Data centers — the banks of interconnected computer servers that store Facebook photos, bank records, health records, and all else in the digital 21st century — use huge amounts of electricity. Colorado already has at least a dozen.
More can be expected as the rise of artificial intelligence expands global annual growth a projected 11.3% through 2026. Electricity prices lagging national averages make Colorado an attractive destination along with its location in the nation’s interior.
But could data centers pose problems for Colorado’s electrical grid and its water supplies? That was the argument that John Gavan made last winter after SB24-085 proposed giving state sales and use tax breaks to data center operators. Gavan is a veteran of the IT industry who later turned his attention to energy. He warned that too many large data centers might cause Colorado to fail to attain its decarbonization goals.
Water is also a concern. It can be the primary cooling method for data centers. The Washington Post in 2023 said that a large data center can gobble up 1 million to 5 million gallons of water a day — enough to serve some 3,000-17,000 households for a year.
Water managers in Colorado are conscious of demands from this expanding sector. “Large users are always part of our conversation,” says Vern Adam, deputy director of engineering services for Aurora Water.
QTS Aurora-Denver has the most high-profile data center in Colorado. It sits on a 67-acre campus in Aurora. To attract the industry, Aurora rebated sales and use taxes and Arapahoe County agreed to a 50% refund of the company’s property taxes.
As for the water needs? Adam declined to identify specifics. A data center using 10,000 gallons daily would pay a $1.1 million one-time tap fee. A large warehouse for food products that uses “a fair amount of water,” says Adam, would pay fees using the same formula.
Adam said in March that he was aware of three data centers already operating in Aurora and three more that had been proposed. Microsoft in 2022 reportedly purchased 260 acres in Aurora with plans to build its first hyperscale data center in the area.
Colorado Springs has seven large data centers and many small data centers embedded in almost every large business. “When we are contacted by prospective data centers looking to relocate here, they are more interested in power availability [than in water],” reports Jennifer Jordan, senior public affairs specialist for Colorado Springs Utilities, which delivers both energy and water to
its customers.
Data centers have been low on Denver Water’s radar. “We haven’t seen a big influx of data centers into our service area,” says Greg Fisher, the utility’s manager of demand planning. “If we hear an industry is coming in, we would take a very specific view of that and make sure that we understand their new demands and fold them into our long-term planning. But right now, we don’t have any indication that’s coming.”
Allen Best is a frequent contributor to Headwaters magazine. He publishes Big Pivots, an e-journal that chronicles the energy and water nexus.
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