Microsoft cuts datacentre water use by 25% in FY25

Microsoft has cut the water-use intensity of its datacentres by 25% as of 2025 and replenished more water than it withdrew across its global operations in FY25.

The figures are part of the company's goals to improve datacentre water-use intensity by 40% by 2030 and to become water positive by the same year.

Water use at datacentres has come under greater scrutiny as demand for cloud computing and artificial intelligence services has risen. Operators face growing questions from communities and policymakers about pressure on local water supplies, especially in hotter, drier regions where cooling systems can consume large volumes of water.

Microsoft's average water use effectiveness, measured in litres per kilowatt-hour, fell to 0.27 L/kWh in 2025 from 2.3 L/kWh in the early 2000s. According to the company, that amounts to a reduction of nearly 90% over the period.

About 90% of its owned datacentre fleet now runs on cooling systems that use little water or none at all during operation. A datacentre design introduced in 2024 for AI workloads uses no water for cooling during operations.

Cooling changes

Much of the reduction comes from changes in how Microsoft cools its facilities. It adopted direct air cooling with evaporative assist across its datacentre fleet as early as 2008, reducing reliance on traditional cooling towers that evaporate water year-round.

Under that approach, water is used only when outside temperatures rise above 29.4C. Some sites in Northern Europe require no water for cooling over a full year, while facilities in Dublin and Amsterdam use water less than 5% of the time. In Virginia, water is typically needed for about 10% of the year, rising to as much as 40% in Phoenix.

The newer AI-focused design uses a closed-loop direct-to-chip cooling system that recirculates water without evaporation. Microsoft said this allows it to control temperatures at chip level while avoiding water loss during normal operations.

Alongside new builds, the company has been adjusting settings and controls at older sites to reduce unnecessary cooling. Real-time weather data, operational analytics and routine audits are used to compare actual water consumption with expected performance.

In Phoenix, those changes helped deliver a 23% year-on-year improvement in water use effectiveness in FY25, according to Microsoft. The company is now rolling out the same measures across direct-evaporatively cooled datacentres globally.

Alternative sources

Microsoft is also expanding the use of recycled, reused and non-potable water in locations where demand is highest. In Quincy, Washington, Singapore and San Antonio, Texas, 74%, 99% and 79% respectively of the water used comes from recycled, reused or non-potable sources, the company said.

Rainwater harvesting systems are operating at selected datacentres in the Netherlands, Sweden and Ireland, with additional installations planned in Canada, the United Kingdom, Finland, Italy, South Africa and Austria.

At new datacentres in Quebec, rainwater collection could reach as much as 1.5 million litres a year, depending on local rainfall. That water would be used to offset withdrawals at those sites.

Some facilities also use on-site treatment systems that allow water to be recycled several times for cooling, reducing dependence on utility supplies, particularly where freshwater resources are under strain.

Local investment

Beyond operational changes, Microsoft has been investing in water and wastewater infrastructure in the communities where it operates. Where upgrades are needed to support its datacentres, the company says it funds the required improvements in full.

Near its datacentre in Leesburg, Virginia, Microsoft is funding more than USD $25 million in water and sewer improvements so local ratepayers do not bear the cost of serving its facilities. Since 2020, it has invested more than USD $500 million in more than 75 water and wastewater infrastructure projects.

The company also pointed to replenishment and conservation work beyond its own sites. In the Phoenix area and parts of Nevada, it works with FIDO Tech and local utilities on leak detection in ageing water systems. Across the Midwest, it is working with The Nature Conservancy to restore oxbow wetlands that help recharge groundwater and reduce flood risk.

Judy Priest, who leads technology strategy, innovation and research for Microsoft's cloud and AI infrastructure, and Steve Solomon, an engineering leader in the same division, said the approach is intended to reduce the water intensity of digital infrastructure as datacentre demand continues to grow.

Microsoft said datacentres are essential infrastructure for the digital economy and should be operated in ways that benefit the communities they serve.