AI Data Centers Shift Water and Power Costs to Public

U.S. data centers could use up to 110 billion gallons of water a year by 2030. Technology companies are securing large electricity supplies and, in some cases, long-term power contracts for AI operations. Scientists from the University of California, Riverside, and other institutions estimated that projected water use equals 7% of annual consumptive use in U.S. public water systems in a March analysis.

Who Pays for the Expansion

A report by nonprofit advocacy organization Ceres says data centers across seven states already use around 3.4 trillion gallons of freshwater a year for electricity generation. That’s roughly 12 times the combined annual water use of Los Angeles, Phoenix and Washington, D.C. A 2025 Bloomberg analysis found that around two-thirds of U.S. data centers built or under construction since 2022 sit in water-stressed areas.

Kaveh Madani, director of the United Nations University Institute for Water, Environment and Health, said communities should know “who benefits from it” before anyone builds a data center. He said assessments should consider whether a facility creates jobs or improves the local economy, and whether it takes water from users who need it more, such as farmers. “There are trade-offs like any other technology,” Madani said. “It has has downsides that need to be regulated, monitored, and mitigated.”

Residents near facilities also bear costs. Residents near a large data center in Vineland, New Jersey, have filed noise-pollution lawsuits. Cooling systems, gas turbines, diesel generators and other equipment produce noise. Scientists at Arizona State University found that data-center heat pollution warmed downwind Phoenix neighborhoods by as much as 4 degrees Fahrenheit.

“Even if these data centers only contribute to an additional heat island magnitude of 1 degree or 2 degrees, that can still have a very significant impact on our lives,” said lead author David Sailor, director of ASU's School of Geographical Sciences and Urban Planning. One recent study estimated that the public-health burden of U.S. data centers could reach $20 billion by 2028.

Power for AI, Public Financing for Nuclear

The International Energy Agency says AI data-center electricity consumption surged 50% last year. Data centers used around 0.5% of global electricity in 2025, and Our World in Data projected that share could reach 1.5% by 2030. Lawrence Berkeley National Laboratory said data centers could account for up to 12% of U.S. electricity consumption by 2028.

The Department of Energy is lending as much as $4.4 billion to restart three plants: the Palisades Power Plant in Michigan, the Crane Clean Energy Center at Pennsylvania's Three Mile Island and the Duane Arnold Energy Center in Iowa. Together, they would restore 2.25 gigawatts of electricity, enough to power roughly 2 million homes and businesses. Two plants have contracts with technology companies willing to pay a premium for large amounts of carbon-free electricity for data centers.

The contracts tie public financing to private demand. Constellation Energy announced it would spend $1.6 billion to restart the reactor at Three Mile Island under a 20-year agreement with Microsoft; the Energy Department provided a $1 billion loan. NextEra Energy and Google are collaborating to restart Duane Arnold by early 2029. NextEra CEO John Ketchum said a long-term contract with a hyperscaler means none of that project’s costs are being paid by residential customers in Iowa.

That claim contrasts with the plants’ earlier economics. Duane Arnold was scheduled to close permanently in October 2020, and replacing it with cheaper sources, including wind, was projected to save Iowa customers $300 million in energy costs. A derecho damaged the plant, and it shut down early in August 2020. At Three Mile Island, Exelon shut down the functioning reactor in 2019, saying it was losing money and Pennsylvania lawmakers had declined to subsidize it.

Fuel, Emissions and Limits on Oversight

Coal powers 30% of global data centers, followed by renewables at 27% and natural gas at 26%. A January report from Global Energy Monitor says more than a third of natural-gas-fired power capacity in development in the United States is intended to power AI. Data centers are also building gas turbines to avoid straining local grids and raising bills; CNN said those turbines are less efficient than large power plants and can add nitrogen oxides and fine particulate matter.

Materials and waste bring further environmental costs. Mining minerals and metals for semiconductors and data-storage components, often in the Global South, has been linked to air and water pollution, deforestation, health risks and climate pollution. Only about a fifth of electronic waste is currently recycled, and AI’s mineral demand could compete with wind and solar industries.

Technology companies say they’re developing cooling systems to reduce water use. Some analysts argue water concerns have been overestimated, while experts have urged state and local governments to strengthen noise regulations. CNN’s poll, conducted by SSRS in September, found nearly 90% of Americans were more concerned than excited about the rise of AI data centers. Limited transparency from AI providers makes precise estimates difficult.