We rely on your tax-deductible donations to support our mission. Donate online →
Most Policy Initiative logo
Browse Research TOPICS

Data Centers Overview

Published on August 5, 2026

Data centers have been top of mind for Missouri residents and policymakers. Here, we’re breaking down the increased use of AI applications, growth in data center construction, and resource demands of this growth. For more in depth information on any of these topics, check out our Science Notes linked below, or go straight to them here.

Data Centers, AI, and Energy Demands:

Total U.S. data center electricity use from 2014 through 2028. Historical electricity consumption and estimated future energy consumption of U.S. data centers. From Shehabi et al. 2024.

In Powering Data Centers, Dr. Maryluz Hoyos Ensuncho explained how data centers contain computers and servers that store and process data for various online services, including:

  • Cloud computing
  • Streaming services
  • Cryptocurrency
  • AI applications

AI programs involve more processing and use more energy than other data center applications, driving more data center construction and power demand. In the U.S., data center electricity demand is forecasted to increase from 4% of all electricity consumption in 2024 to as much as 9% by 2030. In Data Centers Power Requirements, Dr. Hoyos Ensuncho found that a single hyperscale data center, which can require over 100 megawatts (MW) of power, can use 8.7 terawatt-hours (TWh) of electricity over the course of a year. For comparison, that’s more than one-eighth of the entire state of MO’s electricity generation in 2023 (66.7 TWh).

Hyperscale data centers are more energy-efficient than smaller scale data centers, and IT equipment has become more efficient over time. Practices like power management, virtualization, and investing in renewable energy alongside new data centers also help to reduce strain on the electric grid.

Actions to address data center energy demands. Nine states (blue) protect residential consumers from bearing the costs of larger electricity users. Eight states (dark blue) are studying the impacts of data centers on energy usage. Fifteen states (gold) encourage modernizing the power grid using advanced transmission and grid-enhancing technologies. States in gray took different actions to encourage off-grid energy generation.

Overall, electricity demand in the U.S. is projected to increase 35-50% between 2024 and 2040, in part due to increased demand from data centers. In Addressing AI Energy Demand, Dr. Vikram Lakhanpal looked at how states are responding to the anticipated increase in demand. Three major approaches states have taken include:

  • Instructing their state public utilities commission (PUC) or a new task force to study the impacts of data centers on energy demand, the state economy, and energy costs to consumers. (8 states as of 2025)
  • Requiring “large load” electricity customers to “pay their fair share,” either by paying for electricity at a separate rate than residential users, or by paying for a portion of the utility company’s expansion costs. (7 states)
  • Requiring utility companies to consider using technologies that would modernize the power grid and increase efficiency when proposing additions or upgrades to transmission infrastructure. (15 states)

Other state measures limit how much of the state’s power large load customers can use, or encourage businesses to bring their own power generation when constructing new facilities. State PUCs can also negotiate higher electricity rates for large load users or require them to pay additional fees to fund state programs.

Distribution of water usage reported by Google data centers in the U.S. and Canada in 2024. The company reported water usage for 24 data centers. Sixteen of these withdrew fewer than 1 million gallons per day, while three used more than 2 million gallons per day. Out of the 7.8 billion gallons of water the company’s data centers withdrew in 2024, 78% was consumed due to evaporation during cooling and was not returned to the water system. Data from Google 2025.

Data Center Cooling and Water Consumption

Data Centers consume water directly through cooling processes, and indirectly through electricity consumption. Dr. Lakhanpal explores data center water consumption in Science Notes on Data Center Water Use and Closed Cooling Systems.

Data centers primarily run either cold air or cold water through server rooms to remove heat generated by computer equipment. The heat is then transferred outside, often using evaporative cooling, where water in a cooling tower absorbs the heat, evaporates, and is blown away. The cooling systems have a trade-off: air cooling consumes more electricity, and water cooling consumes more water. Data centers choose their cooling systems based on the local climate and which resources are more available.

Some data centers use a closed loop system, where water is recirculated in a closed loop between the facility and a heat exchanger. Reusing the water lowers the maintenance required in the closed loop and the water use compared to an open loop system that continuously pulls new water from a nearby source. However, removing heat from the closed loop still requires air chilling or another water loop for evaporative cooling, which requires consuming either electricity or water to remove the heat.

Water consumption refers to the amount of water a facility withdraws from the water system that does not return. Data centers can consume a large portion of the water they use:

  • Google reported their data centers consumed 78% of the water they withdrew in 2024. The 6.1 billion gallons they consumed marked a 42% increase from 2021.
  • Equinix reported that their data centers consumed 85% of the water they withdrew in 2024.

In total, U.S. data centers consumed 17.4 billion gallons of water in 2023, equivalent to about 160,000 American households.

Example schematic of a closed loop cooling system. A closed loop cycles cooling fluid through a facility like a data center to remove heat and into a heat exchanger. An external water supply takes the heat from the exchanger to cool the closed loop. Figure adapted from ChemStar Water n.d.

Data Center Land Use

Dr. Lakhanpal also looked at the physical footprint and location of data centers in Data Center Land Use. He found that the average size of new data centers is growing, due to the construction of more wholesale and hyperscale data centers, which can cover hundreds of thousands of square feet. Data centers are typically built on a single story to maximize cost efficiency, though multi-story data centers have been built in dense urban areas.

Most data centers are built in metropolitan areas, to keep response times to users (latency) low. However, AI models undergo training before they’re used publicly, which uses a lot of power. Because training doesn’t require close connections to users, large data centers in remote areas where land is cheaper are ideal options to run AI training programs.

Want more? Check out the Science Notes:

Powering Data Centers - What are the electricity demands of powering data centers?

Data Centers Power Requirements - What are data center power requirements and how are they projected to change?

Addressing AI Energy Demand - How are states responding to increased energy demands due to AI?

Data Center Water Use - How do data centers use water?

Closed Cooling Systems - How do closed cooling systems work?

Data Center Land Use - How much and what kind of land do data centers use?

Make sure you don’t miss any of our data center information!
Stay up to date by subscribing to our newsletter or following us on Facebook or LinkedIn.

Like what you’ve read? Donate to make sure we can continue to provide non-partisan research to Missouri residents and policymakers.

Most Policy Initiative logo
Contact
238 E High St., 3rd Floor
Jefferson City, MO 65101
314-827-4549
info@mostpolicyinitiative.org
Organization
Newsletter
Newsletter
© 2026 MOST Policy Initiative | Website design and development by Pixel Jam Digital
Privacy Policy
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram