Cooling, Water and Data-Centre Construction Supply Chain — 2026-09-02

Top developments

California Lawmakers Reach Compromise on Data Center Regulation

On August 29, California state lawmakers reached a deal to regulate energy use by the state's growing data center industry. This legislation was triggered by community anger over the facilities' impact on local utility bills and resource consumption. The compromise marks a significant shift in how the largest U.S. market for data centers will manage the intersection of AI infrastructure growth and local utility constraints.

Oklahoma Data Center Leaks 3 Million Gallons During Drought

On September 1, news broke that a data center in Oklahoma leaked approximately 3 million gallons of water while the region faces severe drought conditions. The incident disrupted services and renewed public concerns about water consumption in arid regions where new AI halls are being built. This event adds pressure on operators to demonstrate tighter water management and transparency, particularly as evaporative cooling remains a common method in these geographies.

Vertiv and Eaton Report Record Backlogs in Q2 2026

In their second-quarter 2026 earnings calls, both Vertiv Holdings Co. and Eaton Corp. plc posted record backlogs and raised full-year guidance. Vertiv specifically highlighted that liquid cooling is becoming the default for new AI data center designs, with its backlog exceeding $15 billion. These figures indicate strong future demand for critical infrastructure vendors, suggesting that orders for liquid cooling units and power distribution equipment remain robust despite broader economic uncertainties.

Growing Public Opposition and Political Tensions

A new University of Virginia report found that more than three in five Americans now oppose data center construction, citing concerns over water and power usage. This sentiment has entered the political sphere, with President Trump recently stating that communities rejecting data centers will end up "backwards and poor." The rising polarization complicates permitting processes and may accelerate the adoption of closed-loop liquid cooling systems to mitigate local opposition.

Local view

China (Sina News / Cailian Press): Chinese media reports indicate that liquid cooling orders are booked through the end of the year due to high-power AI computing clusters. The domestic liquid cooling data center market is expected to break through 100 billion yuan globally in 2026. Vendors like Envicool (Yingweike) and Shenling Environmental Systems are seeing significant stock gains and order backlogs as traditional air cooling becomes insufficient for next-generation AI servers.

United States (NBC News / Fierce Network): Local industry outlets are highlighting the critical labor shortage choking AI data center construction. Estimates suggest the U.S. is short 58,000 workers needed to install fiber-optic cable. Operators are increasingly resorting to training, poaching, and automating tasks to fill the gap, which could delay the deployment of complex liquid cooling systems that require specialized technicians.

Context & numbers

• Transformer Lead Times: Switchgear lead times are averaging 44 weeks, while transformer delivery timelines have stretched from 24–30 months pre-2020 to as long as 5 years today. 44% of data center leaders report utility wait times beyond four years.
• Market Size: The global data center liquid cooling market is projected to surge at a 31.5% CAGR, driven by racks exceeding 300 kW.
• Investment: AI data center investment could reach $7 trillion by 2030, with power constraints driving double-digit growth for critical infrastructure vendors.

On the radar

• California Water Transparency Bills: Governor Newsom has two more chances to sign or veto bills requiring data centers to disclose water use. Previous vetoes have kept this data opaque, but legislative pressure is mounting following recent environmental incidents.
• Meta’s Canadian Expansion: Meta’s first Canadian data center project in Sturgeon County, Alberta ($9B+) is progressing. Hyperscalers are diversifying siting outside the U.S. to avoid domestic permitting and transformer delays.