Utah data center will solve water, power scarcity in a novel way
Up against a power crunch and growing concerns about water scarcity, data center developers in the artificial intelligence race are seeking novel solutions, from nuclear power to exotic cooling technologies to buying the entire output of solar and wind farms.
Neither water nor power should be a problem for a massive project underway in central Utah. Mark McDougal, cofounder of developer Joule Capital Partners, is converting parts of his family’s 4,000-acre alfalfa farm to build multiple AI data centers. The farm has historical water rights to a groundwater aquifer; project engineers estimate that the data centers will use 75 percent less water than if the land were farmed each year, partly due to efficient cooling systems.
McDougal also plans to build an array of gas-fired generators along with battery storage. That means no lengthy wait times to hook up to the local utility and no impact on residents’ electricity prices.
The Joule campus is a unique, not easily replicable spin on the dilemma of water- and power-hungry data centers. Some developers are building their own power plants, often gas-fueled, to skirt the overburdened, outdated U.S. grid. Some are seeking private water rights — in McDougal’s case, family-owned. Others are trying to keep their water consumption on the down low: Earlier this year, judges in Colorado ordered the Denver Water Board and the city of Colorado Springs to turn over information on data-center water usage to Business Insider, after the officials claimed the information was confidential.
Water is increasingly critical in Southwestern states like Utah, which are engulfed in a decades-long drought. Reliable power, and plenty of it, can present another challenge.
“We started working on this a decade ago, and realized that the public utility was quickly becoming outdated and overburdened,” McDougal said. “There’s all this demand for electricity from electric cars, our homes, and now, of course, data centers. To solve for that, it became clear that we’d need to build our own power grid.”
Water/power dilemma
For companies seeking to align their digital footprints and sustainability goals, the energy and water use of AI data centers requires a complicated balancing act that few have mastered. Only 21 percent of the more than 1,5000 companies surveyed by S&P Global in May said they quantify the impact of their AI initiatives on sustainability goals.
Big Tech companies, including Google, Amazon, and Meta, have pledged to be “water positive” by 2030 — meaning they will replenish more water in localities than they consume — and to achieve net-zero emissions by that same date. Microsoft has the same water goal and aims to become “carbon negative” by 2030, eliminating more carbon from the atmosphere than it emits. But the rapid buildout of data centers is undercutting those goals.
“Before companies site data centers, they need to think about water stress in the region,” said Kirsten James, senior program director for water at advocacy and data nonprofit Ceres. “There are some good solutions to be more water efficient, but those systems may be more energy-intensive. So there are different trade-offs.”
U.S. electricity demand is expected to grow by 25 percent by 2030, in large part due to the rapid growth of data centers, according to consulting and technology firm ICF. Since 2022, two-thirds of data centers, either already built or under construction, are in water-stressed regions, including the Southwest, according to a Bloomberg analysis. By 2027, the global demand for AI processing could consume more water than Denmark’s total annual withdrawal, researchers at the University of California, Riverside found.
Big data centers can require city-level amounts of power and water. The facilities are filled with densely packed servers with advanced computing chips that run virtually 24/7 and need to stay cool. Many use evaporative cooling, which continually draws in fresh water. The demands are causing alarm in communities from Virginia to Indiana to Texas, where residents are worried about the impact on air pollution, water availability, and utility bills.
From alfalfa to servers
The Joule project, in Millard County, Utah, broke ground in November and is designed to address some of those challenges. Citing non-disclosure agreements, McDougal declined to name signed customers, saying they include major tech companies.
The initial phase will include 1 gigawatt of power from dozens of gas generators and a battery storage system to level out electricity. A nearby pipeline connection will supply the gas. The site could potentially scale up to 12 GW — or about triple Utah’s total power supply.
“No substations, no towering smoke stacks, no overhead transmission lines,” McDougal said.
He initially considered solar panels but determined they couldn’t provide enough power around the clock. The battery storage system is permitted to accept cleaner electricity, including fuel cells, a nearby geothermal project under construction by Fervo Energy, and small modular nuclear reactors, should they become commercially available.
“Solar is a key option to our future planning, but it is not baseload power,” McDougal said.
‘More expensive and dirtier’
The carbon footprint of the gas generators will be “substantial,” said Logan Mitchell, climate scientist and energy analyst at Utah Clean Energy, an advocacy group.
“You need a whole bunch of these generators to produce the same amount of power as a traditional combined-cycle gas turbine, and they’re way less efficient,” Mitchell said. “So because they’re less efficient, they’re more expensive and dirtier. But they are available today.”
However, the water footprint is expected to be low, McDougal said. The gas generators will use some freshwater for cooling, but the data centers won’t. That’s because a closed-loop, direct-to-chip cooling system will continuously circulate a small amount of water. These systems save millions of water each year compared to evaporative cooling.
Some of the tech giants are moving in this direction. Microsoft in December 2024 said all of its new AI data centers will use closed-loop, direct-to-chip cooling. The switch would save 125 million liters of water, or about 33 million gallons, per year per data center. Meta said its latest project in El Paso, Texas, will use similar technology.
“We can reduce the water consumption dramatically,” McDougal said, noting that the farm has access to about 10,000 acre-feet, or 3.2 billion gallons, of water annually. McDougal plans to shift to planting less alfalfa — a very thirsty crop. “Now that the main focus is data centers, we can farm less intensively than we had before.”
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