AI could keep us dependent on natural gas for decades to come

The thousands of sprawling acres in rural northeast Louisiana had gone unwanted for nearly two decades. Louisiana authorities bought the land in Richland Parish in 2006 to promote economic development in one of the poorest regions in the state. For years, they marketed the former agricultural fields as the Franklin Farm mega site, first to auto manufacturers (no takers) and after that to other industries that might want to occupy more than a thousand acres just off the interstate.

So it’s no wonder that state and local politicians were exuberant when Meta showed up. In December, the company announced plans to build a massive $10 billion data center for training its artificial-intelligence models at the site, with operations to begin in 2028. “A game changer,” declared Governor Jeff Landry, citing 5,000 construction jobs and 500 jobs at the data center that are expected to be created and calling it the largest private capital investment in the state’s history. From a rural backwater to the heart of the booming AI revolution!

The AI data center also promises to transform the state’s energy future. Stretching in length for more than a mile, it will be Meta’s largest in the world, and it will have an enormous appetite for electricity, requiring two gigawatts for computation alone (the electricity for cooling and other building needs will add to that). When it’s up and running, it will be the equivalent of suddenly adding a decent-size city to the region’s grid—one that never sleeps and needs a steady, uninterrupted flow of electricity.

To power the data center, Entergy aims to spend $3.2 billion to build three large natural-gas power plants with a total capacity of 2.3 gigawatts and upgrade the grid to accommodate the huge jump in anticipated demand. In its filing to the state’s power regulatory agency, Entergy acknowledged that natural-gas plants “emit significant amounts of CO₂” but said the energy source was the only affordable choice given the need to quickly meet the 24-7 electricity demand from the huge data center.

Meta said it will work with Entergy to eventually bring online at least 1.5 gigawatts of new renewables, including solar, but that it had not yet decided which specific projects to fund or when those investments will be made. Meanwhile, the new natural-gas plants, which are scheduled to be up and running starting in 2028 and will have a typical lifetime of around 30 years, will further lock in the state’s commitment to the fossil fuel.

The development has sparked interest from the US Congress; last week, Sheldon Whitehouse, the ranking member of the Senate Committee on Environment and Public Works issued a letter to Meta that called out the company’s plan to power its data center with “new and unabated natural gas generation” and said its promises to offset the resulting emissions “by funding carbon capture and a solar project are vague and offer little reassurance.”

The choice of natural gas as the go-to solution to meet the growing demand for power from AI is not unique to Louisiana. The fossil fuel is already the country’s chief source of electricity generation, and large natural-gas plants are being built around the country to feed electricity to new and planned AI data centers. While some climate advocates have hoped that cleaner renewable power would soon overtake it, the booming power demand from data centers is all but wiping out any prospect that the US will wean itself off natural gas anytime soon.

The reality on the ground is that natural gas is “the default” to meet the exploding power demand from AI data centers, says David Victor, a political scientist at the University of California, San Diego, and co-director of its Deep Decarbonization Project. “The natural-gas plant is the thing that you know how to build, you know what it’s going to cost (more or less), and you know how to scale it and get it approved,” says Victor. “Even for [AI] companies that want to have low emissions profiles and who are big pushers of low or zero carbon, they won’t have a choice but to use gas.”

The preference for natural gas is particularly pronounced in the American South, where plans for multiple large gas-fired plants are in the works in states such as Virginia, North Carolina, South Carolina, and Georgia. Utilities in those states alone are planning some 20 gigawatts of new natural-gas power plants over the next 15 years, according to a recent report. And much of the new demand—particularly in Virginia, South Carolina and Georgia—is coming from data centers; in those 3 states data centers account for around 65 to 85% of projected load growth.

“It’s a long-term commitment in absolutely the wrong direction,” says Greg Buppert, a senior attorney at the Southern Environmental Law Center in Charlottesville, Virginia. If all the proposed gas plants get built in the South over the next 15 years, he says, “we’ll just have to accept that we won’t meet emissions reduction goals.”

But even as it looks more and more likely that natural gas will remain a sizable part of our energy future, questions abound over just what its continued dominance will look like.

For one thing, no one is sure exactly how much electricity AI data centers will need in the future and how large an appetite companies will have for natural gas. Demand for AI could fizzle. Or AI companies could make a concerted effort to shift to renewable energy or nuclear power. Such possibilities mean that the US could be on a path to overbuild natural-gas capacity, which would leave regions saddled with unneeded and polluting fossil-fuel dinosaurs—and residents footing soaring electricity bills to pay off today’s investments.

The good news is that such risks could likely be managed over the next few years, if—and it’s a big if—AI companies are more transparent about how flexible they can be in their seemingly insatiable energy demands.

The reign of natural gas

Natural gas in the US is cheap and abundant these days. Two decades ago, huge reserves were found in shale deposits scattered across the country. In 2008, as fracking started to make it possible to extract large quantities of the gas from shale, natural gas was selling for $13 per million Btu (a measure of thermal energy); last year, it averaged just $2.21, the lowest annual price (adjusting for inflation) ever reported, according to the US Energy Information Administration (EIA).

Around 2016, natural gas overtook coal as the main fuel for electricity generation in the US. And today—despite the rapid rise of solar and wind power, and well-deserved enthusiasm for the falling price of such renewables—natural gas is still king, accounting for around 40% of electricity generated in the US. In Louisiana, which is also a big producer, that share is some 72%, according to a recent audit.

Natural gas burns much cleaner than coal, producing roughly half as much carbon dioxide. In the early days of the gas revolution, many environmental activists and progressive politicians touted it as a valuable “bridge” to renewables and other sources of clean energy. And by some calculations, natural gas has fulfilled that promise. The power sector has been one of the few success stories in lowering US emissions, thanks to its use of natural gas as a replacement for coal.  

But natural gas still produces a lot of carbon dioxide when it is burned in conventionally equipped power plants. And fracking causes local air and water pollution. Perhaps most worrisome, drilling and pipelines are releasing substantial amounts of methane, the main ingredient in natural gas, both accidentally and by intentional venting. Methane is a far more potent greenhouse gas than carbon dioxide, and the emissions are a growing concern to climate scientists, albeit one that’s difficult to quantify.

Still, carbon emissions from the power sector will likely continue to drop as coal is further squeezed out and more renewables get built, according to the Rhodium Group, a research consultancy. But Rhodium also projects that if electricity demand from data centers remains high and natural-gas prices low, the fossil fuel will remain the dominant source of power generation at least through 2035 and the transition to cleaner electricity will be much delayed. Rhodium estimates that the continued reign of natural gas will lead to an additional 278 million metric tons of annual US carbon emissions by 2035 (roughly equivalent to the emissions from a large US state such as Florida), relative to a future in which the use of fossil fuel gradually winds down.

Our addiction to natural gas, however, doesn’t have to be a total climate disaster, at least over the longer term. Large AI companies could use their vast leverage to insist that utilities install carbon capture and sequestration (CCS) at power plants and use natural gas sourced with limited methane emissions.

Entergy, for one, says its new gas turbines will be able to incorporate CCS through future upgrades. And Meta says it will help to fund the installation of CCS equipment at one of Entergy’s existing natural-gas power plants in southern Louisiana to help prove out the technology.  

But the transition to clean natural gas is a hope that will take decades to realize. Meanwhile, utilities across the country are facing a more imminent and practical challenge: how to meet the sudden demand for gigawatts more power in the next few years without inadvertently building far too much capacity. For many, adding more natural-gas power plants might seem like the safe bet. But what if the explosion in AI demand doesn’t show up?

Times of stress

AI companies tout the need for massive, power-hungry data centers. But estimates for just how much energy it will actually take to train and run AI models vary wildly. And the technology keeps changing, sometimes seemingly overnight. DeepSeek, the new Chinese model that debuted in January, may or may not signal a future of new energy-efficient AI, but it certainly raises the possibility that such advances are possible. Maybe we will find ways to use far more energy-efficient hardware. Or maybe the AI revolution will peter out and many of the massive data centers that companies think they’ll need will never get built. There are already signs that too many have been constructed in China and clues that it might be beginning to happen in the US. 

Despite the uncertainty, power providers have the task of drawing up long-term plans for investments to accommodate projected demand. Too little capacity and their customers face blackouts; too much and those customers face outsize electricity bills to fund investments in unneeded power.

There could be a way to lessen the risk of overbuilding natural-gas power, however. Plenty of power is available on average around the country and on most regional grids. Most utilities typically use only about 53% of their available capacity on average during the year, according to a Duke study. The problem is that utilities must be prepared for the few hours when demand spikes—say, because of severe winter weather or a summer heat wave.

The soaring demand from AI data centers is prompting many power providers to plan new capacity to make sure they have plenty of what Tyler Norris, a fellow at Duke’s Nicholas School of the Environment, and his colleagues call “headroom,” to meet any spikes in demand. But after analyzing data from power systems across the country, Norris and his coauthors found that if large AI facilities cut back their electricity use during hours of peak demand, many regional power grids could accommodate those AI customers without adding new generation capacity.

Even a moderate level of flexibility would make a huge difference. The Duke researchers estimate that if data centers cut their electricity use by roughly half for just a few hours during the year, it will allow utilities to handle some additional 76 gigawatts of new demand. That means power providers could effectively absorb the 65 or so additional gigawatts that, according to some predictions, data centers will likely need by 2029.

“The prevailing assumption is that data centers are 100% inflexible,” says Norris. That is, that they need to run at full power all the time. But Norris says AI data centers, particularly ones that are training large foundation models (such as Meta’s facility in Richland Parish), can avoid running at full capacity or shift their computation loads to other data centers around the country—or even ramp up their own backup power—during times when a grid is under stress.

The increased flexibility could allow companies to get AI data centers up and running faster, without waiting for new power plants and upgrades to transmission lines—which can take years to get approved and built. It could also, Norris noted in testimony to the US Congress in early March, provide at least a short-term reprieve on the rush to build more natural-gas power, buying time for utilities to develop and plan for cleaner technologies such as advanced nuclear and enhanced geothermal. It could, he testified, prevent “a hasty overbuild of natural-gas infrastructure.”

AI companies have expressed some interest in their ability to shift around demand for power. But there are still plenty of technology questions around how to make it happen. Late last year, EPRI (the Electric Power Research Institute), a nonprofit R&D group, started a three-year collaboration with power providers, grid operators, and AI companies including Meta and Google, to figure it out. “The potential is very large,” says David Porter, the EPRI vice president who runs the project, but we must show it works “beyond just something on a piece of paper or a computer screen.”

Porter estimates that there are typically 80 to 90 hours a year when a local grid is under stress and it would help for a data center to reduce its energy use. But, he says, AI data centers still need to figure out how to throttle back at those times, and grid operators need to learn how to suddenly subtract and then add back hundreds of megawatts of electricity without disrupting their systems. “There’s still a lot of work to be done so that it’s seamless for the continuous operation of the data centers and seamless for the continuous operation of the grid,” he says.

Footing the bill

Ultimately, getting AI data centers to be more flexible in their power demands will require more than a technological fix. It will require a shift in how AI companies work with utilities and local communities, providing them with more information and insights into actual electricity needs. And it will take aggressive regulators to make sure utilities are rigorously evaluating the power requirements of data centers rather than just reflexively building more natural-gas plants.

“The most important climate policymakers in the country right now are not in Washington. They’re in state capitals, and these are public utility commissioners,” says Costa Samaras, the director of Carnegie Mellon University’s Scott Institute for Energy Innovation.

In Louisiana, those policymakers are the elected officials at the Louisiana Public Service Commission, who are expected to rule later this year on Entergy’s proposed new gas plants and grid upgrades. The LPSC commissioners will decide whether Entergy’s arguments about the huge energy requirements of Meta’s data center and need for full 24/7 power leave no alternative to natural gas. 

In the application it filed last fall with LPSC, Entergy said natural-gas power was essential for it to meet demand “throughout the day and night.” Teaming up solar power with battery storage could work “in theory” but would be “prohibitively costly.” Entergy also ruled out nuclear, saying it would take too long and cost too much.

Others are not satisfied with the utility’s judgment. In February, the New Orleans–based Alliance for Affordable Energy and the Union of Concerned Scientists filed a motion with the Louisiana regulators arguing that Entergy did not do a rigorous market evaluation of its options, as required by the commission’s rules. Part of the problem, the groups said, is that Entergy relied on “unsubstantiated assertions” from Meta on its load needs and timeline.

“Entergy is saying [Meta] needs around-the-clock power,” says Paul Arbaje, an analyst for the climate and energy program at the Union of Concerned Scientists. “But we’re just being asked to take [Entergy’s] word for it. Regulators need to be asking tough questions and not just assume that these data centers need to be operated at essentially full capacity all the time.” And, he suggests, if the utility had “started to poke holes at the assumptions that are sometimes taken as a given,” it “would have found other cleaner options.”      

In an email response to MIT Technology Review, Entergy said that it has discussed the operational aspects of the facility with Meta, but “as with all customers, Entergy Louisiana will not discuss sensitive matters on behalf of their customers.” In a letter filed with the state’s regulators in early April, Meta said Entergy’s understanding of its energy needs is, in fact, accurate.

The February motion also raised concern over who will end up paying for the new gas plants. Entergy says Meta has signed a 15-year supply contract for the electricity that is meant to help cover the costs of building and running the power plants but didn’t respond to requests by MIT Technology Review for further details of the deal, including what happens if Meta wants to terminate the contract early.

Meta referred MIT Technology Review’s questions about the contract to Entergy but says its policy is to cover the full cost that utilities incur to serve its data centers, including grid upgrades. It also says it is spending over $200 million to support the Richland Parish data centers with new infrastructure, including roads and water systems. 

Not everyone is convinced. The Alliance for Affordable Energy, which works on behalf of Louisiana residents, says that the large investments in new gas turbines could mean future rate hikes, in a state where residents already have high electricity bills and suffer from one of country’s most unreliable grids. Of special concern is what happens after the 15 years.

“Our biggest long-term concern is that in 15 years, residential ratepayers [and] small businesses in Louisiana will be left holding the bag for three large gas generators,” says Logan Burke, the alliance’s executive director.

Indeed, consumers across the country have good reasons to fear that their electricity bills will go up as utilities look to meet the increased demand from AI data centers by building new generation capacity. In a paper posted in March, researchers at Harvard Law School argued that utilities “are now forcing the public to pay for infrastructure designed to supply a handful of exceedingly wealthy corporations.”

The Harvard authors write, “Utilities tell [public utility commissions] what they want to hear: that the deals for Big Tech isolate data center energy costs from other ratepayers’ bills and won’t increase consumers’ power prices.” But the complexity of the utilities’ payment data and lack of transparency in the accounting, they say, make verifying this claim “all but impossible.”

The boom in AI data centers is making Big Tech a player in our energy infrastructure and electricity future in a way unimaginable just a few years ago. At their best, AI companies could greatly facilitate the move to cleaner energy by acting as reliable and well-paying customers that provide funding that utilities can use to invest in a more robust and flexible electricity grid. This change can happen without burdening other electricity customers with additional risks and costs. But it will take AI companies committed to that vision. And it will take state regulators who ask tough questions and don’t get carried away by the potential investments being dangled by AI companies.

Huge new AI data centers like the one in Richland Parish could in fact be a huge economic boon by providing new jobs, but residents deserve transparency and input into the negotiations. This is, after all, public infrastructure. Meta may come and go, but Louisiana’s residents will have to live with—and possibly pay for—the changes in the decades to come.

The data center boom in the desert

In the high desert east of Reno, Nevada, construction crews are flattening the golden foothills of the Virginia Range, laying the foundations of a data center city.

Google, Tract, Switch, EdgeCore, Novva, Vantage, and PowerHouse are all operating, building, or expanding huge facilities within the Tahoe Reno Industrial Center, a business park bigger than the city of Detroit. 

Meanwhile, Microsoft acquired more than 225 acres of undeveloped property within the center and an even larger plot in nearby Silver Springs, Nevada. Apple is expanding its data center, located just across the Truckee River from the industrial park. OpenAI has said it’s considering building a data center in Nevada as well.

The corporate race to amass computing resources to train and run artificial intelligence models and store information in the cloud has sparked a data center boom in the desert—just far enough away from Nevada’s communities to elude wide notice and, some fear, adequate scrutiny. 

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The full scale and potential environmental impacts of the developments aren’t known, because the footprint, energy needs, and water requirements are often closely guarded corporate secrets. Most of the companies didn’t respond to inquiries from MIT Technology Review, or declined to provide additional information about the projects. 

But there’s “a whole lot of construction going on,” says Kris Thompson, who served as the longtime project manager for the industrial center before stepping down late last year. “The last number I heard was 13 million square feet under construction right now, which is massive.”

Indeed, it’s the equivalent of almost five Empire State Buildings laid out flat. In addition, public filings from NV Energy, the state’s near-monopoly utility, reveal that a dozen data-center projects, mostly in this area, have requested nearly six gigawatts of electricity capacity within the next decade. 

That would make the greater Reno area—the biggest little city in the world—one of the largest data-center markets around the globe.

It would also require expanding the state’s power sector by about 40%, all for a single industry in an explosive growth stage that may, or may not, prove sustainable. The energy needs, in turn, suggest those projects could consume billions of gallons of water per year, according to an analysis conducted for this story. 

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The build-out of a dense cluster of energy and water-hungry data centers in a small stretch of the nation’s driest state, where climate change is driving up temperatures faster than anywhere else in the country, has begun to raise alarms among water experts, environmental groups, and residents. That includes members of the Pyramid Lake Paiute Tribe, whose namesake water body lies within their reservation and marks the end point of the Truckee River, the region’s main source of water.

Much of Nevada has suffered through severe drought conditions for years, farmers and communities are drawing down many of the state’s groundwater reservoirs faster than they can be refilled, and global warming is sucking more and more moisture out of the region’s streams, shrubs, and soils.

“Telling entities that they can come in and stick more straws in the ground for data centers is raising a lot of questions about sound management,” says Kyle Roerink, executive director of the Great Basin Water Network, a nonprofit that works to protect water resources throughout Nevada and Utah. 

“We just don’t want to be in a situation where the tail is wagging the dog,” he later added, “where this demand for data centers is driving water policy.”

Luring data centers

In the late 1850s, the mountains southeast of Reno began enticing prospectors from across the country, who hoped to strike silver or gold in the famed Comstock Lode. But Storey County had few residents or economic prospects by the late 1990s, around the time when Don Roger Norman, a media-shy real estate speculator, spotted a new opportunity in the sagebrush-covered hills. 

He began buying up tens of thousands of acres of land for tens of millions of dollars and lining up development approvals to lure industrial projects to what became the Tahoe Reno Industrial Center. His partners included Lance Gilman, a cowboy-hat-wearing real estate broker, who later bought the nearby Mustang Ranch brothel and won a seat as a county commissioner.

In 1999, the county passed an ordinance that preapproves companies to develop most types of commercial and industrial projects across the business park, cutting months to years off the development process. That helped cinch deals with a flock of tenants looking to build big projects fast, including Walmart, Tesla, and Redwood Materials. Now the promise of fast permits is helping to draw data centers by the gigawatt.

On a clear, cool January afternoon, Brian Armon, a commercial real estate broker who leads the industrial practices group at NAI Alliance, takes me on a tour of the projects around the region, which mostly entails driving around the business center.

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After pulling off Interstate 80 onto USA Parkway, he points out the cranes, earthmovers, and riprap foundations, where a variety of data centers are under construction. Deeper into the industrial park, Armon pulls up near Switch’s long, low, arched-roof facility, which sits on a terrace above cement walls and security gates. The Las Vegas–based company says the first phase of its data center campus encompasses more than a million square feet, and that the full build-out will cover seven times that space. 

Over the next hill, we turn around in Google’s parking lot. Cranes, tents, framing, and construction equipment extend behind the company’s existing data center, filling much of the 1,210-acre lot that the search engine giant acquired in 2017.

Last August, during an event at the University of Nevada, Reno, the company announced it would spend $400 million to expand the data center campus along with another one in Las Vegas.

Thompson says that the development company, Tahoe Reno Industrial LLC, has now sold off every parcel of developable land within the park (although several lots are available for resale following the failed gamble of one crypto tenant).

When I ask Armon what’s attracting all the data centers here, he starts with the fast approvals but cites a list of other lures as well: The inexpensive land. NV Energy’s willingness to strike deals to supply relatively low-cost electricity. Cool nighttime and winter temperatures, as far as American deserts go, which reduce the energy and water needs. The proximity to tech hubs such as Silicon Valley, which cuts latency for applications in which milliseconds matter. And the lack of natural disasters that could shut down the facilities, at least for the most part.

“We are high in seismic activity,” he says. “But everything else is good. We’re not going to have a tornado or flood or a devastating wildfire.”

Then there’s the generous tax policies.

Nevada doesn’t charge corporate income tax, and it has also enacted deep tax cuts specifically for data centers that set up shop in the state. That includes abatements of up to 75% on property tax for a decade or two—and nearly as much of a bargain on the sales and use taxes applied to equipment purchased for the facilities.

Data centers don’t require many permanent workers to run the operations, but the projects have created thousands of construction jobs. They’re also helping to diversify the region’s economy beyond casinos and generating tax windfalls for the state, counties, and cities, says Jeff Sutich, executive director of the Northern Nevada Development Authority. Indeed, just three data-center projects, developed by Apple, Google, and Vantage, will produce nearly half a billion dollars in tax revenue for Nevada, even with those generous abatements, according to the Nevada Governor’s Office of Economic Development.

The question is whether the benefits of data centers are worth the tradeoffs for Nevadans, given the public health costs, greenhouse-gas emissions, energy demands, and water strains.

The rain shadow

The Sierra Nevada’s granite peaks trace the eastern edge of California, forcing Pacific Ocean winds to rise and cool. That converts water vapor in the air into the rain and snow that fill the range’s tributaries, rivers, and lakes. 

But the same meteorological phenomenon casts a rain shadow over much of neighboring Nevada, forming an arid expanse known as the Great Basin Desert. The state receives about 10 inches of precipitation a year, about a third of the national average.

The Truckee River draws from the melting Sierra snowpack at the edge of Lake Tahoe, cascades down the range, and snakes through the flatlands of Reno and Sparks. It forks at the Derby Dam, a Reclamation Act project a few miles from the Tahoe Reno Industrial Center, which diverts water to a farming region further east while allowing the rest to continue north toward Pyramid Lake. 

Along the way, an engineered system of reservoirs, canals, and treatment plants divert, store, and release water from the river, supplying businesses, cities, towns, and native tribes across the region. But Nevada’s population and economy are expanding, creating more demands on these resources even as they become more constrained. 

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Throughout much of the 2020s the state has suffered through one of the hottest and most widespread droughts on record, extending two decades of abnormally dry conditions across the American West. Some scientists fear it may constitute an emerging megadrought. 

About 50% of Nevada currently faces moderate to exceptional drought conditions. In addition, more than half of the state’s hundreds of groundwater basins are already “over-appropriated,” meaning the water rights on paper exceed the levels believed to be underground. 

It’s not clear if climate change will increase or decrease the state’s rainfall levels, on balance. But precipitation patterns are expected to become more erratic, whiplashing between short periods of intense rainfall and more-frequent, extended, or severe droughts. 

In addition, more precipitation will fall as rain rather than snow, shortening the Sierra snow season by weeks to months over the coming decades. 

“In the extreme case, at the end of the century, that’s pretty much all of winter,” says Sean McKenna, executive director of hydrologic sciences at the Desert Research Institute, a research division of the Nevada System of Higher Education.

That loss will undermine an essential function of the Sierra snowpack: reliably delivering water to farmers and cities when it’s most needed in the spring and summer, across both Nevada and California. 

These shifting conditions will require the region to develop better ways to store, preserve, and recycle the water it does get, McKenna says. Northern Nevada’s cities, towns, and agencies will also need to carefully evaluate and plan for the collective impacts of continuing growth and development on the interconnected water system, particularly when it comes to water-hungry projects like data centers, he adds.

“We can’t consider each of these as a one-off, without considering that there may be tens or dozens of these in the next 15 years,” McKenna says.

Thirsty data centers

Data centers suck up water in two main ways.

As giant rooms of server racks process information and consume energy, they generate heat that must be shunted away to prevent malfunctions and damage to the equipment. The processing units optimized for training and running AI models often draw more electricity and, in turn, produce more heat.

To keep things cool, more and more data centers have turned to liquid cooling systems that don’t need as much electricity as fan cooling or air-conditioning.

These often rely on water to absorb heat and transfer it to outdoor cooling towers, where much of the moisture evaporates. Microsoft’s US data centers, for instance, could have directly evaporated nearly 185,000 gallons of “clean freshwater” in the course of training OpenAI’s GPT-3 large language model, according to a 2023 preprint study led by researchers at the University of California, Riverside. (The research has since been peer-reviewed and is awaiting publication.)

What’s less appreciated, however, is that the larger data-center drain on water generally occurs indirectly, at the power plants generating extra electricity for the turbocharged AI sector. These facilities, in turn, require more water to cool down equipment, among other purposes.

You have to add up both uses “to reflect the true water cost of data centers,” says Shaolei Ren, an associate professor of electrical and computer engineering at UC Riverside and coauthor of the study.

Ren estimates that the 12 data-center projects listed in NV Energy’s report would directly consume between 860 million gallons and 5.7 billion gallons a year, based on the requested electricity capacity. (“Consumed” here means the water is evaporated, not merely withdrawn and returned to the engineered water system.) The indirect water drain associated with electricity generation for those operations could add up to 15.5 billion gallons, based on the average consumption of the regional grid.

The exact water figures would depend on shifting climate conditions, the type of cooling systems each data center uses, and the mix of power sources that supply the facilities.

Solar power, which provides roughly a quarter of Nevada’s power, requires relatively little water to operate, for instance. But natural-gas plants, which generate about 56%, withdraw 2,803 gallons per megawatt-hour on average, according to the Energy Information Administration. 

Geothermal plants, which produce about 10% of the state’s electricity by cycling water through hot rocks, generally consume less water than fossil fuel plants do but often require more water than other renewables, according to some research. 

But here too, the water usage varies depending on the type of geothermal plant in question. Google has lined up several deals to partially power its data centers through Fervo Energy, which has helped to commercialize an emerging approach that injects water under high pressure to fracture rock and form wells deep below the surface. 

The company stresses that it doesn’t evaporate water for cooling and that it relies on brackish groundwater, not fresh water, to develop and run its plants. In a recent post, Fervo noted that its facilities consume significantly less water per megawatt-hour than coal, nuclear, or natural-gas plants do.

Part of NV Energy’s proposed plan to meet growing electricity demands in Nevada includes developing several natural-gas peaking units, adding more than one gigawatt of solar power and installing another gigawatt of battery storage. It’s also forging ahead with a more than $4 billion transmission project.

But the company didn’t respond to questions concerning how it will supply all of the gigawatts of additional electricity requested by data centers, if the construction of those power plants will increase consumer rates, or how much water those facilities are expected to consume.

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“NV Energy teams work diligently on our long-term planning to make investments in our infrastructure to serve new customers and the continued growth in the state without putting existing customers at risk,” the company said in a statement.

An added challenge is that data centers need to run around the clock. That will often compel utilities to develop new electricity-generating sources that can run nonstop as well, as natural-gas, geothermal, or nuclear plants do, says Emily Grubert, an associate professor of sustainable energy policy at the University of Notre Dame, who has studied the relative water consumption of electricity sources. 

“You end up with the water-intensive resources looking more important,” she adds.

Even if NV Energy and the companies developing data centers do strive to power them through sources with relatively low water needs, “we only have so much ability to add six gigawatts to Nevada’s grid,” Grubert explains. “What you do will never be system-neutral, because it’s such a big number.”

Securing supplies

On a mid-February morning, I meet TRI’s Thompson and Don Gilman, Lance Gilman’s son, at the Storey County offices, located within the industrial center. 

“I’m just a country boy who sells dirt,” Gilman, also a real estate broker, says by way of introduction. 

We climb into his large SUV and drive to a reservoir in the heart of the industrial park, filled nearly to the lip. 

Thompson explains that much of the water comes from an on-site treatment facility that filters waste fluids from companies in the park. In addition, tens of millions of gallons of treated effluent will also likely flow into the tank this year from the Truckee Meadows Water Authority Reclamation Facility, near the border of Reno and Sparks. That’s thanks to a 16-mile pipeline that the developers, the water authority, several tenants, and various local cities and agencies partnered to build, through a project that began in 2021.

“Our general improvement district is furnishing that water to tech companies here in the park as we speak,” Thompson says. “That helps preserve the precious groundwater, so that is an environmental feather in the cap for these data centers. They are focused on environmental excellence.”

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But data centers often need drinking-quality water—not wastewater merely treated to irrigation standards—for evaporative cooling, “to avoid pipe clogs and/or bacterial growth,” the UC Riverside study notes. For instance, Google says its data centers withdrew about 7.7 billion gallons of water in 2023, and nearly 6 billion of those gallons were potable. 

Tenants in the industrial park can potentially obtain access to water from the ground and the Truckee River, as well. From early on, the master developers worked hard to secure permits to water sources, since they are nearly as precious as development entitlements to companies hoping to build projects in the desert.

Initially, the development company controlled a private business, the TRI Water and Sewer Company, that provided those services to the business park’s tenants, according to public documents. The company set up wells, a water tank, distribution lines, and a sewer disposal system. 

But in 2000, the board of county commissioners established a general improvement district, a legal mechanism for providing municipal services in certain parts of the state, to manage electricity and then water within the center. It, in turn, hired TRI Water and Sewer as the operating company.

As of its 2020 service plan, the general improvement district held permits for nearly 5,300 acre-feet of groundwater, “which can be pumped from well fields within the service area and used for new growth as it occurs.” The document lists another 2,000 acre-feet per year available from the on-site treatment facility, 1,000 from the Truckee River, and 4,000 more from the effluent pipeline. 

Those figures haven’t budged much since, according to Shari Whalen, general manager of the TRI General Improvement District. All told, they add up to more than 4 billion gallons of water per year for all the needs of the industrial park and the tenants there, data centers and otherwise.

Whalen says that the amount and quality of water required for any given data center depends on its design, and that those matters are worked out on a case-by-case basis. 

When asked if the general improvement district is confident that it has adequate water resources to supply the needs of all the data centers under development, as well as other tenants at the industrial center, she says: “They can’t just show up and build unless they have water resources designated for their projects. We wouldn’t approve a project if it didn’t have those water resources.”

Water battles

As the region’s water sources have grown more constrained, lining up supplies has become an increasingly high-stakes and controversial business.

More than a century ago, the US federal government filed a lawsuit against an assortment of parties pulling water from the Truckee River. The suit would eventually establish that the Pyramid Lake Paiute Tribe’s legal rights to water for irrigation superseded other claims. But the tribe has been fighting to protect those rights and increase flows from the river ever since, arguing that increasing strains on the watershed from upstream cities and businesses threaten to draw away water reserved for reservation farming, decrease lake levels, and harm native fish.

The Pyramid Lake Paiute Tribe considers the water body and its fish, including the endangered cui-ui and threatened Lahontan cutthroat trout, to be essential parts of its culture, identity, and way of life. The tribe was originally named Cui-ui Ticutta, which translates to cui-ui eaters. The lake continues to provide sustenance as well as business for the tribe and its members, a number of whom operate boat charters and fishing guide services.

“It’s completely tied into us as a people,” says Steven Wadsworth, chairman of the Pyramid Lake Paiute Tribe.

“That is what has sustained us all this time,” he adds. “It’s just who we are. It’s part of our spiritual well-being.”

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In recent decades, the tribe has sued the Nevada State Engineer, Washoe County, the federal government, and others for overallocating water rights and endangering the lake’s fish. It also protested the TRI General Improvement District’s applications to draw thousands of additional acre‑feet of groundwater from a basin near the business park. In 2019, the State Engineer’s office rejected those requests, concluding that the basin was already fully appropriated. 

More recently, the tribe took issue with the plan to build the pipeline and divert effluent that would have flown into the Truckee, securing an agreement that required the Truckee Meadows Water Authority and other parties to add back several thousand acre‑feet of water to the river. 

Whalen says she’s sensitive to Wadsworth’s concerns. But she says that the pipeline promises to keep a growing amount of treated wastewater out of the river, where it could otherwise contribute to rising salt levels in the lake.

“I think that the pipeline from [the Truckee Meadows Water Authority] to our system is good for water quality in the river,” she says. “I understand philosophically the concerns about data centers, but the general improvement district is dedicated to working with everyone on the river for regional water-resource planning—and the tribe is no exception.”

Water efficiency 

In an email, Thompson added that he has “great respect and admiration,” for the tribe and has visited the reservation several times in an effort to help bring industrial or commercial development there.

He stressed that all of the business park’s groundwater was “validated by the State Water Engineer,” and that the rights to surface water and effluent were purchased “for fair market value.”

During the earlier interview at the industrial center, he and Gilman had both expressed confidence that tenants in the park have adequate water supplies, and that the businesses won’t draw water away from other areas. 

“We’re in our own aquifer, our own water basin here,” Thompson said. “You put a straw in the ground here, you’re not going to pull water from Fernley or from Reno or from Silver Springs.”

Gilman also stressed that data-center companies have gotten more water efficient in recent years, echoing a point others made as well.

“With the newer technology, it’s not much of a worry,” says Sutich, of the Northern Nevada Development Authority. “The technology has come a long way in the last 10 years, which is really giving these guys the opportunity to be good stewards of water usage.”

GOOGLE

Indeed, Google’s existing Storey County facility is air-cooled, according to the company’s latest environmental report. The data center withdrew 1.9 million gallons in 2023 but only consumed 200,000 gallons. The rest cycles back into the water system.

Google said all the data centers under construction on its campus will also “utilize air-cooling technology.” The company didn’t respond to a question about the scale of its planned expansion in the Tahoe Reno Industrial Center, and referred a question about indirect water consumption to NV Energy.

The search giant has stressed that it strives to be water efficient across all of its data centers, and decides whether to use air or liquid cooling based on local supply and projected demand, among other variables.

Four years ago, the company set a goal of replenishing more water than it consumes by 2030. Locally, it also committed to provide half a million dollars to the National Forest Foundation to improve the Truckee River watershed and reduce wildfire risks. 

Microsoft clearly suggested in earlier news reports that the Silver Springs land it purchased around the end of 2022 would be used for a data center. NAI Alliance’s market real estate report identifies that lot, as well as the parcel Microsoft purchased within the Tahoe Reno Industrial Center, as data center sites.

But the company now declines to specify what it intends to build in the region. 

“While the land purchase is public knowledge, we have not disclosed specific details [of] our plans for the land or potential development timelines,” wrote Donna Whitehead, a Microsoft spokesperson, in an email. 

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Microsoft has also scaled down its global data-center ambitions, backing away from several projects in recent months amid shifting economic conditions, according to various reports.

Whatever it ultimately does or doesn’t build, the company stresses that it has made strides to reduce water consumption in its facilities. Late last year, the company announced that it’s using “chip-level cooling solutions” in data centers, which continually circulate water between the servers and chillers through a closed loop that the company claims doesn’t lose any water to evaporation. It says the design requires only a “nominal increase” in energy compared to its data centers that rely on evaporative water cooling.

Others seem to be taking a similar approach. EdgeCore also said its 900,000-square-foot data center at the Tahoe Reno Industrial Center will rely on an “air-cooled closed-loop chiller” that doesn’t require water evaporation for cooling. 

But some of the companies seem to have taken steps to ensure access to significant amounts of water. Switch, for instance, took a lead role in developing the effluent pipeline. In addition, Tract, which develops campuses on which third-party data centers can build their own facilities, has said it lined up more than 1,100 acre-feet of water rights, the equivalent of nearly 360 million gallons a year. 

Apple, Novva, Switch, Tract, and Vantage didn’t respond to inquiries from MIT Technology Review. 

Coming conflicts 

The suggestion that companies aren’t straining water supplies when they adopt air cooling is, in many cases, akin to saying they’re not responsible for the greenhouse gas produced through their power use simply because it occurs outside of their facilities. In fact, the additional water used at a power plant to meet the increased electricity needs of air cooling may exceed any gains at the data center, Ren, of UC Riverside, says.

“That’s actually very likely, because it uses a lot more energy,” he adds.

That means that some of the companies developing data centers in and around Storey County may simply hand off their water challenges to other parts of Nevada or neighboring states across the drying American West, depending on where and how the power is generated, Ren says. 

Google has said its air-cooled facilities require about 10% more electricity, and its environmental report notes that the Storey County facility is one of its two least-energy-efficient data centers. 

GOOGLE

Some fear there’s also a growing mismatch between what Nevada’s water permits allow, what’s actually in the ground, and what nature will provide as climate conditions shift. Notably, the groundwater committed to all parties from the Tracy Segment basin—a long-fought-over resource that partially supplies the TRI General Improvement District—already exceeds the “perennial yield.” That refers to the maximum amount that can be drawn out every year without depleting the reservoir over the long term.

“If pumping does ultimately exceed the available supply, that means there will be conflict among users,” Roerink, of the Great Basin Water Network, said in an email. “So I have to wonder: Who could be suing whom? Who could be buying out whom? How will the tribe’s rights be defended?”

The Truckee Meadows Water Authority, the community-owned utility that manages the water system for Reno and Sparks, said it is planning carefully for the future and remains confident there will be “sufficient resources for decades to come,” at least within its territory east of the industrial center.

Storey County, the Truckee-Carson Irrigation District, and the State Engineer’s office didn’t respond to questions or accept interview requests. 

Open for business

As data center proposals have begun shifting into Northern Nevada’s cities, more local residents and organizations have begun to take notice and express concerns. The regional division of the Sierra Club, for instance, recently sought to overturn the approval of Reno’s first data center, about 20 miles west of the Tahoe Reno Industrial Center. 

Olivia Tanager, director of the Sierra Club’s Toiyabe Chapter, says the environmental organization was shocked by the projected electricity demands from data centers highlighted in NV Energy’s filings.

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“We have increasing interest in understanding the impact that data centers will have to our climate goals, to our grid as a whole, and certainly to our water resources,” she says. “The demands are extraordinary, and we don’t have that amount of water to toy around with.”

During a city hall hearing in January that stretched late into the evening, she and a line of residents raised concerns about the water, energy, climate, and employment impacts of AI data centers. At the end, though, the city council upheld the planning department’s approval of the project, on a 5-2 vote.

“Welcome to Reno,” Kathleen Taylor, Reno’s vice mayor, said before casting her vote. “We’re open for business.”

Where the river ends

In late March, I walk alongside Chairman Wadsworth, of the Pyramid Lake Paiute Tribe, on the shores of Pyramid Lake, watching a row of fly-fishers in waders cast their lines into the cold waters. 

The lake is the largest remnant of Lake Lahontan, an Ice Age inland sea that once stretched across western Nevada and would have submerged present-day Reno. But as the climate warmed, the lapping waters retreated, etching erosional terraces into the mountainsides and exposing tufa deposits around the lake, large formations of porous rock made of calcium-carbonate. That includes the pyramid-shaped island on the eastern shore that inspired the lake’s name.

In the decades after the US Reclamation Service completed the Derby Dam in 1905, Pyramid Lake declined another 80 feet and nearby Winnemucca Lake dried up entirely.

“We know what happens when water use goes unchecked,” says Wadsworth, gesturing eastward toward the range across the lake, where Winnemucca once filled the next basin over. “Because all we have to do is look over there and see a dry, barren lake bed that used to be full.”

In an earlier interview, Wadsworth acknowledged that the world needs data centers. But he argued they should be spread out across the country, not densely clustered in the middle of the Nevada desert.

Given the fierce competition for resources up to now, he can’t imagine how there could be enough water to meet the demands of data centers, expanding cities, and other growing businesses without straining the limited local supplies that should, by his accounting, flow to Pyramid Lake.

He fears these growing pressures will force the tribe to wage new legal battles to protect their rights and preserve the lake, extending what he refers to as “a century of water wars.”

“We have seen the devastating effects of what happens when you mess with Mother Nature,” Wadsworth says. “Part of our spirit has left us. And that’s why we fight so hard to hold on to what’s left.”

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