By Rives Taylor, principal, global resilience research lead, Gensler
Texas is experiencing rapid growth in data center development as part of a broader push to support artificial intelligence (AI) ventures that have transformed digital infrastructure into a magnet for capital.
As noted in Gensler’s recent Design Forecast, these assets demand abundant land, power and connectivity, making the region a natural fit for long-term growth in digital and industrial real estate. However, these facilities also require reliable access to significant water resources to support cooling systems that are essential for maintaining uninterrupted operations. As development increases, so do the needs for resources, and Texas lacks a consistent policy requiring operators to report essential metrics such as water use, energy consumption or cooling loads.
This lack of transparency limits the ability of policymakers, communities and design professionals to fully understand the environmental impact of one of the state’s fastest-growing industrial sectors. With rising pressure on water supplies and power systems, the need for clearer reporting standards and more forward‑looking design approaches is becoming increasingly urgent.
A recent white paper by the Houston Area Research Center (HARC), found that “without modernized planning and policy updates, the state faces a collision between finite water supplies and one of the world’s most resource-intensive industries.” HARC’s study also noted that “existing data centers in Texas consume an estimated 25 billion gallons of water annually for electricity generation and cooling systems.” By 2030, this figure is expected to grow to anywhere between 29 and 161 billion gallons per year.
As we consider the future of data center design and water supply management in Texas, design professionals play a central role in shaping the approach. If data center owners reported both their anticipated and actual water and energy consumption — including peak and average load, cooling demand and water usage — designers and operators could work together to help Texas build digital infrastructure that is efficient, resilient and community-minded. With clear policy guidance, architects and engineers can implement strategies that reduce water and energy impacts, including liquid cooling, advanced airflow management, non-potable water reuse, green grid and onsite power with batteries.
Efficient Water Use on Site
Modern buildings rely heavily on water-cooled systems, and in hot climates like Texas, cooling tower makeup water is often the largest single use of potable water in an office building.
Data centers amplify this challenge dramatically because their servers generate enormous heat loads that have historically been rejected through refrigerant systems tied to cooling towers, which consume tens of thousands of gallons of water per day. As water-stressed cities such as Las Vegas push back on evaporative cooling, operators are exploring alternatives such as air-cooled chillers, which avoid water use but require much more energy, and geothermal systems, which can be effective but depend on extensive well fields and favorable local conditions.
Water as a prime measure of data center success — and of these facilities’ relationship to shared community water resources — should not be an afterthought. Facilities should actively evaluate strategies such as water reuse, stormwater capture and even cooling tower mist recovery to reduce their reliance on offsite freshwater supplies. These approaches can meaningfully reduce potable water demand while helping communities preserve constrained water systems.
New strategies are also shifting from simply rejecting heat to managing it more intelligently. Some data centers are testing ways to capture waste heat for nearby housing, district heating networks or greenhouse agriculture, turning what was once a liability into a usable resource. Others are improving operational efficiency through AI-driven load management that reduces compute activity when possible, which lowers both energy use and heat generation. Together, these approaches reflect a broader move toward balancing cooling needs with water scarcity, energy constraints and environmental responsibility.
Resilient Ecosystems
As these challenges and opportunities intersect, the path forward depends on innovative thinking that extends beyond conservation alone. This moment calls for solutions that not only reduce strain but also reimagine how data centers can contribute positively to their surrounding ecosystems.
Through our research, we’ve considered the possibility of using the warm water from data centers to stock manmade ponds that grow algae, or other food crops, to help reduce the carbon impact of data centers. Heated water creates ideal conditions for growing certain types of algae which have a wide range of commercial and industrial uses, including biofuel. Once the 100-cubic-meter pools are full, the algae are harvested for use in things like medicine, food and cosmetics. This method would allow for roughly 17 harvest cycles a year, capturing 14,000 kilograms of carbon.
Community-Minded Policies
Local governments also need reliable information on data center water and energy consumption to negotiate agreements that protect residents while delivering economic value. A data center should not be an opaque facility whose impacts are understood only after construction. Communities deserve to evaluate proposals with full knowledge of their resource implications and to ensure new facilities contribute positively to local infrastructure and quality of life.
Current policy discussions in Texas are moving toward greater transparency about data center resource demands during both the planning and operational phases. State leaders have directed the Public Utility Commission of Texas to begin tracking water and energy consumption from data centers (and cryptocurrency mining facilities), with a statewide survey that launched this spring. Results are due by the end of 2026. This requirement, added through a budget directive authored by Texas Rep. Armando Walle, reflects a growing legislative interest in ensuring communities and regulators have access to reliable information about how large technology facilities use water and power.
To support continued progress, accurate information is essential. As HARC’s white paper suggests, requiring data centers to report expected and actual water and energy consumption gives designers and policymakers the clarity needed to match solutions to real conditions. Handled thoughtfully, this is an economic opportunity that positions Texas as a leader in sustainable, next-generation digital infrastructure. Achieving that vision requires smart policy, reliable data and design practices that anticipate the future rather than react to it.