Data Center Impacts in the West: Policy Solutions for Water and Energy Use

The rapid growth of data centers, fueled by artificial intelligence, is creating major challenges for the Interior West. Utilities in Arizona, Colorado, Nevada, New Mexico, and Utah are now forecasting electricity demand to grow more than four times faster than in the past decade, driving up greenhouse gas emissions and straining the grid.

At the same time, water demands for cooling could reach 7 billion gallons annually by 2035 in a region already facing scarcity. These pressures risk undermining clean energy goals, overburdening other ratepayers, and threatening fragile water resources.

Western Resource Advocates (WRA) recommends policies to turn this challenge into an opportunity: clean energy tariffs and behind-the-meter renewables, stronger efficiency standards, fair ratemaking and contract safeguards, and water reporting and conservation requirements. With the right measures, data centers can support—rather than derail—the West’s clean energy and sustainability goals.

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