Explosive growth in internet usage, combined with rapid AI expansion, is driving unprecedented demand for data centers. This surge is increasing pressure on global water resources as high-density AI workloads require intensive cooling. Water use varies by facility, shaped by cooling design, IT rack chip density, local climate, and electricity sources. It is estimated that data centers consume about 560 billion litres of water annually, and this could increase to nearly 1,200 billion litres by 2030.
Companies pursuing peak performance face a tough balance between rising energy costs and responsible water use. With the sharp growth in AI, cooling innovation has become essential for modern high-density data centers. Advancing new cooling technologies can unlock higher energy efficiency and sharply reduce dependence on freshwater.
This article examines emerging innovations that provide credible pathways to cut water consumption across the data center cooling value chain.
Innovation pathways to reduce data center water consumption
The innovations highlighted below offer promising pathways to reduce water stress as data center infrastructure expands. These solutions aim to cut reliance on scarce freshwater, lower energy demand, and improve cooling costs while maintaining high efficiency.
By addressing the sector’s key challenges, these breakthroughs support more sustainable water use, smarter resource management, and a better balance between technological growth and fair access to local water supplies.
The Net Zero Insights Market Compass showcases these innovation pathways in a structured, multi-layered framework that brings clarity to the evolving data center cooling innovation landscape.
Liquid cooling for data centers
As AI-driven workloads push thermal limits, data centers are accelerating the shift from air-based systems to liquid cooling to manage rising heat loads. Liquid cooling uses high-efficiency fluids rather than air to remove heat from servers, dramatically reducing dependence on water-intensive evaporative cooling systems. Because water has up to 3,000 times the heat absorption capacity of air, liquid cooling delivers far greater thermal efficiency without requiring energy-heavy refrigeration.
Liquid cooling spans several technologies including direct-to-chip systems, immersion cooling, cold plates, specialized dielectric fluids, and integrated distribution architectures—designed to support the thermal demands of modern AI and high-performance computing (HPC) environments.
By transferring heat directly from hardware to a controlled liquid loop, these systems reduce cooling energy consumption, lower water use, and enable higher rack densities compared to traditional approaches.
Direct-to-chip cooling
Direct-to-chip (D2C) cooling is one of the most widely adopted liquid cooling methods for AI and HPC infrastructure. This approach circulates a safe, non-conductive coolant through cold plates attached directly to processors and other high-heat components. The liquid absorbs heat at the source and transfers it to a sealed chilled-water loop, eliminating the need to cool the surrounding room air.
D2C systems deliver stable thermal performance regardless of workload intensity or external climate conditions. They significantly reduce reliance on evaporative cooling, improve energy efficiency, and support higher power densities as AI chips continue to scale.
Immersion cooling
Immersion cooling submerges servers or full racks in a thermally conductive, electrically non-conductive fluid. The liquid absorbs heat directly from components and transfers it to a heat exchanger before recirculating through the tank. Available in both single-phase and two-phase systems, immersion cooling provides the highest thermal efficiency of any liquid cooling method.
Although it requires higher upfront investment, immersion cooling offers substantial long-term benefits:
- reduced water use
- lower energy consumption
- greater rack density per square foot
- higher thermal efficiency with more stable temperatures
- reduced need for bulky cooling infrastructure
- minimal noise and dust due to sealed systems
Because immersion systems rely on synthetic dielectric fluids rather than evaporative processes, they dramatically reduce the freshwater burden associated with conventional cooling.
Dry cooling for data centers
Dry cooling is an emerging solution that helps data centers manage heat with minimal electricity and virtually no water use. By replacing water-intensive evaporative systems with air-cooled heat exchangers, dry cooling significantly reduces pressure on local water supplies while maintaining effective thermal performance.
This method circulates a heated fluid from server environments into an external unit where it is cooled by ambient air. When outside air is cooler than the circulating fluid, heat is efficiently transferred through finned tubes or plates designed to maximize surface contact. The cooled fluid is then recirculated back into the data center, creating a continuous, closed-loop system.
Hybrid cooling for data centers
Hybrid cooling is an adaptive thermal management approach that combines both liquid and air-based systems to optimize efficiency and reduce water usage. It applies liquid cooling to high-density, high-heat components while relying on air or other low-intensity methods for the remaining load, enabling data centers to lower water consumption compared with fully evaporative systems.
In hybrid configurations, liquid absorbs heat directly from critical equipment, and any residual heat released into the surrounding space is removed through air-based systems. By integrating direct-to-chip cooling or liquid-assisted air systems for dense racks while maintaining traditional air cooling for lower-intensity hardware, hybrid solutions offer a balanced, scalable pathway.Â
Key advantages of hybrid cooling include:
- Real-time switching between liquid and air cooling based on workload needs
- Improved energy efficiency and lower operating costs
- Better budget control while easing the transition toward advanced liquid-cooling systems
Cooling Solutions for a Sustainable Digital Infrastructure
The rapid acceleration of AI and its rising power needs make water efficiency a critical priority. By 2027, AI alone is projected to drive 1.1–1.7 trillion gallons of water withdrawal, more than 4–6 times Denmark’s annual water use. This scale of demand leaves no room for delay in adopting solutions that can help reduce dependence on scarce freshwater resources.
To limit the environmental footprint of the digital economy, operators must accelerate adoption of these advanced cooling systems. Doing so will allow the sector to sustain performance growth while strengthening its commitment to responsible resource management.
Looking to explore the data centers cooling solutions in greater detail?
Book a call to start your free trial and access our Data Centers Water Consumption Market Snapshot.
Already a customer? Log in here.
