The four largest hyperscalers reported direct water withdrawals and consumption of about 20 billion gallons worldwide in their latest sustainability reports, against a little over 100 trillion gallons the United States withdraws in a year.
The public argument about data centers and water is about the buildings. Tony Lenoir's research says the water that decides the answer sits upstream, in the power plants that supply them, and that the carbon-free options are among the largest water consumers of all.
"We talk about decarbonization, yeah, but which kind?"
Lenoir is associate director for data centers and energy research at S&P Global, covers the US renewables market, and read the sustainability reports Google, Amazon and Microsoft published in June and July before this conversation was recorded.
I listened to the full interview so you can skip it. 21 minutes of audio, 12 minutes of reading.
Here are the 10 takeaways that matter.
👤 Guest: Tony Lenoir, associate director for data centers and energy research at S&P Global, who covers the US renewables market and has published on solar, wind, battery storage and the market for renewable energy certificates
🎙️ Host: Eric Hanselman, chief analyst for industry research at S&P Global
📰 Published: 1 September 2026 on the Next in Tech feed (S&P Global)
🟣 Apple Podcasts | ⏱️ 21 min | ✅ Time saved: 9 min
Key Takeaways
The hyperscalers have not abandoned decarbonization, they have moved the dates They set a record for power purchase agreements last year, and Amazon alone is above 40 gigawatts of secured clean energy
Secured clean energy is not operating clean energy About half of Microsoft's roughly 40 gigawatts is running today; the rest is still in the pipeline
Solar and wind projects that missed the July 4 construction deadline must be generating by December 31, 2027
Nuclear power is carbon-free and one of the largest water consumers in electricity generation Lenoir puts it level with coal on cooling water, and says hydropower is more water intensive again
The four largest hyperscalers account for 0.02% of what the US withdraws in a year US golf courses take a little over 500 billion gallons annually, against about 20 billion for the hyperscalers
Water stress is a regional question that a national average hides
France's 1974 nuclear program was built for energy security, and carbon-free generation was the by-product
Battery storage is the missing piece, and the US is behind on it Microsoft is backing a Milan-based startup whose technology would dispatch stored energy for eight to 24 hours
1. Hyperscalers Held the Line
Google, Amazon and Microsoft published their latest sustainability reports in June and July, and Meta is expected to disclose at the end of September. Lenoir read them looking for the retreat that rising power demand was supposed to force, and did not find it.
The commitments survived the demand surge. "And really, what our findings show is that they remain committed to decarbonizing their power supply." "They are still signing power purchase agreements left and right. In fact, they hit new records last year. Amazon is well above 40 gigawatts of secured, clean energy capacity." Microsoft is not far behind Amazon and Google is also up there, Lenoir said
The four of them are the corporate renewable market. "If you look at the group, the four hyperscalers, they're each at about 25% of their aggregate."
What did move is the timing. Rising power needs are causing setbacks against the milestones the companies had set, and Lenoir said some executives alluded to that in the reports just released His reading is that they remain on the right path and seem committed to it
Hanselman said the speculation had been that AI demand curves would force a wholesale pullback from decarbonization targets, and that the continued volume of power purchase agreements is the evidence it has not happened He added that the grid still has to become able to shift that energy more flexibly, but that at least the investment is there to fund the more sustainable approaches
2. Secured Is Not Operating
The reported gigawatt totals measure contracts, not electricity. Lenoir drew the distinction that the headline numbers obscure.
There are two different quantities, and only one of them is powering anything. The energy that actually powers a facility is not the same as the energy a company has secured to match its requirements
Most of the secured capacity has not been built. "A lot of the secured, renewable energy capacity is still in the pipeline, so it's not available yet." That leaves the hyperscalers relying on conventional generation in many instances
The split on Microsoft's book is roughly half. "But anyway, yeah, 40 gigawatts of secured clean energy, but about half of that is operating at the moment."
Clean energy has come to include nuclear, Lenoir noted, which is what makes the later part of the conversation about water relevant to these totals
Hanselman pointed out that the delays run in both directions: interconnection queues hold up the generation side and the consumer side alike
3. The 2027 Tax-Credit Clock
Wind and solar are the fastest generation to build, which is why the deadline in last year's budget law decides so much.
The law accelerated the phase-out of the credits. H.R.1, also known as the One Big Beautiful Bill Act, cut short the production and investment tax credits for renewables
The safe-harbor date has already passed. "Basically, those tax credits expire in 2027 for solar and wind unless you safe harbored for an extra four years by beginning construction by July 4th of this year." A site that had not broken ground by then can still claim the credits, but the power plant has to be online by December 31, 2027
"So, the clock is really ticking."
Hanselman restated the two paths — construction started buys the longer timeframe, and everyone else is on the tighter one — and Lenoir agreed it is technically still possible, with opportunities narrowing
The speed advantage is real but incomplete: wind and solar are fast to market on capital investment and standup, and then run into the same problem of getting connected to the grid
4. Renewables Beyond US Policy
The conversation moved off the US, where the incentive picture is worsening, to the places where capacity is going in regardless.
India and China are bringing renewables online in ever-greater capacity, and are now significant factors in the global numbers
Hanselman said he had heard the idea raised that morning that renewables might outpace coal on generation capacity, and that he was not going to hold his breath until it happens
The build-out does not depend on the subsidy. "Renewables definitely have the winds at their backs, regardless of policy incentives that may be in place or not."
The current catalyst is energy security, not climate policy. Lenoir named the conflict in the Middle East and the disruption it created in fossil fuel markets, and said governments are drawing a conclusion about autonomy from it The reason is that the input is not purchased: the fuel that powers a solar or wind plant is the sun or the wind
5. France's 1974 Nuclear Bet
Lenoir used his own country as the worked example of a decarbonization that nobody set out to achieve.
The sequence he gave was the OPEC embargo of 1973 and then the Iranian revolution in 1979
The French response was a state program named after the prime minister. "So they unleashed what was called the Messmer Plan in 1974." "And they embarked on one of the largest, fastest, nuclear energy deployments, ever."
Fifty years on, the country is essentially independent in electricity, and almost all of the French generation fleet is carbon-free, because what is not nuclear is mostly hydropower
The motive was supply, not emissions. Lenoir said the program was not driven by a philosophical pursuit of cleanliness but by scarcity
Hanselman said the decision looks reasonably prescient now and that his understanding is France sells reasonable volumes of capacity to Germany, while flagging that he was not sure whether it is currently a net exporter
The host's own framing of the moment: the Middle East war is the third major shock to the global energy system in five or six years, after COVID in 2020 and Russia's invasion of Ukraine in early 2022. "Three major shocks in six years is a lot."
6. Storage Is the Next Step
Renewables are intermittent and data centers are not allowed to be, which is the whole case for storage.
The uptime requirement is contractual. Data centers run under service-level agreements that keep them on almost all the time, so solar and wind intermittency has to be firmed with storage as far as it can be
One hyperscaler is buying into the technology directly. Microsoft is investing in a battery energy startup Lenoir believes is based in Milan, whose technology he could not name from memory "But, they're talking about a technology that would allow you to dispatch stored energy, from eight to 24 hours."
Lenoir put storage ahead of everything else on the list. "Yeah, I think battery energy storage will be the next differentiator, the next major milestone when it's finally deployed at scale. The US is behind on that front, but it has a lot of battery energy storage in the pipeline" He sees promise in the larger non-lithium-ion technologies and named a couple of different sodium startups
Hanselman made the argument for tolerating inefficiency in storage: when generation is abundant there is a great deal of it, so capturing a reasonable percentage has a real effect on the grid even at well under 100% efficiency
Large-capacity storage is starting to come online in a number of places, which the two agreed brings it closer to base load without quite getting there
7. Water: 0.02% of US Use
Lenoir called the water discussion the part of the sustainability debate with the most misinterpretation in it, and answered it with two figures.
What the hyperscalers actually use on site. "The hyperscalers in their latest sustainability reports reported direct withdrawals and direct consumption totaling about 20 billion gallons of water globally." That is mostly cooling, and the total includes internal estimates for Meta, whose latest report is from last year
The denominator is what changes the picture. "But when you put that in perspective, the US on an annual basis consumes a little over 100 trillion gallons of water annually."
The share is two hundredths of one percent. "So really the amount of direct water consumption across the top four hyperscalers equals 0.02% of annual consumption in the US, annual withdrawals in the US."
The comparison Lenoir reached for is recreational. "Yeah, I believe US golf courses consume a little over 500 billion gallons of water a year, give or take."
Hanselman's summary was that a data center can be a significant local load on water and still be a small fraction of a hundredth of a percent nationally, and that water is unlike electricity, where the share of total demand is genuinely debated
8. Where the Water Bites
The national number is an average, and Lenoir spent the next passage taking it apart.
Regional stress decides who feels a data center. He lives in Utah, a very dry western state, and put Arizona, Nevada and New Mexico in the same position, against the country east of the Mississippi
Withdrawal and consumption are different measurements. Withdrawal is what a facility takes out of the domestic watershed; consumption is what evaporates
Evaporated water is not lost, but it may not come back to the same place. It stays in the water cycle, Lenoir said, while no longer being directly available to the watershed it was withdrawn from
Some communities will therefore feel the direct impact of data center withdrawals far more than others, whatever the national figure says
9. Nuclear's Water Problem
The second half of the water question is the power plant, and this is where the answer stops being comfortable.
Conventional generation is a heavy water user. Coal and gas-fired plants consume a lot of water for cooling, which is what the large cooling towers are doing
Nuclear came back for the AI build-out on the strength of three properties. It is carbon-free, it is baseload, and it is proven technology, which Lenoir said makes it feel like a solution
It is also near the top of the water table. "But actually, conventional, traditional nuclear power generation consumes a lot of water. In fact, it's one of the highest consumers out there."
Hanselman asked directly whether nuclear consumes more water than coal or other fossil sources. "It's up there with coal as the highest consumer for cooling purposes."
Hydropower is worse again, and Lenoir stopped short of quantifying it. "So, there you go, you have another carbon-free electricity generating technology that, yes, does not lead to emissions, but there are evaporation considerations there." He said hydropower is complicated and the evaporation metrics vary, and declined to go further
The conclusion is an argument for the intermittent sources. Wind and solar need no water beyond a few gallons for cleaning and maintenance, nothing on the scale of a full power plant
10. Hot and Dry Cools Better
The last stretch was about siting, and about the fact that every choice buys one problem with another.
Evaporative cooling towers are among the most effective ways to cool a facility, and where they are effective depends on the weather "That's going to be particularly effective in a hot and dry climate. Hot and humid, less so." A humid site therefore consumes more water and more power for the same result
Climate conditions at the chosen location are a critical factor in the resulting carbon footprint and water usage, Lenoir said, which makes siting one of the largest variables in the whole calculation
Hanselman pushed the logic to its limit: a site north of the Arctic Circle or in Iceland solves the cooling problem and creates a latency problem, because the building is now physically far from its users
Neither of them offered a single answer. Hanselman's framing was that these are complex relationships where pushing on one side of the equation makes consumption appear on another, and Lenoir agreed it is very difficult, with a lot of parameters to weigh
Bonus Insights
Hanselman opened by noting that Next in Tech has covered data center capabilities from several angles already, including the insurance requirements and the broader financial perspectives
Lenoir said a group of colleagues had been having the cooling-tower conversation that same morning, which is how the siting example reached the episode
Asked what keeps him interested, Lenoir gave the shortest answer in the episode. "Also keeps us humble."
Hanselman closed by trailing an upcoming webinar and a follow-up episode on what is happening in communities more broadly, and the objections data center projects are meeting there
Lenoir's bottom line is that the sustainability question for a data center has moved off the building and onto the power plant behind it, where the carbon-free choice and the low-water choice are not the same choice.
Products, Companies & Tools Mentioned
Amazon, Microsoft, Google and Meta (The top four hyperscalers, which Lenoir said dominate the corporate renewable market at about 25% of the group's aggregate each; Amazon is above 40 gigawatts of secured clean energy and about half of Microsoft's comparable total is operating)
A Milan-based battery energy startup (Microsoft is investing in it, Lenoir said; he could not recall the technology, which would dispatch stored energy for eight to 24 hours)
Books & Resources Mentioned
The 2026 sustainability reports of Google, Amazon and Microsoft, with Meta still to come (Published in June and July and the basis for Lenoir's findings; Meta is expected at the end of September, so its share of the 20 billion gallon water figure is an internal estimate)
H.R.1, the One Big Beautiful Bill Act (Last year's budget law, which accelerated the phase-out of the production and investment tax credits for wind and solar)
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