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Power Forward Communities wants you to have a heat pump.

Getting fossil fuels out of your home is really hard. You have to find a contractor, ideally one who supports electrification and doesn’t ask why you won’t just stick with natural gas. You have to coordinate between multiple trades — electricians, plumbers, HVAC professionals — as well as lenders and utilities and permitting authorities, most of whom don’t talk to each other. You have to navigate a confusing array of finance options and incentives. You might be left feeling defeated, unable to afford the high up-front costs and unable to secure low-cost loans. And if you’re a renter, all you can do is dream.
These are not easy problems to solve. But a new initiative called Power Forward Communities has a pioneering plan to simplify the process all over the country — and it just got $2 billion to get started.
The money is part of the $20 billion the Biden administration awarded on Thursday via the Greenhouse Gas Reduction Fund, a program approved as part of the Inflation Reduction Act to provide low-cost financing options for consumers, communities, and businesses to transition to clean energy and adapt to climate change.
Power Forward Communities is made up of five core partner organizations — Rewiring America, Enterprise Community Partners, Local Initiatives Support Corporation, Habitat for Humanity, and United Way Worldwide — who will work with communities, government agencies, unions, and housing developers to decarbonize hundreds of thousands of homes and apartments between now and 2031. The coalition has committed to invest at least 75% of the financing in projects in low-income and disadvantaged communities.
That all starts with a four point plan.
First, reduce friction by creating online tools and providing community-level assistance to help homeowners navigate the decarbonization process. Rewiring America is already part of the way there with its “personal electrification planner,” which provides a rough estimate of the upfront cost, annual bill savings, and expected emissions reductions for any given project. Soon, the group will pair that with another, first-of-its-kind tool: a dataset of every electrification incentive in the country. Eventually you’ll be able to plug in your address and income and get a list of all of the programs available to help you pay for your project.
Second, invest in workforce development and create a “contractor marketplace” where building owners can go to find vetted partners for their project.
Third, create new low-cost financial products to help bridge the gap between existing incentives and project costs. Notably, Power Forward plans to allocate more than half of its loans to projects in multifamily buildings, as these buildings tend to serve renters with lower incomes, and decarbonizing them is much more capital-intensive.
The details of the finance aspect of the program are subject to change, but the group’s application for the Greenhouse Gas Reduction Fund proposes an energy efficiency loan for apartment building owners who want to make minor upgrades, which would offer an average of $30,000 per building with a 10- to 20-year term and 1% to 3% interest rate. As part of this program, Power Forward would also work with the building owner to make a plan to fully decarbonize the building down the line, and issue grants to fund the planning process. A proposed “net-zero rehab permanent loan,” meanwhile, would provide financing for full retrofits at an average of $120,000 per building.
Meanwhile, the finance options for single-family homes could be tied to predetermined “packages” of decarbonization measures that homeowners can choose from. This brings me to the fourth, and what I see as the most interesting and innovative part of the plan: the aggregation of demand.
Part of why electrification is so difficult and expensive is that it’s a bespoke process. Some buildings might need insulation, others might need electrical upgrades. Some might require new ductwork for central heat pumps, while others might be better off installing mini-split heat pumps in every zone of the house. There’s no one-size-fits-all solution.
“How do we unlock economies of scale and create an offering that could serve as many households at once?,” Nicole Staple, the head of market partnerships at Rewiring America, posed rhetorically to me in February. “That has historically been incredibly challenging given there's so much customization to heat pump design.”
But there are buildings with similar needs. If there were a way to identify them and then group the jobs together, you could start to solve a surprising number of other challenges. “That's where I think you unlock a lot of speed in [electrifying] full communities,” said Staple.
The most obvious benefit would be lowering the cost of equipment by buying in bulk. You could give suppliers better visibility into demand so they could stock up accordingly. You could help contractors plan ahead and space out jobs so that they have guaranteed work during the shoulder seasons. You could create new markets for union labor, which have historically been shut out from residential work due to the small size of the contracts and high customer acquisition costs. You could pool loans to diversify risk. You could design more effective policies to wind down the natural gas system.
The standardized packages Power Forward plans to offer will enable the group to “pre-define pricing and financial product offers, streamline underwriting and installation, and reduce financing costs,” according to its funding application. It estimates that by aggregating demand, it can reduce the remaining costs of electrification after incentives by as much as 50%.
The application also said the group has obtained letters of commitment from supply chain participants, including Home Depot and Mitsubishi, to lower equipment costs. In return, the coalition will reserve an initial $125 million over the first three years of the program as an insurance pool to guarantee $1 billion in sales volume for select partners.
To unlock all this magical potential, Rewiring America has been working on a large-scale data model to identify homes with similar characteristics, which will in turn help it figure out where there is opportunity to bundle projects in different parts of the country.
The group has also been gathering information and testing out assumptions on what will ultimately lower the costs of equipment and installation in a series of pilot projects, starting with one in the rural, mostly Black community of DeSoto, Georgia, where “107 households survive on a median income of $20,375, grapple with repeated house fires linked to propane gas usage, and strain to pay utility bills,” according to Power Forward’s application.
When I spoke to Staple a couple of months ago, she told me that about 75 households in DeSoto had expressed interest in the program thus far. Each participant would get at least one piece of equipment — a heat pump space heating system or a water heater, for example — fully subsidized. They would also be eligible for electrical upgrades or weatherization improvements as needed.
“Many of the households have not had cooling. Some have had their HVAC systems broken for literally decades,” Staple told me. “There's lots of dimensions of that community that we think help us understand how carefully we need to manage electrification projects, considering the ways that these communities have been failed.”
Power Forward had initially requested $9.5 billion to implement its plans, so it will have to go back to the drawing board over the next few months to map out what it can achieve with the $2 billion it was given. What could it have accomplished with that additional $7.5 billion?
“Our mission is to create hundreds of DeSotos, and ultimately decarbonize housing across the nation,” the coalition’s application says.
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The data center water issues are real – but they aren’t what you think.
Too often, I hear people say the number one reason they’re against data center development is water use. Heatmap’s data shows water consumption is historically the reason cited most often by activists when opposing projects. This complaint, they often say, is rooted in the fear that this nascent buildout of AI infrastructure will simply draw so much H2O it will leave little liquid left for the rest of us.
I spent weeks trying to understand how real the water use problem is when it comes to data centers, reading research and speaking to some of the world’s leading academics, large tech firms, and environmental advocates to make my best attempt at answering some of the most important questions being asked about data centers.
Before I jump into this thicket, a few caveats. I’m not going to address the host of water pollution concerns many have raised about data centers because that is for a future article. If you want me to dissect how Rep. Alexandria Ocasio-Cortez got a jar of dirty water near a Meta data center, that was poor construction practices – not a data center’s water demand. By that same token, if you're itching for me to find out how much PFAS is in data center water, I’m not delving into that here, though I’ll just say PFAS is everywhere and isn’t a data center-specific issue.
So are there problems with AI data centers’ water use? Yes. Are data centers using too much water for society to handle? It depends on what “too much” means to you. Is the AI data center boom going to usher in a new era of drought across the United States? Probably not, but there’s a few places we should be mindful of.

Researchers told me data center water use is a painfully understudied topic rendered more obscure by a lack of public information about individual H2O consumption at the project level. Those I spoke to were split on how seriously to take the topic.
Some analyses insist the sector’s water use should be regulated and tackled head-on by the sector. I spoke with Yi Ding, an assistant professor at Purdue University, who co-authored a paper laying out a framework for evaluating the water impact of computing weighted specifically for water stress. Ding told me there is currently no set of industry-led best practices for sustainable water-conscious data center operation and her work aims to fill that gap.
When I asked Ding if data centers are actually threatening individual towns’ water supplies, she didn’t hesitate: “Yes, it’s significant.”
Others in this field have the opposite view.
“Water is often brought up as the primary concern when it’s less important,” David Mytton, a sustainable computing researcher at Oxford University, told me. “The more important thing is going to be how you bring more clean energy onto the grid, and nuclear power, so that we can generate sufficient energy to build these centers.”
Large tech companies are starting to spend less time debating the extent of the problem and more bandwidth addressing the PR crisis surrounding data center and AI water use.
Ben Townsend, Google’s head of infrastructure and sustainability, told me he believes that “from a comms and PR perspective” he has “no doubt” it would be easier to build data centers without the debate over water. “Data centers operators are not explaining why they’re using water or how much water they use. There’s a complete lack of transparency or discussion.”
Google has been getting splashy around this topic, a public relations strategy that reminds me of Meta’s recent workforce training investments. Last week, Google announced five fresh “commitments” towards its “climate-conscious approach” to water use, including a pledge to “replenish more water than we consume at our sites” by 2030.
This week, Amazon made a similar declaration and claimed its operations are 75% of the way to accomplishing this goal, which it’s calling “water positive.” Brandon Oyer, director of energy and water at Amazon Web Services, told me he thinks the industry “could’ve done better” and “come out earlier” to address its water use.
“There’s just been a lot of misinformation that has led people to [be] a little bit alarmist. And rightfully so. I would get alarmed if I thought that water was going to be impacted in my community,” Oyer said.
The basics of data center water use
Data centers need water to cool large server racks whizzing away to power AI and most other internet practices, from streaming to online banking. Normally, you don’t want computers to get too hot because then they can crash causing potentially catastrophic harm to the machine.
This water use presents a number of environmental challenges. Often, server farms rely on clean, fresh water, or filtered drinking water, a need largely for functionality reasons. They’re competing for this resource at a time when supply is dwindling amidst the crisis of global warming.
Making matters worse, much of the U.S. has faced drought conditions over the past year, including states that are typically water abundant, like Virginia and Georgia, that are at the center of the data center boom. On Monday, The Guardian reported that more than half of all planned data centers in the U.S. are in “locations that have been in drought conditions throughout the past year,” citing data center site information from federal agencies and the energy data firm Cleanview.
In the top data center destination of Texas, where peak electricity demand could more than quadruple in the near future, analysis from state university researchers released in May found data centers could wind up between 3% to 9% of water demand by 2040. Projects are being developed near cities like Corpus Christi and El Paso that were already fearful their drinking water supplies would dry up before the AI infrastructure boom came to town.
“The impact of building a data center in Arizona versus Wyoming is very different,” said Ding, the Purdue University researcher. “[Companies] will say different things because of their position. The problem is substantial and sometimes it’s not that they don’t want to use water – it means they don’t have water to use.”
The most water intensive version of data center cooling is called “evaporative cooling,” which mixes water evaporation and ventilation air flow to cool rooms in ways industry compares to human sweat. Evaporative cooling uses a lot of water and regular fresh supply because, well, the water goes away once it evaporates.
One Google data center using evaporative cooling in Council Bluffs, Iowa used more than 1 billion gallons of water in 2024, a stat that made the project a poster child for perceived excesses in water use. Somewhat ironically, we know this because Google is one of the few large tech companies to voluntarily disclose direct water consumption from individual data centers on an annual basis.
But cooling tech is becoming much more water efficient. You may have heard of “closed loop cooling” – that’s when a chilling system is supposedly self-contained. These systems as designed typically rely on loops of pipes filled with coolant flowing through them. This means they should not expel much liquid. If the modern trend in data center development skewed towards closed-loop systems, it would theoretically mean very little new water supply drawn on the average day.
“If you’re using a closed loop system, the water goes into the data center and then it doesn’t really require a refill every so often. It’s a one-time thing,” Mytton said. “If you’re using evaporative cooling, the water is continuously evaporating into the atmosphere. That’s when it’s being drawn from water sources.”
Closed-loop systems aren’t perfect because of ordinary issues like leaks. These flaws have meant this innovation has done little to assuage the loudest local concerns about water use. Critics of the sector have pointed to estimates pegging a closed-loop failure rate up to 25%. But Mytton said this criticism against closed-loop cooling systems is a little misguided. “They’re just wrong. They just don’t understand how data centers work.”
Closed loop systems and water-free cooling processes (like simple air vent-based cooling) also have trade-offs, particularly the extra energy and chemicals required to make these loops work to spec. Given data center developers are often choosing gas-fired power, which also requires water and produces greenhouse gas emissions, more power for less water is hardly a comfortable trade-off from an environmental perspective.
“‘Closed-loop cooling’ is a marketing gimmick,” proclaimed anti-data center group Food and Water Watch in an April blog post, calling the practice “greenwashing” and “just clever advertising.”
We do not know right now how much water most data centers are actually using, sans a handful of companies reporting individual facility use like Google. The data center development space – Big Tech, their subsidiaries, start ups, real estate firms – is mostly keeping their individual facility water usage private, and there isn’t really any regulation at any level of government to compel this information to be released in the United States, despite it being the number one destination for data center development. Corporations often consider these figures proprietary and municipal governments often consider this confidential business information, making it likely to be redacted or withheld from public records requests.
For example, in Wisconsin, an environmental group sued the city of Racine when officials refused to give water use projections for Microsoft’s data center campus in the nearby village of Mount Pleasant, about five miles from the shores of Lake Michigan. The projections were ultimately released under court order, showing Microsoft’s data center campus was projected to use up to 234,000 gallons of water on peak days or up to 2.8 million per year; eventually those numbers could almost triple to 702,000 gallons on peak days, or almost 8.5 million gallons a year.
These projections, according to Microsoft, are for a facility where more than 90% of the facility will rely on closed-loop cooling. The rest of the data center campus “will use outside air for cooling, switching to water only on the hottest days.” The company has called this design a “technological milestone” that’ll use “roughly the amount of water a typical restaurant uses annually.”
Microsoft is accurate here: the average eatery uses roughly 250,000-to-300,000 gallons of water a year according to restaurant sustainability advocates, a level of consumption that’s led restaurants to be roughly 15 percent of total water use in commercial facilities in the United States.
Personally I think it is easier and more useful to compare a data center to a farm, especially given how many are fighting to stop these projects to preserve prime farmland. Agriculture doesn’t measure water consumption by the gallon; farms use far too much water for those stats to work here. Instead farms use acre-feet, which is calculated using the volume of water necessary to entirely cover an acre of land with one foot of water. For posterity, one acre-foot is almost 326,000 gallons of water, which is about the maximum daily water consumption of that Microsoft data center in Mount Pleasant, Wisconsin. In 2023, the average amount of water applied to a single acre of farmland for irrigation was 1.5 acre-feet, rendering this figure comparable to a large Microsoft data center. This is still a lot of water and not a 1:1 comparison, since different crops require water at different times. But even if a data center consumed that much water every day for a full year, that’s 365 days. An average large farm is a little more than 1,400 acres and many farms span far more acreage. That’s the sort of relative scale we’re working with. So, for instance, a large family farm in Stafford County, Kansas, might use something like 420 million gallons of water over roughly 1,000 irrigated acres of corn in an average year.
I’m no farming expert – there might be things about farmland irrigation I don’t necessarily understand. But it's hard for me to look at these numbers and not long for some sort of rethinking about how we’re doing water math with data centers, especially given the environmental trade-offs around using less water.
Honestly I don’t think trying to explain this math helps anymore because secrecy may have spoiled the well in Racine, pun intended. In September, a peer-reviewed study by University of Wisconsin researchers found the Mount Pleasant datacenter had become “a microcosm of a macro problem with secrecy.” The paper stated that while closed-loop systems at the Mount Pleasant facility “may significantly reduce water use during some of the year, there is still a question of transparency and why it has been so difficult to obtain clear answers about water use.” Full transparency around water use, as well as the energy required for water-lite cooling practices, would be “essential” for any future research into industry practices “to have credibility,” the study stated.
Asked for comment on the study, a Microsoft spokesperson said via email: “Our datacenter campus in Mount Pleasant leverages the latest and most innovative cooling technology available. In past datacenter designs, water has played a key role in datacenter cooling and humidification, but our new designs aim to eliminate this continuous need for municipal water for cooling. The bottom line is that this data center, and others we build in the future, will not require massive amounts of water.”
When you zoom out further, water use by sector shows that U.S. data centers are not the leading driver of water use and its scarcity to date. Thermal power (fossil energy) and agriculture are by far the largest users of water in the U.S. economy, and it would be challenging for the data center industry to ever catch up. Industry figures collected in 2015 found thermo-electric power used roughly 132.4 billion gallons of water per day. Irrigation was a close second at 118 billion gallons of water daily. By comparison, researchers have noted International Energy Agency estimates that the entire global data center sector consumed a comparable amount of water during all of 2023. These are pre-AI boom numbers, but they tell us a lot about relative scale.
However, once again, researchers, tech companies, and advocates alike all told me they believe this macro picture elides individual communities and transparency issues are rendering these comparisons unhelpful for calming concerns down. The data center conflicts are local matters felt acutely, especially in places where drinking water is either hard to come by or expensive. Your average rural desert town or midwestern farming district cares little about the world; they want to know if their own wells will run dry. As Amazon’s Oyer told me, “The hyperlocal influence you can have on a water supply is why it becomes top of mind for people.”
One way to measure data center water impacts in aggregate may be to quantify the potential infrastructure upgrades necessary to meet the industry’s demand. A new study by researchers at University of California-Riverside and CalTech found that new water infrastructure spending for data centers alone could total as much as $58 billion in only four years time. These upgrades will be necessary in order for municipal water supplies to withstand peak demand on the hottest days of the year, a need akin to grid resilience upgrades. Not to mention our nation’s sewer systems are in desperate need of upgrades.
“If a data center was able to show they weren’t stripping our water resources and convinced a community they have mitigation strategies at the local level, that’s a theoretical path,” said Kathryn Hoffman, executive director of the Minnesota Center for Environmental Advocacy. Her organization has successfully stalled data center projects in the state with lawsuits arguing city and county environmental reviews are failing to account for the full extent of local resource usage, including water.
“Unfortunately, we’re a long way from that,” Hoffman added.
And more of this week’s biggest news around project fights.
1. Matagorda County, Texas – The bipartisan data center backlash is now so powerful that a top Republican Texas state official is doing an event with the Democrat vying to replace him.
2. Albany County, New York – As we await Gov. Kathy Hochul’s decision on whether to enact the nation’s first statewide moratorium on data centers, I wanted to bring up some pretty crucial facts about the situation in the Empire State.
3. Davidson County, Tennessee – Anyone who’s anyone should be talking about Nashville.
4. Lehigh County, Pennsylvania – I’m used to eagles halting wind turbines, but now people are trying to use the birds to stop data centers.
5. Laramie County, Wyoming – We had another anti-wind rally backed by national conservatives, this time in Wyoming.
6. Ellis County, Kansas – Let’s end on a sweet note: a giant solar farm getting its permits.
A conversation with Craig Lawrence of Energy Transition Ventures
This week’s conversation is one of my favorites so far – Craig Lawrence of Energy Transition Ventures. Lawrence has been around the block and back again when it comes to the cleantech investment landscape. So I took note when he got into a brief back-and-forth with an activist fighting data centers in Indiana who claimed there were “so many clean energy people who no longer care about climate change” because they “now support fossil fuel data centers if some nominal amount is met with clean energy.”
Lawrence replied, “Some of us are simply realists.”
It was a provocative answer. I reached out to Lawrence and asked if he’d explain what realism on cleantech and climate change looks like in the age of the data center boom. The following conversation was lightly edited for clarity.
So okay, what does “realism” in the clean energy space look like in the era of the data center boom?
In general, it looks like progress. Whether that’s technological or social, which often includes increased energy consumption. This is an extreme example of demand appearing at once. And what’s been incredible for me over 25 years of being involved in this stuff is, we’re finally at a point where clean energy can meet most of this demand – the cost of renewables and the cost of energy storage are now at a point where they directly compete with or without subsidies against fossil fuels.
However we’re not at a point where it's reasonable to expect 100% of this demand can be renewables. I don’t think that’s practical. Natural gas is still a very affordable, very flexible energy source. The data centers are going to use them.
I think the game should be figuring out how to support the most clean energy. That includes nuclear and other low-carbon sources to meet this demand.
I’d like to represent the other side of this really quickly. The pro-moratoria side here would be, why? Why do we actually have to build all of this? Why not just halt these data centers so the gas isn’t built, then invest in renewable energy to green our grid?
I made that comment about being a realist. We have an administration in this country that isn’t going to do that. Who will halt that? Who is in a position to actually do that? The answer is nobody.
We have another problem to worry about – the administration halting renewable energy projects. We have to prevent that from happening. I’ve been following the school of thought that there’s a grand bargain on permitting reform applying to renewables and other sources of energy.
I honestly truly believe that head to head, renewables and energy storage beat natural gas. In the free market of power, as much as it is a free market, renewables are winning and so you are painting a target on your back trying to stop all development unless it’s 100% renewables. You’re going to face a backlash from that.
In the U.S., 93% of new electricity generation is solar, wind, and storage. Do you really need 100%? You’d like it to be but man, take the W.
We’re winning. Not only are we winning but we are destroying the competition. To create a battle that has the potential to create significant backlash against renewables is the wrong move right now.
Okay, but on the opposing side someone would say that argument is what landed us in this place to begin with. Some would say a frame of realism is why we can’t seem to shake a reliance on fossil fuels.
I don’t think that’s the reason why.
Once renewables and storage became cost competitive they’ve dominated since. Prior to that, they weren’t cost competitive and it was a policy fight to say people should be forced to buy more expensive electricity that was cleaner for the climate. That battle was difficult and had some wins and some losses. We’re past that battle now.
Renewables are winning in the global market. Would I love a scenario where we could meet all the demand with solar, wind, and batteries? Yes. And I think we can get there, but there are real practical limitations to those resources too. They’re not 24/7 resources, even though they’re getting close to that.
Let’s just say I agreed with them and that side of the argument. What can you do about it with this administration? You can certainly try to elect candidates that’ll be supportive of it. You can’t force a moratorium.
Luckily, for that side of the argument, there’s plenty of people upset about data centers that aren’t just thinking about climate change.
How do you feel about the data center backlash as an investor in cleantech, and does it impact the decisions you make around who you potentially finance?
Not yet. The data center boom for us is indicative of a broader boom for increased electricity demand, which is generally good for what we invest in.
I think this feels very deja vu. Whether it's nuclear or renewables or pipelines, someone is going to be against it and make a lot of noise. That’s part of the reason we struggle to build things in this country.
But no, if anything, the whole AI and data center buildout is a tailwind for the energy transition and climate technologies. It’s helping gas too, no doubt, because people are trying to procure any power they can, and so they’ll do it by whatever means necessary, but I continue to think we’re oversupplied globally on solar panels and batteries. That’s thanks to China, primarily. And you can build those facilities in one or two years. Gas has five-plus lead times for turbines. We’re in a position to win that battle without having to make it a political battle over halting the buildout of these things.
Do you think the upset over data centers will impact the energy projects to power them?
Yes, I do. I’m seeing subsections of X, farmers and people purporting to support them, that are really upset about solar on farmland and engaged in interesting discussions around it. The same happens with data centers and farmland. It’s interesting to try and figure out their motivations. Is it preserving the farming or an angle to attack development they don’t like?
I am seeing a mobilization of people against buying up land and buying up electricity and water and using it for… xyz. Right now the flavor is data centers. It’ll be something else down the road. We’ve even heard the same things around the EV charging buildout.