Data centre study calls for new reporting framework to manage water use

Data centre study calls for new reporting framework to manage water use

A report funded by the Strategic Panel’s Market Improvement Fund to understand water use in data centres has recommended a series of actions to support this critical and emerging sector while safeguarding water resources.

The report, delivered by the Water Research Centre (WRc), presents policy options such as introducing a reporting framework to include water use and water efficiency, registering data centres on a Critical National Infrastructure register and reducing barriers to using alternatives to drinking water for cooling, such as the use of treated sewage effluent.

The Strategic Panel is the most senior governance group in the business water retail market providing strategic direction and overseeing programmes of work to improve business customer outcomes. The Panel, commissioned WRc, an RSK Group company, to undertake the research project following their successful application to the MIF in Round 4. The Market Improvement Fund was set up to support innovative projects benefiting the non-household water market and its customers.

Rick Hill, Independent Panel Member from the Strategic Panel, said “Investigating data centres is essential to fill major evidence gaps on their potable water use and rising demand. The Strategic Panel funded this work to inform policy and support sustainable sector growth. The report will guide planning, benchmarking and regulatory development to manage future water impacts effectively.”

WRc Head of Water Efficiency Joe Cahill explained how current data centre potable water consumption in England is estimated to be 1,879,000 m³/year (0.2% of the non-household market) but that this is showing a clear upward trend.

Data centres require cooling as the equipment they house produces a significant amount of heat, which needs to be removed to avoid overheating and equipment damage. They also require humidity control, as high humidity damages metal components while low humidity causes a build-up of electrostatic charge and increases the potential for sparks. There are a variety of cooling methods deployed in data centres that can utilise water, chilled air and liquids such as mineral oils, either in combination or in isolation.

Joe said: “A headline finding was that, while some English data centres can consume fairly large volumes of potable water, this is not the norm and the landscape is significantly different from other jurisdictions, notably the United States. Our analysis has found that the majority of data centres in England do not consume significant quantities of potable water (67% use <1000 m³/year). This consumption is highly skewed towards the large water users, with the top six data centres accounting for 65% of the sector’s water consumption. Many of these appear to have come online in the last few years.”

MOSL, which sponsored the project, recognises how this research complements its Strategic Data Programme, reinforcing efforts to improve the quality and granularity of water-use data across the business retail water market. Liz D’Arcy, Head of Digital Insights at MOSL, said: “Our world is changing around us and traditional metrics are no longer accurate enough to support modelling and forecasting. This has a knock-on effect on how we balance supply and demand across our networks. No where is this more apparent than with the emergence of data centres which represent new and increasing water demand. This report provides us with crucial insight to ensure we better understand the trends in this sector and ensure we maintain service levels and support growth in the economy.”

Read the report in full here on the WRc website.

Notes for editors

1. About WRc

WRc is part of RSK Group and provides consultancy, technical services, accreditation schemes, research, innovation and training to customers in the water, waste and environment sectors around the globe.

WRc services include drinking water treatment quality and delivery, wastewater treatment quality and delivery, waste and resources management, survey and assessment, reducing environmental harm and the drive to net zero, testing and certification, natural water resources management including water efficiency activities, digital, resilient and intelligent assets, enabling customer-centric operations and toxicology.

1. About the Strategic Panel

The Strategic Panel is the most senior market governance group and is responsible for leading the evolution of the Business Retail Market (BRM) and shaping its strategic direction to bring about the best customer outcomes. Established by Ofwat, with the support of Defra, it transposes the strategic vision and direction for the market into prioritised outcomes and programmes of work. The Panel is made up of senior independent members with experience in other sectors, a customer representative and senior representatives from wholesalers and retailers. Ofwat, Defra and MOSL may attend as non-voting affiliate members. This provides the Panel with the opportunity to give an authoritative, broad and informed perspective on how the market should best serve its customers.

1. 3. About MOSL

MOSL is the market operator for the non-household water retail market in England, which opened in April 2017, enabling more than 1.2 million business customers to choose who supplies their retail water and wastewater services.

He explained that the increase in data centre industry growth had not been fully factored into water resource planning timelines. However, it is now apparent that this has the potential to impact water availability for other purposes if even some of the 100 planned data centres use a significant amount of water. The report warns that the rapid expansion of AI and its need for greater cooling could exacerbate this.

WRc emphasises that its recommendations should be interpreted in the context of data centres being “a growing sector and a prioritised area for economic growth, which is classed both as Critical National Infrastructure and an emerging industry”.

The report notes that in 2024, the UK government designated data centres as Critical National Infrastructure, granting them government support during critical incidents and potentially, preferential treatment for planning permission. They are also a key part of the government’s growth ambitions, with £45 billion in private investment committed since July 2024.

Joe also noted that the overall amount of water required for data centres was not the only concern for water resource planning, adding: “A large concern is demand on peak days, and that these would likely coincide with increased domestic demand, as both have temperature as a significant driver.”

He added that the proportionality and equity of any regulation and policy changes should also be considered, as many of these recommendations will apply equally to other sectors, including some that could be found to use more water or to use water less efficiently.

The report recommends that government considers whether additional regulation is merited, such as:

• A reporting framework including policy interventions to enable easier benchmarking of data centre water use. This would consist of mandatory, centralised reporting of (at least a subset of) the metrics required under the EU’s Energy Efficiency Directive.
• England emulates EU practice. The EU is leading the way with regard to developing an internationally recognised efficiency label, with this usefully incorporating water and energy. England could adopt this and consider minimum performance standards.
• Data centres should be listed in a Critical National Infrastructure register to make best use of the framework. This would sit alongside planning process improvements to increase the visibility of data centre applications and promote proactive engagement between data centre designers and water companies.

Further research, engagement and collaboration involving the data centre industry, water industry, regulators and leading experts. These organisations could look at reducing and removing barriers to the use of treated sewage effluent, however, increased collaboration would be beneficial with more general water resource planning. Ongoing engagement is particularly recommended due to the rapid evolution of the data centre industry and technology, which could significantly impact water requirements and opportunities for data centre water efficiency.

It sits at the centre of the market, with access to central market data, processing more than 90,000 transactions each day through the Central Market Operating System (CMOS). MOSL is responsible for the day-to-day smooth running of the market, enabling new companies to enter the market, customers to switch and settlement to take place. The organisation also ensures that everyone involved is held to account for their performance in delivering the best possible service to business customers. MOSL also works with retailers, wholesalers, customers and key stakeholders, such as the water regulator, Ofwat, to identify and implement ways to improve the market through key improvement programmes.