Water
Problem Overview: Water-cooling is the most cost-effective pathway today
Globally, with increasing use of AI, data centers are growing rapidly. India also has grand ambition for AI sovereignty, with data center capacity projected to be 8-10 GW by 2030. Computing chips in data centres generate intense heat. Most data centers globally rely on evaporative cooling, with an open loop cycle. This means that water is evaporated to cool the data centers while cooling, and is lost to the atmosphere. India’s current 1.5GW of data center capacity consumes 37.5 billion litres of water annually, and this consumption will increase exponentially with high intensity of computing and increasing global temperature. Most of the data centers planned for India will be located in water-stressed regions, which only getting worse with climate change, and competing with residential and agricultural demand. [1]
Core Bottlenecks: Cooling with low energy usage, and high reliability
1. Heat-Transfer Limitations & Energy Requirements
Air Cooled data centers consume less water, but more energy, which can drive costs and emissions. Water’s higher thermal conductivity and specific heat capacity allow it to absorb and transfer heat more efficiently, and hence it is often considered the best solutions so far.
2. Increasing Heat Density
With increasing compute, the heat density from chips is expected to increase, further adding the stress on cooling solutions. Non-latent heat cooling methods struggle to deal with increasing heat evacuation rates
There has been progress to develop alternative direct cooling solutions like liquid immersion and direct-to-chip cooling. However, these solutions today are expensive and run the risk of leakage that can destroy expensive equipment. Most data center operators still plan to continue using air / open-loop water cooled systems. There are also solutions that deliver early-warning signal for demand spikes, enabling cooling systems to respond before chip temperatures rise and performance stalls, but they can only optimize cooling and have limits. [2]
Existing Approaches and Technology Readiness
Direct liquid cooling
Most commercial advanced after air cooled, but challenges on open loop
Immersion cooling
Achieves low PUE and zero water usage, but high capex and safety issues
Passive closed loop cooling tech
Eliminate water consumption entirely while using latent heat, but not commercial
Where is the white-space for innovation?
For India’s climate and water condition, current solutions are not the most effective at managing heat evacuation while maintaining low PUE and WUE. There is a need for passive / low-energy solutions that can cool GPUs with high reliability, low contact risk and reasonable cost or increase. In India, since many data centers are being built from scratch, there is an opportunity to build indigenously relevant solutions. The scope for innovation is on two fronts:
Science Breakthrough
→ Alternate sustainable phase-change materials for dual phase immersion cooling
→ Enabling sea-water based or wastewater based cooling with minimal treatment
Engineering Innovation
→ Innovations for effective waste-heat recovery of low-grade heat from GPUs
→ Optimization of cooling demand, demand response for renewable energy utilization, leak detection
How we identify climate innovation opportunities?
- Gupta, S. (2026, April 29). India is using water to build the machines that tell us we are running out of it. Down To Earth.
- Lindsey Li. (2026) Roadmap: The AI data center stack. Bessemer Venture Partners
- Mordor Intelligence. (2026). India data center cooling market size, share, forecast report 2026.
- Calculation based on avoided energy-related emissions of air-cooled systems for 2030 capacity, and India’s baseline grid emissions.
- Calculated based on Adaptation Risk Index
- Kez D.A. (2025). AI-driven cooling technologies for high-performance data centres: state-of-the-art review and future directions, Sustainable Energy Technologies and Assessments
Last Updated On: June 5, 2026
Economic Potential
- India, 20252,300Mn USD[3]
- India, 2030~9,000Mn USD[3]
Impact Potential
- India, 202515.5 Mn Mt CO2e[4]
- Lives Impacted~760-1868 Thousand people's (annual domestic water supply is 37500 Mn lt)
- India, score9/27[5]
- Hazard
- Exposure
- Sensitivity
- Adaptive Capacity
- Vulnerability
| Low | Med | High |
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Water
Biodiversity
p-ARL Score
8/12
Regulatory Outlook
Nascent
Nascent
Spotlight for innovation in India
Research
IIT-Bombay, Heat Pump Laboratory, Rotating Contacting Disks Based Liquid Cooler
Direct Liquid Cooling
Passive Cooling Using Heat Pipes