As we recently noted, proactive collaboration between utilities and data center developers is about new demand while protecting communities, strengthening infrastructure planning and creating shared accountability before decisions become urgent. When utilities and developers engage early, transparently and with communities in mind, the conversation shifts from whether growth can be served to how growth can deliver broader public value. 

Wastewater Digest VP of Content Strategy Bob Crossen spoke with Brown and Caldwell Water Stewardship Leader Dr. Carla De Las Casas and Brown and Caldwell Technology Market Sector Leader Rebecca Maco about the current challenges wastewater utilities face with data centers and what levers to use in negotiations with developers.

The primary pain point data centers create for wastewater systems

Bob Crossen: In your conversations with utility partners, what appears to be the biggest pain point for them when it comes to data centers? 

Dr. Carla De Las Casas: One of the biggest challenges utilities face is the difference between data center development timelines and traditional utility planning horizons. Data center projects can advance from site selection to delivery in a relatively short period, while utilities must plan, permit, finance and construct water and wastewater infrastructure over much longer timeframes. That timing gap can make it difficult to evaluate water supply, wastewater capacity, discharge quality, conveyance, treatment needs, rate impacts and community priorities early enough to plan effectively. The opportunity is to bring utilities, developers, power providers and communities into the conversation earlier, so growth can be supported with greater transparency, shared expectations and better long-term outcomes. 

How wastewater systems should approach negotiations with data center developers

BC: What leverage does a utility have when negotiating a partnership with a data center developer? What questions should they be asking before an NDA is signed? 

CD: Utilities have important leverage when they clearly define the information they need to protect existing customers and maintain reliable service. Before an NDA is signed, a utility should seek enough information to understand the proposed scale, phasing and schedule of the project; anticipated water source and demand profile; wastewater flow and characteristics; discharge timing; peak and seasonal conditions; power requirements; and whether the project is committed or still speculative.

Rebecca Maco: Early engagement also allows both parties to define readiness milestones, cost-recovery mechanisms, planning or capacity fees, and clear decision points if a project changes course. Done well, this gives developers a predictable path to service while helping utilities protect ratepayers and maintain public confidence. 

BC: Data center and tech companies are seemingly adamant that they'd help to pay for infrastructure costs, but utilities are wary. What kinds of public-private partnerships have you seen work? What are some key details utilities should ensure are codified in any contractual P3s of this nature? 

CD: In our experience, every hyperscaler we have worked with has been willing to enter into a development agreement with the utility and pay for the additional infrastructure needed to serve the project. The most effective public-private partnerships are those that move beyond broad commitments and clearly define cost, risk, timing and accountability. Utilities should look for agreements that specify the developer’s role in planning, design, permitting, construction, operations and long-term maintenance.

RM: They should also address what happens if demand is lower than projected, the project is delayed, or the project does not proceed. Important provisions may include capacity reservation fees, take-or-pay commitments, milestone-based funding, reimbursement triggers, off-ramps, financial security, water efficiency expectations, discharge requirements, data-sharing protocols and community benefit commitments. A strong partnership should give the developer a clear and workable path to service while preserving utility financial resilience and public trust. 

Finding and balancing risk before infrastructure is committed for a developer

BC: How can utilities define and balance the risk of constructing infrastructure for a data center that may or may not see the light of day (sometimes they are simply speculative land assets)? If the utility plans, designs and/or constructs infrastructure and the data center then falls through, what could that planned infrastructure be used for instead? Is there a means to pivot to another growth opportunity? 

CD: Utilities can manage this risk by treating data center-related infrastructure as part of a broader adaptive planning process rather than as a single-customer investment. That starts with testing multiple demand scenarios, identifying improvements that can also support community growth or system resiliency, and phasing infrastructure so investment follows confirmed project milestones.

If a project is highly specific to one customer, utilities could consider non-refundable planning fees, financial guarantees, take-or-pay commitments or similar mechanisms so existing customers are not left carrying costs if the project does not proceed. Where possible, infrastructure should be designed so it can support other economic development, redundancy, reuse or long-term capacity needs if circumstances change. 

Cooling systems have an indirect impact utilities must also consider

BC: What should utilities know about indirect water demand for data centers, primarily power plant cooling? How should and could they factor this part of the demand into their water supply planning? 

RM: Utilities should recognize that a data center’s water footprint may extend beyond the water used on site. As some facilities adopt lower-water or no-water cooling technologies, direct water demand can decrease, but energy demand may increase. Depending on the power supply and generation mix, some of the associated water use may occur upstream at power generation facilities. For water supply planning, this means utilities should coordinate early with power providers, regional planners and developers to understand both direct water service needs and the broader water-energy implications. That broader view helps utilities plan responsibly without overstating or oversimplifying the impact of any individual facility. 

BC: Different cooling technologies have different water demands. How should a utility factor in the balance of direct and indirect water needs as well as the energy requirements that could impact the water demand? 

RM: Cooling technology should be evaluated through both a water and energy lens. Evaporative cooling can increase direct water demand, while air-cooled or closed-loop liquid cooling systems may reduce direct water use but require more power. That tradeoff matters because additional power demand can create indirect water use elsewhere in the regional system, depending on how the electricity is generated. Utilities do not need to select the cooling technology, but they should ask for annual average and peak seasonal water demands, wastewater flows, blowdown characteristics, backup operating assumptions and power-related assumptions. Those details help utilities plan for realistic service conditions and communicate clearly with decision-makers and the public. 

Understanding the water treatment needs of a data center

BC: How does on-site water treatment look at a data center compared to other industrial users (food and beverage facilities, chemical processors, etc.)? 

RM: Compared with many industrial users, data centers generally have less complex process chemistry, but they still require careful water quality management. Water and wastewater treatment are critical infrastructure that support reliable data center operations; however, they are not typically core to the data center operator’s business. In many cases, operators would rather pay for the utility or a qualified third-party provider to own, operate and maintain the necessary treatment assets than take on that responsibility themselves.

CD: On-site or dedicated treatment is typically designed to protect cooling performance and equipment reliability, manage scaling and corrosion, optimize cycles of concentration, and treat cooling tower blowdown or other reject streams before discharge. The specific treatment approach depends on the source water, cooling technology, reuse strategy and local discharge limits. From the utility perspective, the most important step is to understand the facility’s water balance, operating assumptions and waste stream characteristics early, so ownership, operations, pretreatment and permitting requirements reflect actual service conditions. 

BC: What kinds of filters do data centers need for their water needs?  

RM: Filtration needs depend on the source water and cooling approach. Common applications include particulate removal to protect cooling equipment, side-stream filtration to manage suspended solids in recirculating systems, and polishing treatment where higher water quality is needed. Some facilities may also use softening, cartridge filtration, membrane treatment, reverse osmosis or other conditioning steps, particularly when using reclaimed or non-potable water. For utilities, the key is not to prescribe one technology, but to confirm that the proposed treatment approach can protect public infrastructure, meet discharge requirements and support efficient water use. 

Why pretreatment and discharge requirements still matter for data center effluent quality

BC: What are common pretreatment requirements that utilities are adding into data center discharge permits? 

CD: Pretreatment requirements for data centers are typically aimed at protecting the collection system, treatment plant performance, permit compliance and downstream reuse or discharge objectives. Utilities may require characterization of cooling tower blowdown and other waste streams; monitoring or limits for pH, temperature, total dissolved solids, conductivity, metals, nutrients, biocides, corrosion inhibitors and other treatment chemicals; flow monitoring; sampling access; spill prevention; and notification when operations or chemical programs change. Biocides are generally addressed through chemical disclosure, review of potential toxicity where appropriate, best management practices, discharge limits and monitoring requirements that reflect the receiving utility’s permit and treatment process. The most effective permit conditions are specific enough to protect the public system while allowing responsible operational flexibility. 

BC: How are biocides accounted for in these discharge permits? 

CD: Biocides are typically regulated by the inclusion of whole effluent toxicity (WET) testing requirements included in the discharge permit. Some states, such as Indiana, require the permittees to obtain approval for any proposed water treatment additive (WTA) before use. As part of the approval process, the projected concentration of the WTA or biocide in the effluent, calculated using discharge flow and biocide dosage information, is evaluated against ecotoxicity thresholds provided in the products’ safety data sheets (SDS). This assessment helps determine whether the biocide could cause toxicity in the receiving water.

Indiana's WTA approval process is incorporated into its standard permit conditions, whereas many other states rely primarily on WET testing to demonstrate compliance. In some cases, a utility may reject a proposed biocide based on toxicity concerns. When this occurs, the data center operator typically works with its chemical vendor to identify an alternative WTA that meets regulatory and operational requirements.