Why Data Centers Are Facing New Scrutiny, and What It Means for Cooling System Design

A Building Boom Under a Bigger Spotlight

Data center construction is accelerating at a pace few other industries have matched in recent years. Growth in cloud computing and artificial intelligence workloads has pushed developers to add capacity faster than utilities can expand the grid to support it. Some industry estimates suggest data centers could account for as much as 12 percent of total U.S. electricity consumption within the next few years, with tens of gigawatts of new capacity expected to come online by the end of the decade.

That growth has not gone unnoticed by the communities where these facilities are built. Homeowners near proposed sites are raising questions about electricity rates, water availability, and grid reliability at public hearings and in local news coverage. Recent polling found that a large majority of Americans are concerned that new data center construction will push their own energy bills higher. In just the first few months of 2026, local opposition contributed to the cancellation of dozens of proposed projects representing tens of billions of dollars in planned investment.

Lawmakers have responded. More than 300 bills addressing data center energy and water issues have been introduced across over 30 states this year, covering topics ranging from building moratoriums to mandatory water use disclosure to utility rate structures. Regardless of how any individual bill fares, the broader trend is clear: the regulatory and public scrutiny around data center resource use is not going away.

At Koch Applied Solutions, this is a conversation we have with data center developers and facilities engineers on a regular basis, since the cooling system is one of the largest factors in a facility’s water and energy footprint, and one of the most direct ways to address the concerns communities and regulators are raising. Our work specifying STULZ and ClimateWorx cooling equipment for data center projects puts us in the middle of exactly this trade-off, and the decisions made early in a project’s cooling design often determine how well it holds up to the scrutiny described below.

Water Use Is Bigger Than It Looks

Much of the public conversation understandably centers on water, since cooling is the most visible resource a data center consumes on-site. Direct water use for cooling in U.S. data centers has more than tripled over the past decade, and that figure is expected to keep climbing as AI training and inference workloads intensify.

What often gets missed is that direct, on-site water use is only part of the picture. Generating the electricity that powers a data center also requires water, particularly at power plants that rely on steam turbines or evaporative cooling. Multiple federal and academic analyses have found that this indirect water footprint is substantially larger than a facility’s direct consumption, sometimes by a factor of ten or more. Because indirect use happens off-site at power plants, it rarely shows up in a data center’s own sustainability reporting, even though it is a real consequence of how much electricity the facility draws.

This distinction matters for anyone evaluating a facility’s true environmental footprint. A cooling system that reduces on-site water use but increases electricity demand may simply be shifting the water burden somewhere else in the grid, rather than eliminating it.

The Water and Energy Trade-Off in Cooling System Design

This is where cooling technology choices become genuinely consequential rather than purely operational. Broadly speaking, data center cooling systems fall along a spectrum:

• Chilled water systems generally use more water on-site but can be highly efficient in terms of electricity use, particularly at scale.
• Direct expansion, or DX, systems and air-cooled chillers use little or no water directly, but typically require more electricity to achieve the same cooling capacity.
• Free cooling and economizer configurations use outside air conditions to reduce mechanical cooling load whenever ambient temperatures allow, cutting both water and energy use during favorable weather.
• Hybrid and dual-mode systems can shift between water-based and air-based cooling depending on the season or local water availability, giving operators flexibility as conditions or regulations change.

There is no universally correct answer among these options. The right configuration depends on local climate, the price and availability of water in that jurisdiction, electricity costs, and increasingly, the regulatory and community environment surrounding the project. A facility in a water-stressed region may lean toward air-cooled or hybrid systems even at some energy cost, while a facility with access to affordable, reliable power and ample water supply might reasonably prioritize the efficiency of a chilled water design.

Efficiency Metrics Are Becoming Part of the Conversation

As scrutiny increases, more developers are being asked to demonstrate efficiency using recognized industry metrics rather than general claims. Power usage effectiveness, or PUE, measures how much of a facility’s total energy draw goes toward computing versus overhead functions like cooling. A related figure, partial PUE, isolates the efficiency of the cooling system specifically. Lower values in both cases indicate a more efficient facility.

These metrics are useful not only for internal engineering decisions but increasingly for external communication with regulators, utilities, and local stakeholders who want assurance that a proposed facility has been designed with resource efficiency in mind from the start.

Designing for Scrutiny From the Beginning

The facilities best positioned to navigate this environment are the ones that treat resource efficiency as a design requirement from day one, rather than a retrofit after community or regulatory pushback. That means evaluating chilled water, DX, and free cooling options against local water and energy conditions early, selecting equipment with efficiency data that can be documented and shared, and building in flexibility to adjust as conditions or regulations change over the life of the facility.

Koch Applied Solutions works with data center developers and facilities engineers across our territories to evaluate these trade-offs and specify cooling systems suited to the site, the climate, and the resource realities of the region. Through our partnerships with STULZ and ClimateWorx, we offer a full range of data center cooling equipment, including CRAC and CRAH units, chilled water and DX systems, in-row and containment solutions, and free cooling configurations designed to reduce both water and energy demand where conditions allow.

If you are planning a new data center or evaluating upgrades to an existing facility, our team can help you weigh these options against your site’s specific requirements. Contact Koch Applied Solutions to discuss your project and find the cooling approach that fits both your operational goals and the community you are building in.