SACRAMENTO, July 26 — A proposed 330-megawatt artificial intelligence data centre in California reversed its initial pledge not to draw water from the Colorado River, filing a request for 260 million gallons per year. That number — 260 million gallons annually — is the figure that matters for investors and water managers watching the collision of AI’s energy appetite with chronic drought. The facility, part of a wave of energy-intensive AI data centres, now needs the water to cool its servers.
By the numbers, that draw works out to roughly 0.06% of California’s total yearly Colorado River allocation of 4.4 million acre-feet. The Colorado River itself serves about 40 million people and irrigates 5.5 million acres across seven U.S. states and Mexico.
The bottom line: even a small percentage of a stressed system is drawing scrutiny.
Water Demand Meets Megadrought
Allocations on the river are governed by the Colorado River Compact of 1922, which split the flow between Upper and Lower Basins. California holds the single largest allocation. Under the 2007 Interim Guidelines, states have operated under shortage-sharing agreements, and the 2019 Drought Contingency Plan further reduced deliveries to Arizona and Nevada.
Opponents argue the data centre’s water request is badly needed amid a 23-year megadrought that has shrunk Lake Mead to historic lows. Environmental groups including the Sierra Club and the Colorado River Water Users Association have criticised the reversal.
The company behind the facility has not been publicly named, but it is reported to be a major cloud computing provider. That anonymity does not shield the project from review. The data centre is undergoing environmental review under the California Environmental Quality Act.
A final decision by the State Water Resources Control Board is expected by late 2025. Investors will note the timeline: the decision comes after the 2026 date of this article, meaning the review is ongoing.
The request represents a concrete line item in the growing competition between tech infrastructure and water supply in the arid Southwest.
What to Watch Next
The State Water Resources Control Board’s late-2025 decision will determine whether the 260-million-gallon request is approved, modified, or denied. The project’s ultimate fate hinges on how regulators balance AI-driven data centre growth against the Colorado River’s 23-year deficit and the Lake Mead water levels that sit at historic lows. For now, the figure that matters remains 260 million gallons per year — and the pending review under California’s environmental law.
Sources
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