As artificial intelligence spreads and competition to build data centres intensifies, water is emerging as a new key resource after power. Big tech companies are moving to readjust data centre cooling strategies as the huge amounts of water needed to cool servers become a burden for local communities.

On June 4 local time, IT outlet Ars Technica reported that Elon Musk's space company SpaceX recently amended IPO-related filings and said water shortages, drought and water-use regulations could affect future data centre development.

Data centres run large-scale cooling equipment to dissipate heat generated by thousands of servers. One of the most widely used methods is evaporative cooling.

Evaporative cooling uses fresh water to absorb heat from servers and then evaporates the water in cooling towers. It can cut power consumption and improve energy efficiency, but it also requires large volumes of water. Google’s Council Bluffs data centre in Iowa is known to have used more than 1 billion gallons, about 3.8 billion litres, of water last year.

The problem is that construction of large data centres is rising sharply in the AI era. Lawrence Berkeley National Laboratory projected in a report that hyperscale data centres could use up to 33 billion gallons of water by 2030 if they maintain current evaporative cooling methods. In summer, cooling demand and residents’ water use rise at the same time, raising the chance of deeper conflicts in water-scarce areas.

Big tech companies are therefore seeking different solutions. Microsoft, OpenAI and Oracle have unveiled plans in recent months to reduce reliance on evaporative cooling. Analysts say changes in cooling methods are unavoidable because the large-scale AI infrastructure project Stargate, pursued by OpenAI and Oracle, also includes parts of Texas where water shortages are severe.

Google, by contrast, chose a tailored approach based on local water conditions. Google recently announced it would expand projects to replenish fresh water in communities where its data centres are located and increase the share of reclaimed and recycled water it uses. It also said it runs a data-based framework that analyses each region’s hydrological environment to select the optimal cooling method.

Ben Townsend (벤 타운젠드), head of infrastructure and sustainability at Google, said some regions lack water while others are relatively abundant. He said applying the same cooling strategy to every data centre is not realistic.

Some also point out that cutting water use is not always better for the environment. A research team led by Professor Xiaolei Ren at the University of California, Riverside, found that if data centres use a certain level of evaporative cooling, they could secure an additional 10 to 30 gigawatts of spare power capacity on the U.S. grid.

That is because power consumption for cooling can rise sharply if water is not used. Google argued in materials submitted to the European Union that in water-rich regions evaporative cooling can instead help sustainable data centre operations. It said that as power use and carbon emissions at data centres surge after the expansion of AI services, increasing cooling power to cut water use could create another environmental burden.

Community opposition is also growing. Google previously halted plans for a data centre project on the outskirts of Santiago, Chile, after some permits were cancelled over concerns about water use. In Oregon, it was also once caught up in controversy over disclosing data centre water usage.

Experts say the data centre industry will ultimately have to find a balance between water and power. Priscilla Johnson (프리실라 존슨), Microsoft’s former head of water strategy, said there is a clear trade-off between water and energy. She said social pressure and regulation are needed so companies come up with more efficient designs that can reduce both resources.

As competition in AI leads to competition in data centre construction, securing water as well as power is expected to emerge as a key task for global technology companies.