Microsoft’s data center in Colón, Mexico, has been operating on gas generators for much of the past year due to delays in connecting to the national power grid. The facility, established in the industrial hub last year, faced prolonged construction timelines under its contract with the Federal Electricity Commission, preventing a timely grid hookup. Microsoft anticipates full integration with the grid by mid-2027. In the interim, the Mexican government has authorized the use of seven gas generators to maintain operations at the site.
The company has not disclosed details on how it powers its other data centers in Mexico or whether generator use will persist elsewhere. This situation underscores broader challenges in the region’s expanding data infrastructure. Since 2020, Microsoft, Amazon Web Services, and Google have invested more than $7 billion in Mexican data centers, fostering job creation and economic development. However, these facilities demand substantial energy and water resources, raising concerns in drought-prone areas prone to summer blackouts.
Mexico hosts around 150 data centers operated by major tech firms. In Querétaro, where Microsoft runs three facilities, annual water usage totals 40 million liters. Globally, Google reported a 28% increase in water consumption, reaching 8.1 billion gallons between 2023 and 2024. Power demands are equally intense: Querétaro’s current data center capacity stands at an estimated 160 megawatts (MW), with the Mexican Association of Data Centres projecting a pipeline of 600 MW in upcoming projects.
These growth projections strain Mexico’s energy infrastructure. The Mexican Institute for Competitiveness forecasts a power grid deficit of 48,000 megawatt-hours by 2030—exceeding half of the country’s 2023 output. The surge in data center activity, amplified by generative AI’s energy needs, exacerbates these pressures.
The issue extends beyond Mexico. In the United States, utilities in several states have warned of rising bills amid low supply and surging demand from data centers and other sectors. Across the Atlantic, the United Kingdom faces similar woes during its driest period since 1976. Last month, the government encouraged residents to delete old emails and photos to reduce data storage’s indirect water footprint. Nvidia’s recent $30 billion investment in UK data infrastructure is poised to intensify demands on the nation’s water and power supplies.
As tech giants scale operations worldwide, balancing innovation with sustainable resource management remains a critical challenge. Governments and companies must address these strains to support economic benefits without overburdening essential utilities.
