Energy constraints loom larger than water for Colorado AI boom, experts say

At Colorado Climate Week in Boulder, experts highlighted that the artificial intelligence boom is significantly impacting local infrastructure, particularly concerning grid demand, water use, and data center construction. Lon Huber, Senior Vice President for Xcel Energy, noted that while other states like Texas are seeing booming data center development due to abundant power, Colorado currently lacks incentives. Colorado Energy Office Director Will Toor emphasized that energy use from AI is projected to become a significant share of the state's overall electric demand, potentially up to 20% if the market grows quickly, making it a far greater concern than water use, which is estimated at only 0.1% of the state's consumptive water. While acknowledging the importance of water and cooling efficiency, Toor stated that energy policy is the bigger constraint. In response to these developments, Denver Mayor Mike Johnston's administration, which supports AI-driven products for city revenue, has advanced legislation for a one-year moratorium on new data center construction starting May 21. This pause aims to allow the city to develop specific regulations for data centers, which are currently unregulated in Denver. Concurrently, Colorado state legislators are debating two bills: one offering tax breaks to attract large facilities, supported by a coalition of data center developers, and another requiring data centers to use new renewable energy sources, which environmental advocates say is crucial for the state's carbon goals. Denver Water CEO Alan Salazar also stressed the need to understand the impact of data centers on water delivery and supply.