75% of data center water sits at the power plant — and nowhere on the books

Indirect water consumption — the water that steam-cycle power plants draw to cool and condense the electricity data centers buy — accounts for up to 75% of a data center's total water footprint, according to Lawrence Berkeley National Laboratory research cited by asset manager Janus Henderson.

That share puts a slice of facility water use that almost no lender, operator or corporate buyer measures, let alone reports. An analysis by nonprofit Ceres and water-focused market researcher Bluefield Research identified the disclosure gap as a structural problem: data centers consume water through the grid, but the consumption does not surface on an electricity bill or in a colocation contract.

Who actually sees the water?

Meta, one of the few operators that has disclosed an indirect figure, reported a 2024 number more than 20 times the water its data centers consumed directly at the cooling tower. Amazon tracks indirect consumption but has not published figures, citing an absence of industry standards. Google and Microsoft declined to confirm whether they track indirect use at all.

Why aren't lenders pricing it?

Private credit firms now handle 70% to 90% of individual project-level borrowing for new data center construction, according to S&P Global Market Intelligence. The firms underwrite power the way they underwrite any other purchased input — by cost, reliability and queue position, not by the water intensity of the generating plant upstream.

The defense runs through the utility. The water exposure at a steam-cycle plant sits with a regulated utility carrying its own water-planning duties, which credit rating agencies already scrutinize. The data center's grid mix is not reviewed in the same way.

The second reason is methodological. No settled framework exists to measure or report a data center's indirect water footprint, the way Scope 1, 2 and 3 protocols standardized carbon two decades ago. A risk with no standard measure is hard to write into a loan covenant, and a risk that never enters loan documents never gets priced into the cost of debt.

Water diligence on direct consumption, by contrast, is thorough:

• Closed-loop or dry cooling is typically required
• Water efficiency targets sit inside covenants and are tracked
• Water rights and groundwater permits are checked before construction

The facility-level failures the industry cites — including the court-ordered halt of Google's planned Chile campus over its groundwater permit — show what that diligence is built to prevent.

Dry cooling only shifts the problem upstream. A dry-cooled facility draws more electricity than a conventional one, and generating that electricity takes yet more water at the power plant.

What does the Texas action change?

In August 2026, Texas Governor Greg Abbott ordered a freeze on new data center interconnection approvals until developers verify their water use reporting and ensure grid sustainability. Data centers account for nearly 90% of new grid power requests in the state.

The order is the first state-level move in the U.S. to bind grid access to water disclosure, and Texas remains the only state to have tied interconnection approval to that data point.

What standard is filling the gap?

A coalition of SCS Global Services, World Resources Institute, World Wildlife Fund and the CEO Water Mandate is developing a scopes-based water accounting framework — the closest analog yet to the carbon disclosure regime corporate sustainability teams have run on for twenty years.

Until the framework lands, the disclosure question falls to whoever is buying the compute. Sustainability teams negotiating hosting or power purchase agreements can now ask whether water availability at the generating plant was assessed at all, and whether contracted capacity rests on a resource anyone has checked in year 12 of a 15-year lease.

What comes next

Two milestones will determine whether indirect water enters the financing and disclosure ledger: the first delivery of the SCS/WRI/WWF water accounting framework, and the next reauthorization or lifting of Texas's interconnection freeze. Each sets a data point developers, lenders and corporate buyers will have to respond to.