25 Million Gallons and a Missed Deal
By denying data centers, communities miss an opportunity to shore up water systems
On February 18, the San Marcos City Council, by a 5-2 vote, denied a proposed data center project. The reason given for the denial was the facility would use 25 million gallons of water annually.
Developers and investors saw a rational business decision for their project; data centers consume 1 percent of water used today. The council and some residents of San Marcos saw untenable demand for water in their city. San Marcos leadership was not only thinking about the impact of this one data center, they were thinking about the cluster problem. Three separate data center projects are in motion within roughly three miles of each other in the greater San Marcos area (Sabey at Carson Select, Highlander SM One at Maberry and CloudBurst).
The denial is understandable for a city council that has grappled with drought in recent years. But San Marcos and other communities that shut the door on data center development may be shutting the door on an opportunity to make improvements to local water systems that are needed throughout Texas.
According to data we compiled at AsimovGrid, data center opposition has grown from just three actions in 2024 to 81 in the first five months of 2026, with 31 moratoriums and a 76 percent denial rate when projects reach a public vote. The main reasons for these denials have been power grid strain in 30 percent of cases and water consumption worries in 25 percent of cases. Over $70 billion in proposed data center investment in 40 states is now denied, blocked, or under legal challenge.
Surprisingly, considering how project-friendly Texas has proven to be, 16 of the moratoria and denials have been in the state. This is because of a statewide water problem, a problem the state has dedicated up to $20 billion to address. This number might sound like a lot, but projections call for $174 billion over the next 50 years.
