you are, where are you going to get that water?”
If the project is in a temperate location, the odds they’ll need to use evaporative cooling are low. But on the other side, anybody building a datacenter in a hot place like Arizona is doing a fairly dumb thing.
What about zoning?
Well, this is where a lot of communities have some leverage, but in my opinion, it’s a bit of a farce. At its root, a datacenter is no different when it comes to zoning and aesthetics than a large warehouse. If you have zoning to control those structures, then you have zoning to control a datacenter.
What about power?
Power is the limiting factor in most places. As we mentioned in the introduction, these places need a lot of electricity. The question here comes down to, “Who pays for the power?”
In many places, industrial and commercial power consumers are able to buy power at lower rates than residential customers. It’s a volume discount. But here’s the catch:
Conventional commercial and industrial applications that consume a lot of energy also create a lot of jobs. They also usually produce goods that are sold. At each step in that chain, money is injected into the local economy. An auto plant gets a break on its power so it can employ two thousand people and pay them a wage and spit out thousands of cars that can be sold. All of this contributes to the local economy.
A conventional warehouse is considered commercial, but typically they’re low density in terms of energy consumption. They’re basically just running HVAC and keeping the lights on.
Datacenters do not contribute to the local economy. After they are constructed, they might employ a dozen people. They produce no tangible product. The revenue for the product created inside that datacenter often never passes through the community where it was being built.
So the fundamental contract of supplying power to industrial scale customers at a discount breaks down. The datacenter gets cheap power, but the community doesn’t get the benefit of the goods produced with that power. That creates a problem.
The datacenter’s consumption WILL drive up everybody’s power costs. But residential customers will see a larger increase UNLESS the community can create a new classification for these loads. Datacenters should pay more for their power than a factory. They should pay more than a residence or store. Since the community cannot derive value from the commercial activity inside that datacenter through conventional means like local wages and sales/use/inventory tax on physical goods produced or housed, then the community needs to realize the benefits of that activity via controlling the energy inputs.
So where does the power come from?
Normally, the local utility. But most communities don’t have the generating capacity to power these new projects. So when that datacenter goes up, suddenly a community can go from generating all of its own power to importing power. That always makes rates go up.
If the datacenter is going to generate its own power onsite with gas turbines, that creates different problems. Gas turbines are noisy, and they’re powered by natural gas. That means that instead of your electric bill going up, your gas bill goes up.
There is no free lunch here. Somebody has to pay for the energy.
Conclusion
So, if you have a datacenter project trying to spin up near you, you need to think about it really hard. Before you start a protest or blow up a zoning meeting, ask a few questions:
1. Water: are they using evaporative cooling? If yes, where is that water coming from? If it’s the water company, that’s a problem. If it’s the Mississippi river, it’s probably not a problem.
2. Zoning: If you allow warehouses, then you can allow a datacenter. As far as the aesthetics of the building are concerned, they’re the same.
3. Power: Does your community have a rate class for datacenters so they can pay for the power they use at a proper rate and not cause rate increases for everybody else? If not, you have a problem.
I hope this is helpful and can assist people in making educated decisions about how to regard datacenter projects near them.