Evaporation, Closed Loops and Dry Coolers
On December 9, 2024, Microsoft published a description of what it called its next-generation data center design, one that consumes zero water for cooling. According to Microsoft, all new data center designs begun from August 2024 use chip-level cooling with water recirculating in a closed loop, so the water is filled once and not evaporated. The company said the design would avoid the use of more than 125 million liters of water per year per data center, that projects in Phoenix, Arizona, and Mount Pleasant, Wisconsin, would pilot it in 2026, and that new sites built to the design would begin coming online in late 2027. It also acknowledged a cost: without evaporation, the design relies more on mechanical cooling, which raises power usage effectiveness, though Microsoft said it expected only a nominal increase in annual energy use.
That last admission is the most instructive sentence in the announcement, because it names the central trade-off of this module. To see why the trade-off exists, return to physics. When water evaporates, it absorbs a large amount of heat for each kilogram that turns to vapor. A cooling tower exploits this by spraying warm water through moving air so that a small portion evaporates and cools the rest. The cooled water returns to the chillers or directly to the heat exchangers. Evaporative cooling can reject heat at temperatures close to the outdoor wet-bulb temperature, which on a hot, dry afternoon is well below the air temperature. That lets a building avoid running refrigeration compressors for much of the year, which saves electricity.
The price is water. The evaporated water leaves as vapor and is gone from the local system. In addition, as water evaporates, the minerals it carried stay behind and concentrate, so a tower must periodically discharge some of its water, called blowdown, and replace it with fresh supply. Withdrawal is the water taken in; consumption is the portion that does not return to its source. For evaporative cooling, consumption is the larger concern.
The alternative is to reject heat without evaporation. A dry cooler is essentially a large radiator: the facility water runs through finned coils and fans blow outdoor air across them. It uses no water, but it can only cool the water to a few degrees above the outdoor air temperature. On hot days, if the cooling loop needs colder water than that, a chiller must make up the difference, and chillers use electricity. This is where direct-to-chip liquid cooling and warm-water operation help, because a cold plate that accepts warm supply water lets dry coolers do most of the work in more places for more hours.
The national picture comes from the Lawrence Berkeley National Laboratory report published in December 2024. It estimated that United States data centers directly consumed about 17 billion gallons of water in 2023 for cooling, and that the electricity they used was associated with roughly 211 billion gallons more, consumed indirectly at power plants, many of which themselves use evaporative cooling. The indirect figure is an estimate that depends on the mix of generation serving each facility, and it deserves the same caution as any modeled number. The ratio still matters. A design that saves water on site by using more electricity may shift some water use to a distant power plant, depending on how that electricity is generated.
Other large operators have moved in similar directions. Meta has said that its El Paso, Texas, and Beaver Dam, Wisconsin, data centers, both still under construction, with Beaver Dam due online in 2027 and El Paso in 2028, are designed to use closed-loop liquid cooling with dry coolers that need little or no operational water for cooling, while many of its older sites use direct evaporative cooling of outside air. The details differ by climate, and each company describes its designs in its own terms, so comparisons across companies require care.
Faraday's read is that the water question is fundamentally local. Evaporating water in a humid region with abundant rivers is a different act from evaporating it in a desert basin where every allocation is contested. Likewise, a small increase in electricity use matters more on a grid heavy with water-cooled thermal plants. There is no universally correct cooling choice, only a choice that fits a place.
For anyone evaluating a project, the useful questions are concrete. Does the design evaporate water, and in how many hours of the year? What happens on the hottest week, when the dry coolers cannot keep up? Where does the makeup water come from, and could it be reclaimed wastewater rather than drinking water? The answers tell you far more than any adjective in a press release.