Cooling, Water and Data-Centre Construction Supply Chain — 2026-09-19
The global AI datacenter liquid cooling market is projected to surge to $17.8 billion by 2036, driven by high-density infrastructure needs. Meanwhile, water-use enforcement in Texas and growing public opposition in Colorado highlight regulatory friction, while transformer lead times exceeding 36 months continue to bottleneck construction timelines.
Cooling, Water and Data-Centre Construction Supply Chain — 2026-09-19
AI Liquid Cooling Market Projected to Reach $17.8 Billion by 2036
The AI Datacenter Liquid Cooling Market is projected to grow from USD 3.7 billion in 2026 to USD 17.8 billion by 2036, expanding at a 16.9% CAGR. This forecast underscores the critical shift toward liquid cooling as the standard for high-density AI racks, directly impacting order books for vendors like Vertiv and Schneider Electric as they scale production to meet this accelerated demand curve.
Texas Governor Threatens Penalties for Data Center Water Non-Compliance
Texas Governor Greg Abbott has warned that data centers failing to report their water usage could face penalties, following a state-mandated survey where less than 30% of facilities responded. This move signals stricter regulatory scrutiny on water-intensive cooling methods, potentially accelerating the adoption of closed-loop liquid cooling systems that reduce direct water consumption compared to traditional evaporative cooling towers.
Contractor Backlogs Rise as Data Centers Dominate Nonresidential Work
U.S. nonresidential contractors reported stronger sales and profit expectations in August, with data center projects lifting overall backlogs despite labor shortages. The construction sector is increasingly dependent on AI hall builds, with one in six U.S. contractors now engaged in data center work, creating a competitive landscape for skilled electricians and specialized cooling installers.
PFAS Use in Data Center Cooling Sparks Environmental Concerns
A new report highlights that data centers are increasingly swapping water for PFAS ("forever chemicals") in immersion cooling systems to handle higher heat loads, prompting scrutiny from environmental groups. This trend poses a long-term reputational and regulatory risk for vendors promoting immersion solutions, requiring clearer lifecycle management and disposal protocols for coolant fluids.
Colorado Data Centers Face Growing Public Opposition
Despite advancing multiple projects, Colorado data centers are encountering significant public opposition, with new polling showing massive resistance to expansion. This sentiment may delay permitting for new AI halls, forcing developers to invest more in community engagement and potentially altering site selection strategies away from water-stressed or politically sensitive regions.
Local view
In China, Shenling Environment (Shenling) announced a major supply agreement worth approximately $415 million (approx. RMB 2.78 billion) for air conditioning and cooling equipment, signed on September 16, 2026. This deal highlights the strength of Chinese vendors in the global cooling supply chain, particularly as domestic manufacturers like Yingweike and Shenling see orders booked through year-end due to high-demand AI server deployments. Pacific Securities has issued a "Buy" rating for Shenling, citing the rapid release of profits from its liquid cooling business as high-power AI chips drive demand.
Context & numbers
- Market Size: The global Data Center Liquid Cooling market was valued at USD 2.88 billion in 2025 and is projected to reach USD 36.59 billion by 2034, growing at a CAGR of 32.6%.
- Transformer Lead Times: Critical electrical equipment remains a bottleneck, with transformer lead times exceeding 36 months, stretching into 2028 for some hyperscalers.
- Water Intensity: Coal plants, which still provide a significant portion of grid power for data centers, require approximately 19,185 gallons of water per MWh, emphasizing the indirect water footprint of non-renewable powered facilities.
On the radar
- PFAS Regulation: Watch for emerging state-level regulations regarding PFAS disposal from immersion cooling systems, following the recent Fortune report.
- Labor Shortages: The U.S. is estimated to be short 58,000 workers for fiber-optic installation, a constraint that may slow down connectivity for new AI halls.
- Texas Enforcement: Monitor the Texas Water Development Board's next steps in enforcing water usage reporting mandates for data centers.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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