Artificial intelligence, or AI, has burst into our everyday lives — realistic images and videos seep into social media feeds, and tools like Chat GPT are used to complete everyday tasks from drafting emails to meal planning. While most people understand what AI does, many haven’t looked behind the curtain to fully understand what powers it — data centers. These facilities are packed with rows of servers that bring AI, cloud computing, and high-speed internet to our smartphones and laptops. But all this computation power comes at a high cost.
Over the past few years, electric utilities in the Interior West have seen projected future demands for energy, known as load forecasts, increase significantly. This is largely due to the explosive growth in electricity demand from data centers. Without the guidance of reasonable policies, AI and the data centers that power it pose an imminent threat to meeting the climate and water conservation goals of Western states.
In WRA’s latest report, Data Center Impacts in the West: Policy Solutions for Energy and Water Use, we take a detailed look at the implications of these facilities. We analyzed future energy and water demands from data center developments and offer policy solutions for each state we work in.
Key Findings #
Imagine a warehouse the size of a football field, filled not with goods — but with rows and rows of computer servers. These energy-hungry data centers are expected to drive a more than 50% increase in energy demand in our region in the next 10 years. And compared to conventional manufacturing, data centers generate very few permanent jobs. Additionally, the new large volumes of water needed to cool and protect the hardware contained in these facilities could consume substantial new amounts of water in a region where supplies are already scarce. Seven billion gallons of water annually is projected to be used by new data centers in our region by 2035.
Advancing Clean Energy#
Our research identifies solutions to meet skyrocketing demands, while still achieving clean energy goals to reduce climate pollution in our communities. One option is to encourage data centers to invest in zero-emission energy generation and battery storage resources that they own and utilize directly to reduce energy demand from utilities. This would limit stress on the utilities’ generation, transmission, and distribution systems, avoiding costly upgrades. Another option is to adjust how much energy is being used at specific times. Throughout the day there are times when electricity demands spikes, like when many people return from work and begin to use their stoves, washing machines, and air conditioning units. During times of high demand, utilities tend to use more fossil fuels. But if some data centers could shift their electricity consumption away from these times of peak electricity usage, fewer polluting resources may be required.
Protecting Habitat and Wildlife while Advancing Clean Energy #
Meeting the energy demands from data centers without endangering our climate goals will require an enormous build out of new energy resources, ideally from renewable sources. But building more energy capacity across the West means permitting and siting for these new projects, which must be navigated using caution to ensure land, wildlife, and habitat are protected. Natural resource protections standards like the ones drafted by the New Mexico State Land Office for renewable energy leases on state lands could be a blueprint for the West. Over the course of nine months, WRA engaged with the Office providing detailed reference materials, feedback, and suggestions — most of which made it into the final draft. These draft standards require thoughtful evaluation of sensitive habitats and wildlife resources when considering new leases for clean energy development. Similar legislation that WRA helped pass in Colorado in 2024, Senate Bill 212, established a study to develop best practices in renewable siting. WRA seeks to ensure high priority habitat is identified and avoided when building new energy infrastructure. These strategies lay the groundwork to ensure the clean energy transition during the next 10 years of projected data center growth works in partnership with land conservation priorities.
Putting Customers and Communities First #
As more utilities in our region forecast accelerated load growth, WRA is advocating for policies that ensure small business and residential customers aren’t bearing the significant costs imposed on the electric system and that data centers are paying their fair share. Integrated resource planning has long been the foundation that ensures utilities acquire the right level of resources to meet demands while managing customer costs and risks. Utilities recoup costs via electricity bills and could spend millions on infrastructure expansions to meet projected load growth. But if demand from data centers is less than initially predicted, regular customers could be on the hook to pay for those expensive and ultimately unnecessary projects. WRA recommends utility regulators take steps to ensure that residential customers are protected from the financial risks that could arise when utilities invest to serve large loads that do not materialize.
Protecting Water Supplies #
In the arid West, every drop of water is precious, and special consideration should be made when looking at data centers’ water use. Water use varies between data centers, and there are trade-offs between achieving energy efficiency or water efficiency. Cooling systems that are water efficient can have higher energy demands and vice versa. Decision makers need to thoughtfully examine this when determining policy solutions for data center locations, designs, and operations.
Currently, there’s a lack of comprehensive information about data centers’ water use. Estimates suggest data centers used over 500,000 acre-feet nationwide in 2020, a number that’s certainly grown. For context, Nevada’s allocation from the Colorado River is 300,000 acre-feet per year. But in order to protect our water, we need to first know how much is being used. Requiring data centers to report their water usage is the first step toward implementing the best water reuse and conservation programs. In addition, data centers should not negatively impact local streams, groundwater, or habitats, and if they do, data centers should be required to install water-efficient cooling systems.
Implementing the Solutions #
Data centers pose a myriad of challenges, but WRA has technical expertise, data, influence, and solutions needed to guide decision makers in adopting policies that ensure new energy and water demands from AI is not a burden to the people and places of the West. But we can’t continue this critical work without support from donors. WRA’s newly published report is a critical first step, and now the real work begins by advocating at the state- and local-levels to adopt and implement these recommended policies, best practices, and customer safeguards.
We are on the cusp of monumental change, and we can’t afford to get this wrong. Without proactive regulation, there is a risk residential customers will be on the hook for higher energy bills, and the progress we’ve made towards reducing pollution from burning fossil fuels could be lost.
