[00:00:00] Speaker A: The infrastructure, the connectivity infrastructure and data transmission infrastructure is there ready to connect the area to really the rest of the world when it comes to data?
[00:00:18] Speaker B: I am Reece Tisdall and this is the Future of Water in which we talk about all the ways which companies, utilities and people addressing the challenges and opportunities in water. This is episode 115 and I can already tell it's going to be a great one. That's because today I'm joined by my colleagues Keith Hayes and Chloe Meyer for a deep dive into what seems to be one of the most pressing and fastest evolving intersections in the water landscape, data centers and water management. This conversation really is partly sparked by an AWS announcement in Spain and it couldn't be more timely. It has to do with data center development and our Europe based team has also just published new analysis exploring the scale and trajectory of the data center developments across the region, particularly with a focus on Spain's escalating water stress. That's where the convergence is and this insight investment pours into Spain. Data centers really dives into how hyperscale build outs are colliding with regional water resource constraints. But what I like about the analysis is it's how it moves beyond surface and tries, it seems, to unpack the geographic shift in data center investments towards Southern Europe, at least as far as Spanish developers are hoping for and concerned about rising competition among water solutions providers navigating high stakes, high growth markets and opportunities for things like water management for these data centers. The role surprisingly what is now legacy infrastructure, and that is the role of things like in the locations of undersea cable networks in shaping site selections. It's hard to believe that undersea cables for Internet and things like that are legacy infrastructure, but they are in today's fast growing world. And then lastly, the growing imperative for transparent sustainable water strategies from the big tech or tech giants if you will, and what they're saying and what they're providing to local communities and stakeholders. But before we do that, you're going to have to bear with me just a little bit longer. Hear about what's caught my attention this past week, that is CYR Week. The newly appointed U.S. secretary of Energy Chris Wright apparently pulled no punches at the annual energy conference and his message was clear fossil fuels aren't going anywhere. The energy transition narrative, while continuing to evolve, evolving seemingly in a different direction under a new administration.
Secretary Wright had emphasized that coal, natural gas and LNG remain foundational to global energy systems, particularly in meeting rising demand from things like AI, data centers and industrial development. Not going to lie. I agree it's going to take a portfolio approach, but the world's changing a little bit and what the administration's approach is and what they're funding and so forth. But Secretary Wright had called for expanding fossil fuels in developing regions, especially in Africa, arguing that coal and gas are as essential to their economic ascent as they were for the US this is sort of the similar approach that China has taken historically. And the stance really underscores a longer Runway for traditional fuels raising important flags for the water intensive energy systems. So I think that is why we at Bluefield care about this is what does this mean for water demand, Water management within the power and or energy networks. And so that's something we're focusing on. AI and data center growth are triggering what seems to be exponential electricity demand increasing. What will increase pressure if not already on power generation assets? Many of these especially gas fired plants, while more water efficient because they're new and they're more focused on that. They do depend still heavily on water for cooling. So the knock on effect is greater scrutiny on things like water sourcing, thermal discharge and regulatory compliance depending on where the systems are. It is worth pointing out that several months ago Bluefield released an entire report on the energy transition. And one thing that came out of it was, you know, energy demand, or power demand, should I say more specifically in the US has grown since post World War II, but really over the past decade to two decades in the US it's been relatively flat, growing at only about 0.7% annually. So it's really the demand has not been climbing. But if AI and data centers live up to their expectations, or at least all the hype that everybody's talking about, the power demand could triple or quadruple pretty quickly. And that's already in planning. And so that's really where the rub is between data centers, the power sector and I think for this discussion, water, water demand and water management. One last point I wanted to bring out, that's what the Secretary's comments made me think about. That is the winners under the new administration, oil and gas producers are certainly poised to benefit from US crude and oil output. As oil output surpasses 10, I think, is it 10 million barrels per day? And LNG exports have also climbed significantly as well. Both of these since 2015 when it became legal for companies to export to other markets. In the case of natural gas, I've talked about this a number of times. Russia, Ukraine, that conflict has driven a spike in energy prices, particularly in Europe, for natural Gas. And as a result, US Producers have benefited. So it seems like the market opportunity or addressable market for energy producers in the US Is huge. And so what does that mean for water? Well, what it means is midstream water players like ARIS and Select Water Solutions, they're set to gain their roles in produce, water management, recycling, infrastructure expansion become even more critical amid these booming exports. That is in addition to whatever happens with data centers and AI. So the midstream water sector is a really interesting space, and we're looking forward to seeing how that changes over time. So those are really three things that came out of the keynote address a week or two ago in Houston that I thought I'd share with you. With that being said, let's get to it. So get into conversation with Keith Hayes and Chloe Meyer.
All right, I'm joined by Keith Hayes and Chloe Meyer. Guys, how's it going? Chloe, what's going on?
[00:06:59] Speaker A: Hello. Hi, everyone. Everything's good here.
[00:07:02] Speaker B: Keith, what about you?
[00:07:03] Speaker C: I'm doing good, thanks. Reece, Good to. Good to be back on the pod.
[00:07:07] Speaker B: I know. I don't know if we've. We've done one this year yet.
[00:07:09] Speaker C: I don't think we have. It's been, it's been a while.
[00:07:12] Speaker B: It's already March, which is a little distressing. But as we were just talking about what we're doing this weekend, and it sounds like either sitting in the cold, pouring rain or going riding, which actually sounds kind of nice, but. All right, well, look, you guys have been digging into some research on data centers, particularly in Europe, in Spain. There was some news that came out of Spain about aws, making some announcements. And so you guys put together some research. And so Chloe, why don't we start with you? You sort of took the lead on this. Why are we digging into data centers? If it's not obvious for the listeners, why are we digging into it? Why? What's happening in Europe and what was the cause for the research net?
[00:07:55] Speaker A: Right. So, yeah, we just looked at the Spanish market in particular, and obviously there is this context of exponential growth in global data consumption. But more than this, with the rise, emergence, and now common use of artificial intelligence, AI, there is a need for more processing capacity. Right. And so in this context, what we're seeing is that Spain is really emerging as a key data center hub here in Europe. There are billions of announced investments for the next few years. And a region, in particular, the region of Aragon in the northeast of Spain, is centering or capturing a load of a lot of the focus. I Think There are over 30 billion euros of announced investment already that will go into the market within the next few years. And I think looking at Spain, it's interesting to see that the sector is at a sort of inflection point. There is a need to balance the economic growth of data centers and the constraints in terms of resources that it faces, whether it is we're talking about land or availability of space, but also the constraints associated with energy and of course the ones with water. Right. And I think in particular in Spain we see a lot of traction from those hyperscalers. So those really large data centers that are for enterprises with high data volume needs like Google, Microsoft, Amazon Web Services or Meta, for instance, and obviously there are larger infrastructure, larger assets, so their energy and water consumption is also higher than the colocation data centers, for instance, which means that companies are increasingly looking at the project viability and how to implement sustainability strategies to ensure the ongoing development of those infrastructure.
[00:10:05] Speaker B: Yeah, I think it's, you know, it's hard to believe how much money is going into this segment and it's also being evidenced just by the interest from our clients. We've put out a US industrial forecast. Part of that we're on is on data centers and the growth. It's the highest growth segment of the forecast. I suspect the same will be said or it'll come out in our upcoming Europe industrial report as well. It's going to be a big growth segment. But what's interesting is what I liked about this research note was, you know, talking about Spain because there are different dynamics, also competitive. I don't know if that's the right word, but what does make Spain an attractive market for data centers and how does it compare to other established data hubs? And I think you, you guys threw out the term Flap D. Maybe you could explain what Flap D is, what it means and start from there. Yeah, so what, what is interesting about Spain as far as development, growth?
[00:11:02] Speaker A: Right. So the Flap D markets as we call them, or the historical data center hubs in, in Europe, so it stands for regions of Frankfurt, London, Amsterdam, Paris, as well as as Dublin. And what we are seeing, which is really fueling the attractivity of the Spanish market at the moment, is that those historical hubs are seeing or facing increasing constraints back to the questions of lawns, energy and water. Right. They have less available land surfaces. They also are facing increases, or have been facing for a few years now, increases in the cost of energy. And that has led the data centers developers to look at other markets. And this is where Spain comes in strongly because first the costs of land and energy is lower in Spain, there is more land availability as well. And looking specifically at the question of energy, what we're seeing with Spain, where there's a high production of renewable energy and renewable electricity is, is that last year, for instance, around 10% of the sport market prices were actually below zero because of that excess of renewables production. So low costs of land, low cost of energy. And also, Spain is really located as at a strategic location. It serves as a bridge between Europe, North Africa, but also the Atlantic side of things, whether North America, but also Latin America. And it's connected to those regions through available submarine fiber optic cables. So the infrastructure, the connectivity infrastructure and data transmission infrastructure is there already to connect the area to really the rest of the world when it comes to data. And finally, the government is really tapping into the market by offering incentives and fast tracked approvals for key projects. I think a few weeks ago, a month ago, there was the announcement of Meta's 1 billion data center in Talavera de la Reina region. So those fast tracked approval were also definitely attracting investors to the country.
[00:13:33] Speaker B: Yeah. And so that, that leads to the next question. I think that's super interesting because everybody sees it. In fact, it's moving so fast. But on the back end of all of this, which is really our specialty or specialization, that is water. And what does this mean for water use in data centers?
It seems to be a growing concern. I think, you know, there are questions about, you know, how much water is used at a data center. What about dry cooling is dry cooling. But if the use is dry cooling, you know, what does that mean for the power plants or power generation supporting those facilities? Do they use more water? And so on. So, Keith, maybe just not leave you hanging out there. Let's start with you. So water uses in data centers is a growing concern. So how are some of the companies at least addressing it? And if you have any numbers to throw out there to provide some context, that would be great.
[00:14:25] Speaker C: Yeah, and I'm happy to hang. And also, Chloe, I'm impressed with your pronunciation of Talavera de la Reina. If I had to do the same thing in French, it would be a disaster.
So the issue around data centers, water consumption, I think we don't know a lot of times, I mean, it is relatively cloaked in secrecy. It's a strategic input to the way these pieces of infrastructure work. So yes, we've been moving around this number of one and a half liters of water per Kilowatt hour. On the other hand, we've heard that some can be way more efficient than that. When these data centers use water. Depends a lot on the temperature, environment that they're in, right? So, you know, we know that there can be some data centers where if the temperature is below a certain point, it's all air cooling, and it'll only do liquid cooling if it gets hotter than that. So obviously, a place like Spain, where temperatures in a place like Zaragoza, for example, can average over 25, almost 30 degrees in the summer, that would mean perhaps you'd use more water or not. But again, a lot of these agreements with municipalities to supply water are not fully disclosed. It's not transparent. You know, even when we look at this in the U.S. right, in places like Loudoun County, Virginia, water, which has been a cluster of data centers for probably over a decade now, we don't know exactly how much all those data centers are using, even though it's very well known that they're using a lot of water. So, yeah, we've been using our models, one and a half liters, I think, per kilowatt hour. We have seen that that number seems to be growing. And one of the clearest indicators we saw recently was Microsoft saying that their usage had grown almost 18% since 2020. And a lot of that specifically is because of the advent of artificial intelligence. Right? And so what's happening here is that, okay, these things are already being built out a lot. And then when they're built, their usage, their load that they're carrying and how those servers are operating is going up. And so how quickly they can build the data centers is often being driven by all that AI demand. And again, I think, as Khloe was saying before, there are a lot of moving parts to this, right? It is getting the land. It's also getting that power transmission line. And then depending on that and where it is, then you got to figure out your water sourcing strategy. And what we've seen from all the hyper, hyperscalers, pretty much all data centers, is that, you know, they don't. They don't. They don't draw from some bulk water source that is sort of off the grid. They are not drawing from their own surface water allocation. They are drawing from the municipal water network. So obviously, that's putting data center demand in direct competition or needs to be in harmony with all that domestic use, commercial and industrial use that also may be on municipal system.
So that is what leads to, you know, a lot of tension, a lot of spotlight is being shined on these, these installations. I think in Spain, we've been talking about Aragon, but also in Asturias. You know, these are, these are big drivers for areas of Spain that have had relatively low employment levels. So getting these types of investments is, is very interesting. But it's also putting pressure on these hyperscalers to pursue some mitigation of what their water footprint looks like. And Chloe, I know you probably have looked at some of the measures that they've taken to mitigate that footprint.
[00:18:20] Speaker B: Yeah, yeah, I mean, I guess, yeah, that's a good question. So, Chloe, what are some of the trade offs that have been made? What else have they done to head off the concerns?
[00:18:30] Speaker A: Right, so we do see some companies opting for air cooling processes instead of water cooling processes, or others opting for, or trying to improve to the maximum ability, their maximum ability, the water cooling processes. I think what's interesting to me is how some of those hyperscalers and data centers, developers, companies have also been looking at trade offs outside of the perimeter and of the data center itself by going into or investing into water optimization projects in partnership with municipalities or providing wastewater, recycled, recycled wastewater for local farmers, for instance. So sort of taking a step back and looking at the water issue and the water challenge, not just from the lens of the data center itself, but also the lens of the broader ecosystem that it is set up in. And again, in Erigan's region, we've seen, for instance, Amazon Web Services has collaborated with a company called Fidotech, which provides leak detection services to support municipalities with leak detection services and mending those leaks. So not just optimizing water usage into the data center, but also trying to optimize water consumption and reduce water scarcity at the scale of the municipality that those infrastructure are set in. And to that extent, Amazon Web Services has also committed some additional funding, around 17 million euros, to other water saving and local infrastructure investment projects in that region.
[00:20:27] Speaker B: So if I put my cynical hat on, maybe Keith, I'll throw this back at you, is I look at that and so AWS or Microsoft, pick your big tech company, they walk in and they say, hey, we want to develop a large data center, hyperscale data center. It's going to use a lot of water and it's going to draw from your system. But as we step back to Chloe's point, we're going to take a broader view at your local network and say, you know, actually you've got all these other problems. So our drawdown of your water supply or our withdrawals from your Water supply, you know, that'll be there, but we're going to go in and fix all your, find other problems and just make you holistically more efficient. Is that, that's what we're getting at. And, and if it's within the network, it makes sense. If they're doing it elsewhere, you know, water is very local, then it's kind of a paper game.
[00:21:20] Speaker C: Yeah, no, it is. And again, the challenge here is that there is minimal transparency around this in terms of the split of supply and how that's being allocated, you know, where exactly on the network it's connecting, what are the treatment levels of the water that is arriving at the facility? There are a lot of particulars, there are a lot of details around this that, that we don't know. Which is, which is frustrating but at the same time understandable. I would assume from the company's point of view, it is a, it is a strategic advantage for them if they come up with a way to do it more cheaply and more efficiently. But you know, I think the, the idea here is that it is building public trust by investing in those kinds of projects. So there's a huge PR element obviously to what these hyperscalers are doing in financing these types of projects. And it's about showing that just as they do with their carbon footprint where they try and offset all of their energy consumption with renewables, they are trying to say that they're doing the same thing with water. They roll it all into their sustainability report. They have chief sustainability officers that are selecting which projects to do.
But I think it is a positive sign in that they can in some way leave some of these networks a bit better than they came in there with. And that's definitely been the case in a couple places in Spain where there's a lot of leakage. There's another project actually that, that Microsoft is doing in Brazil outside of Sao Paulo, where they're also financing leak detection on the network of Campinas, which will help them improve relationships with that city around the data center they have there. So using Fidotech as a technology partner, it's, it's bringing to bear AI tools, it's cutting non revenue water and hopefully it's making everything more efficient. But again, we don't know the net impact here, do we? And we also don't know about contingencies. Right. And I think that's one thing of concern. And as we've seen, the world's getting to be a more uncertain place in many ways. Definitely weather wise, we had catastrophic Flooding at the end of October here last year in Valencia, we've been in, we were in a really horrible drought in Catalonia for almost three years. So what happens, for instance, if the water supply availability goes below a certain threshold in Zaragoza where they are siting, this data center? We don't know exactly what that threshold is. What would be the triggers, what would be the measures to deal with it. And you know, this stuff is showing up in local press all the time. You have active environmental activists that are clamoring for any kinds of details to try and shine some transparency on this issue. But you know, at the same time it is, it is positive that these corporations are looking beyond, you know, the walls of their data center and their server racks and thinking longer term. And they're generating a lot of jobs too. So at least a lot of jobs in the construction phase. I think there is some argument about what are the long term number of positions that are going to be in some of these facilities as they become more and more automated. But you know, that's, that's the rub. And I think, you know, seeing the agriculture industry, domestic competition for use of this water is going to keep playing out all over Spain and in the rest of Europe and wherever they're going to put these data centers.
[00:25:28] Speaker B: Yeah, and I don't mean to make light of it, and we'll change gears in a second, but that is, you know, for AWS, to Chloe's point, AWS commits, you know, 17 million euros to water related projects in Aragon. That's like lunch for them. You know, as far as like volume or number of euros. If anything, they do bring serious bags of money to the table if needed. If it's that important, they'll do it.
[00:25:56] Speaker C: Yeah. I mean, it doesn't. Yeah, no, just to reconfirm that. I mean, Zaragoza is not London or Dublin or, you know, one of these rich cities. I mean, it's bringing funding to cities that are not necessarily tier one in terms of gdp. So that's definitely a consideration as well.
[00:26:17] Speaker B: And so. All right, well, let's change gears for a second. So with regions like Aragon and you know, seeing exponential data center growth, if that's what it is, exponential, how are they responding? I mean, you mentioned sort of like AWS and Fido. What, what are ways that, that they're addressing this?
Keith, we'll throw it at you. Why don't we start with you and then close?
[00:26:41] Speaker C: Yeah, yeah. No, I mean, I think so. The, as we were saying before, AI is driving greater use. I think we've Seen that even just power demand in the US is supposed to increase another 4% over the next 5, 10 years just because of AI being used at data centers, which is massive. And that trend is obviously following in Europe. AI as a consumer of water is a huge concern. At the same time, AI can be used to more efficiently run that water infrastructure. Right. So identifying leaks or optimizing energy use, or optimizing the lifetime of the assets, the pipes that are filtering that are delivering that water to these facilities. So AI is a, is a potential tool to help mitigate some of that water footprint. Recycling water on site as well is, is a key aspect of it. And we know that several wastewater treatment plants have been tapped in the U.S. for instance, for treated wastewater. So purple pipe networks being built out that can also deliver water to data centers. We think we're going to be seeing that definitely more in Europe, treating the water to a degree that it can be fed into those cooling systems.
And then obviously there's a lot of talk about alternative cooling technologies, so immersion cooling, where you actually directly cooling the chip itself more precisely, almost like drip irrigation inside of a data server. So this is all very interesting stuff. It's pretty cutting edge. And it sounds like if these companies have so much resources to bear on perfecting the way this kind of infrastructure works, we should be able to find a way to engineer this in a more sustainable way. But again, I think we're all waiting for more clarity on the, on the data around that.
[00:28:56] Speaker B: So, Chloe, I mean, what other areas, at least in Aragon, are you seeing? What else is happening as far as the local communities, how are they responding?
[00:29:07] Speaker A: Right. I think one of the questions for the Spanish market is the ability of the grid network to sustain the energy demand from those data centers.
So I would expect Spain to, if that growth rate from the data centers is meant to be sustained, to invest into the energy grid to sustain that electricity demand. And I think to that extent, what we are starting to see emerge in the country is increasing investment in the data center space from the electricity providers and the electricity players on the market. They are positioned as they already have power facility or power plant production, power production plants, they already have connections granted access to the grid network. And we do see some that are repurposing older facilities into data centers and likely provide, will offer to the market a almost turnkey solution where you. The access to the water is already granted, the access to the energy network is already granted. So it's definitely an interesting dynamic there and it's something that is happening In France as well. Edf, the state provider of energy and electricity, have announced that some facilities will be offered as data centers in the future building on that connection to the grid network already.
[00:30:41] Speaker B: Yeah, it'll be interesting to see how it plays out. I think even in the intro was talking about the new Secretary of Energy from the US they were talking about the role of energy production. And demand is traditionally, at least in the US has been flat. It's growing at 0.7% a year. It's obviously really mature.
You can watch the phases of demand growth since World War II, but the last couple decades been mostly flat. But with the role of AI and data centers it could triple or quadruple really quickly. And it is going to put a lot of pressure. Everybody is probably more concerned about transmission grid siting, but not a lot are talking about sort of the role of water. And I know the water sector or at least the data center developers are talking about using things like dry cooling. But the question is sure you can air cool or dry cool these systems, but does that just push the water usage over to the thermal power plant rather than being on site for on site cooling? So there is a trade off that is going to happen. I mean we talk, Keith, you already talked a little bit about sort of AI driven growth and Chloe, you touched upon it as well. So that's going to be the question is how overhyped is this or not. So given the scale sort of get to the just sort of wrap things up. But given the scale of investment Spain, the competing pressures on water and energy, how do you see it evolving or adapting over the next five to ten years? Keith, why don't we start with you?
[00:32:19] Speaker C: You know, I mean, I think we're going to see a lot more efficiency probably around the, the water issue. So you know, that kind of optimization I was mentioning before around you know, chemical dose dosing, the quality control of the, the water inside the treatment plant that's going into the data center and the cooling system as well. I think all of that will probably reach a point where hopefully it's not as much of an issue. I mean they are going to keep building these things very quickly. It's always going to be of some concern. But this isn't a, it shouldn't be as much of a draw on the water systems as I think we're all pretty concerned about right now. Just, you know, a lot of the, a lot of the worry is just about what we don't know. So a lot of innovation there and innovation from many different players. Right. And one of the cool things about data centers is we're not just talking about the water sector, we're talking about energy companies, which, you know, and some of them are trying to get into this game and see it as a, as a growth opportunity for them. There's technology players so making sure that the fiber optic cables are there. So, you know, everybody kind of wants a piece of this business and that's going to be, I think, a driver for innovation is how all those pieces come together. But also just the, I think that the governance around data centers is going to be a key aspect of how this plays out as well. And when I say governors, and I'm not just talking about like the siting, but you know, data sovereignty, cybersecurity, all of that is obviously coming into play more and more. So if data centers are going to be kind of the backbone of how a lot of things we're on, they're also going to be subject to a lot of controls and regulations that we're probably definitely going to see more in Europe perhaps than we are going to see in the US in the near future.
[00:34:23] Speaker B: What about you Chloe? What do you see going forward over the next five to 10 years?
[00:34:28] Speaker A: Right. So I think building on the emergence or increasing use of those partnerships with local communities to ensure water savings at the local level and in areas where data centers are located. I think this feeds into increasing the acceptability of data centers in areas where it may not be well perceived, but it also feeds into those companies ESG goals. Right. A number of hyperscalers have companies have goals to be energy positive but also water positive or achieve net zero water targets. And I think as much as optimization can take place within the data centers, at some point those larger scale water savings programs will also feed into the water savings reporting done by those companies and will increasingly be a tool for them to achieve their water goals and improve their water strategy or deliver their water strategy. So I would expect this trend to increase in the, in the next few years as well.
[00:35:45] Speaker B: I have one question for you Chloe, because you're in France, I mean does like edf, right. France is obviously nuclear represents a large share of the power generation fleet. Are there discussions in France about, hey, if AI? I mean there's probably a different discussion by AI and its role overall than maybe what we see in the US but maybe it's the same. But the point is given the role of nuclear in France, is there more discussion about hey, we should be building more nuclear facilities to support this build.
[00:36:17] Speaker A: Out Right, so that's, that's a good question. So France is already in the process of building new facilities because some of the existing one or reaching a certain age and being our plans, there are plans to retire them within the next few decades. So construction is ongoing already. I think it's definitely part of the discussion and concerns, as in other countries, like you've pointed out, around energy demand and not just with AI and data centers, but also the increasing use of electric vehicles, for instance. It also drives the demand for energy and electricity consumption in general and generally speaking, the green transition and again, increasing reliance on green electricity or nuclear electricity in France. It's definitely driving discussion around how to tackle this and ensure that the infrastructure is there to deliver and cover the needs. Missile power.
[00:37:20] Speaker B: Yeah, I think that's super interesting because that's a similar yet albeit different conversation. At least in the US when it comes to nuclear, there's discussions about bringing back, you know, Three Mile island, which is an old facility, old nuclear facility that Microsoft is at least has a contract or some agreement to be in power off taker and pay for the upgrades or rehabilitation of that.
The other issue is like building nuclear in the US 20 years is probably a short timeline as far as project development, permitting. That may change relatively quickly. We'll see regulatory wise, given what's happening in Washington, the focus on being able to build things more quickly such as this. So it'll be interesting. I mean, I think at the end, you know, as I think about it, thinking about what you guys have talked about, the role of data centers, it's really just a power discussion in many respects is how do we. Cool. How do we.
Because that's really where the water demand. That's what it's for. And so then the question is there's an opportunity for the power sector, whether you be edf a nuclear power generator or you be a renewable power generator like an Iberdrola in Spain, or you know, the other side of it is then there's the water treatment side. You know, whether you're a company like Ecolab, where you're just treating the produced or cooling water so there aren't things like Legionella outbreaks within the data, data center facility. So there are opportunities surrounding this problem. But then Keith, as you pointed out, it's sort of multifaceted in a sense. It's not just, oh, here's a data center, there's water management because the water management or impact is felt not only on the data center, it's felt at the power facility, but Then there are competing resources, whether it be for agriculture or the community itself. And there's not a lot of transparency.
[00:39:18] Speaker C: Yeah, no, and I think, you know, to your point about just like the energy aspect of it, when we started writing this research note, I mean Chloe and I were looking at a, an unconfirmed announcement from Repsol, which is Spain's primary oil and gas player, to get into the data center business. And that for us was an interesting indicator of how all major infrastructure companies and energy players are looking at this. So definitely, definitely would agree with what you're saying.
It does circle around just where are we going to get enough power for this stuff? Which then draws a lot of the onus on transmission networks as well. And are there enough power lines? I mean, I think we've seen that there are queues quite long in some markets to try and get a, access to a transmission line which makes Spain, as Chloe was saying before that much more attractive is that there is, there is availability there. But I think going back to our days as renewable energy market analysts, there is this almost wild west feeling right now about how many almost real estate developers are running around trying to grab land and almost speculatively thinking data centers are going to be everywhere.
Although at the same time we're seeing that it's not, it's not like a solar power farm or a wind farm. It is more complicated than that. So these things can't pop up like mushrooms as one might think. But at the same time, I mean there is this boom going on right now and I think the other thought I had was are we going to get to a place where there's just much more of like a data center in a box. So I think Chloe was saying before, more like one stop shop, more turnkey solutions being provided and I think we'll definitely start to see that. You already can see like there's the containerized treatment aspect of it that we already have in the water industry and that can be calibrated depending on whatever is the quality of the immunity water that the data centers are drawing from. But then, you know, is there also a way to standardize all the rest which would bring the cost down for data centers and hopefully make them more efficient as well?
[00:41:51] Speaker B: Yeah, it's super interesting. I think the data center, it's, it's going to change a lot of things of what we do. It's changing, like I said, the communities, the power sector, the power demand. We haven't even gotten into what it all means for society and you know, socially, culturally, educationally we'll save that for another podcast. But with that being said, I'll set you guys free, let you guys the road. Enjoy the weekend because it's early Friday and at least it is the East Coast U.S. and you guys are closer to the weekend than I am. So enjoy and let's talk again soon.
[00:42:29] Speaker C: You do stay hydrated.
[00:42:31] Speaker A: All right, thank you.
[00:42:32] Speaker B: All right, take care.
All right. That was great to have them on. I'm not going to lie. It's good winding about the data center sector and what it means, water. It's actually pretty complex and I hear a couple quick thoughts just based on that conversation that we just had. And that is, yeah, the role of water for data centers is complex. It's not just, you know, on site water usage and cooling. It's impacted by the power system, the power systems, demand for water. So if, if companies are in that space, that landscape may be changing. Then lastly, not to be overlooked and arguably the most important at the end of the day, and that is the community itself and there are other, there, there is competition for resources, whether it be from other industries, other, you know, the domestic resonances as well as, you know, agriculture as well. The other thing that jumped out at me just in the conversation itself, I don't really have notes on this, but that is the difference between the US and Europe when it comes to supporting or powering these data centers. Right? So in the case of Chloe and Keith, they're talking a lot about nuclear, they're talking about renewables. These are carbon less or carbon limited solutions and technologies. In the intro, I talked about the new secretary, Chris Wright from the Department of Energy, talking about, you know, fossil fuels or what's going to power this. That's what we have, that's what we're going to do. So there is this push and pull between what are the power solutions, some of which are water intensive, some of which are not. So that impacts the water sector itself. And then lastly, one thing that also jumps out to me, and this is, you know, if I put my cynical hat back on again, is, is the discussion because of the spike or potential spike in power demand, is a discussion going to shift from carbon mitigation over the last decade or two, particularly during an era in the US at least, of low power demand, where it was pretty flat, we were able to have that discussion. Now we're seeing this spike. And so now are the property developers, the communities driven by the economic engine, the potential for construction jobs. To build these, we need to build these things. We can't wait around for renewables or backup battery power. We just need we've got lots of natural gas in the us. We still have coal. Let's not decommission coal. So are we going to shift more towards fossil fuels? And so once again, question about the opportunities for water management in the water sector do evolve with this discussion. It all hinges on data centers and AI. So they are disrupting a number of different pieces of infrastructure. They influence the communities, the water utilities themselves because the most of them are connected to the municipal water utility, they are connected to power, electric power infrastructure. So it impacts that as well as well as community. So lots of questions. Hopefully that's clear enough to at least think about. I know that at Bluefield we will be talking more about this partly because of conversations like this. So that being said, that's a wrap for our 115th episode. So thanks for being part of the journey in 2025. We're almost to the quarter of the way home, which at my age is getting a little sad. Makes me a little scared for what's to come. Before we sign off. If you're in Boston, Barcelona. I'm going to throw out a couple other places. Paris, New York, the Bay Area, Chicago. Let us know. We'd enjoy the opportunity for a meeting. Send us a
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Sa.
