We’re always thinking about energy and water in Colorado.
That’s how Colorado State Rep. Jennifer Bacon, who serves District 7 in Far Northeast Denver, responded to a question about whether the Colorado General Assembly is considering the water and energy impacts of data processing centers.
Whether it’s interstate negotiations about the Colorado River or Governor Polis’s push for electric vehicles and strengthening energy grids, Bacon said our state is concerned about water and energy.
“In regards to the data centers, yes, we’ve been having conversations. I am not familiar with any specific bills, but we know the conversations are coming,” she said. “We have been following what kind of energy data centers need, and if they need water, they’re not an option for Colorado.”
As multinational and national companies have increased construction and operation across the U.S. of large buildings filled with computers for processing information and artificial intelligence, stories about the impacts on water and energy supplies began appearing in the national media this year. From Tennessee and Georgia to Arizona and western states, data centers have created new demands for power generation and water for cooling the computers.
In July, a report on “Data Center Impacts in the West: Policy Solutions for Water and Energy Use,” was released by the regional nonprofit Western Resource Advocates (WRA). The mission of WRA is to fight climate change and its impacts. It focuses on clean energy, healthy rivers, and western lands mainly in Colorado, Arizona, New Mexico, Nevada, and Utah, as well as Wyoming and Montana.
The organization’s work brings its staff into meetings and legal proceedings with the Public Utilities Commission, explained WRA Clean Energy Policy Advisor Deborah Kapiloff, one of the report’s three authors.
“We have been seeing just absolutely explosive growth in the load forecast that utilities are filing. The load forecast is essentially how much electricity they’re projecting that they will need to serve their customers,” Kapiloff said. “And we were very concerned about that because normally the growth of energy consumption has been pretty flat, pretty steady. It’s been something that we’ve been able to plan for. And this was just a huge, dramatic spike.”
Freelance journalist and nonfiction author Jonathan Thompson writes in his 8/26 edition of Land Desk dispatch that “Xcel Energy expects to spend about $22 billion in the next 15 years to meet new data centers’ projected power demand in Colorado, potentially doubling or even tripling legacy customers’ rates. Also of concern: If the projections are overblown, Xcel could end up building a bunch of new generation that’s not needed, leaving the utility and its customers with a bunch of stranded assets.”
“So much of that growth in energy demand is tied to just a few customers,” said Kapiloff. “A single data center by itself could require a new generation source because they’re just that large. And our system is built and regulated in a way where risk is shared among all of the customers.”
“We really need to be proactive about reforming the way that we think about resource planning, how we think about rate making, and who is paying for what assets on the electrical grid. Because the way that it is set up now is not meant to accommodate these ginormous customers who are bringing lots of growth very, very quickly,” she added.
The WRA report recommends that governments create incentives and streamlined processes for data centers to develop and build their own on-site clean energy sources, so they don’t strain the operations or increase rates at public electricity providers. Other recommendations are for requirements on energy efficiency standards and best practices to minimize energy demand, and requirements for data centers to carry the financial risk and responsibility for the energy resource development. Policies should be in place in case a company decides to close a data center, so the community is not left paying for oversized generating capacity that is no longer needed.
Data centers also use large amounts of energy or water to cool the equipment during operation. Air cooling systems increase their energy demands, while water cooling systems gulp up millions of gallons of water.
The report states: If utility predictions on data center growth come to fruition, data centers in a five-state area (Colorado, New Mexico, Arizona, Nevada and Utah) could have annual, on-site consumptive water use of 13,700 acre-feet (4.5 billion gallons) in 2030, and 21,600 acre-feet (7 billion gallons) in 2035, assuming they use conventional water-based cooling technologies. For comparison, 21,600 acre-feet is enough water to support 194,000 people per year.
“Data centers are going to be using water equivalent to hundreds of thousands of people, so you can think about like a new city in the West springing up with 150,000 or 200,000 people and their related water demands,” Kapiloff said. “Then, you realize that that city doesn’t exist. That city is just a bunch of data centers with rows and rows of servers containing chips, and the water is being used to stop those chips from overheating so that they can run artificial intelligence queries. I think that is just mind-boggling to think about that.”
Researching the report revealed “the fact that there was a dearth of information about the water usage and the water use efficiency of individual data centers,” she revealed. “I think the first step to managing impacts to water is just ensuring that that information is being reported to the relevant state agency and is accessible.”
“And then beyond that, I think looking at the local watersheds and where the data center water is coming from and putting standards into place that ensure that water use by data centers is not harming sensitive streams, habitat, or groundwater,” she added.
In a rural area of Georgia, homes depend on wells for their water, but the wells ran dry due to excessive sediment buildup caused by the construction of a nearby data center owned by Meta, the parent company of Facebook, according to articles in The New York Times and BBC.
AI and Computer Data Processing Raise Social and Environmental Justice Concerns
As for community impacts from the energy demands of data centers, Kapiloff said, “Any community that is either near where a data center will be sited or is potentially near existing or new fossil generation, those are the communities that will be most impacted by this.”
She cited an example in Randolph, Arizona, where a utility decided to keep operating a fossil gas plant “because there is so much increasing demand on their system, which is largely stemming from data centers. That is a primarily Black community where there are higher incidences of air pollution related to that fossil gas plant and negative health impacts that are associated with that additional pollution burden.”
She also cited an article about a decision by Arizona Public Service, a utility serving the Phoenix metro area, to delay the closure of the Four Corners coal-fired power plant beyond its original 2013 closure date to 2038 or later. As a result, the tribal nations and communities in that area will continue to deal with heath issues exacerbated by coal generation pollution.
“I think that fossil generation not being retired, or new fossil generation being on the system, is a social and environmental justice issue, especially based on where that energy production is sited,” she said.
She also noted that increased electricity rates due to energy development for data centers, if allocated business-as-usual to all customers, would most effect low-income individuals and families.
State Rep. Bacon also has concerns about coal power generation and the need to transition from coal to cleaner, renewable sources.
“We care about how communities are impacted by energy. We’ve been in a battle with Suncor for quite some time because we have seen the impacts from air quality to water quality for a while. Colorado has been on the EPA’s list. We have been in violation of the Clean Air Act for air quality for decades now,” she said, clarifying that the geography of the Front Range contributes to the smog issue.
“I do predict that if we get to a place where data centers want to operate here, we will push the operators to think cleanly and renewably. You know, we’re watching,” she added. “And guess where those data centers are? Because, you know, unfortunately, disenfranchised and marginalized people tend to be in places where they put those types of development, where they think they can get away with it. You know, the first rule of real estate is location, location, location. They’re not going to put a plant in a place with mansions.”
Bacon cited an article about a lawsuit brought by the NAACP against Elon Musk’s data centers that are burning methane in Memphis, Tennessee. According to an article in The Guardian, the Southern Environmental Law Center has conducted studies on the pollution that the methane gas turbines emit and says they have the capacity to emit thousands of tons of harmful nitrogen oxides, along with toxic chemicals such as formaldehyde.
Though Arizona and northern Nevada have been primary destinations for data centers in the U.S. West, Colorado is also a desirable location due to the availability of undeveloped land, low risk of major natural disasters, and access to electricity generation, Kapiloff explained
“We are starting to see quite a bit of data center growth along the Front Range. For example, the QTS facility in Aurora,” she said.
Kapiloff concluded that a really important takeaway about the water and energy consumption of data processing centers is how we think about AI, cloud computing and other related internet use. “It doesn’t necessarily feel like there’s physical infrastructure associated with it, but there is so much physical infrastructure associated with it. And that infrastructure is thirsty. It’s consuming water, and it’s also very consumptive in terms of its electricity needs,” she said.
She proposed that it is important to understand when data centers are planned in Colorado, there are impacts to our already very constrained water supplies. Plus, there might be “kitchen table impacts in terms of the way that electricity rates could potentially be increased to pay for all of this infrastructure. There’s no such thing as a free lunch.”
She summed it up, saying, “You know, it might be easy to just use ChatGPT or to have AI summarize something for you when you’re doing a search, but that is tied to this infrastructure, which is consuming water and energy.”
Contributor’s note: You can learn more about this topic in the report: https://westernresourceadvocates.org/wp-content/uploads/2025/07/Data-Center-Impacts-in-the-West.pdf
