Google's $15 Billion Data Center in Andhra Pradesh Faces Water Scarcity Collision Course

Reuters reported on Wednesday, August 6, that Google's $15 billion data center in Visakhapatnam, in the Indian state of Andhra Pradesh, is facing lawsuits that could delay the company's largest infrastructure bet on AI outside the United States. Excavation and terracing on the hill adjacent to the site are proceeding at a rapid pace as the High Court sets a new hearing for August 24.

The project is being executed in partnership with the Adani Group, led by Indian billionaire Gautam Adani, and the local government promises up to 188,000 jobs over the decade. Visakhapatnam, a port city with a population of 2.5 million, currently receives 410 million liters of water per day against a demand of 480 million, meaning it already operates in chronic water deficit and subjects peripheral areas to rationing. The site is located 860 meters from the Kambalakonda Wildlife Sanctuary, home to leopards and pangolins.

Environmental criticism gained visibility during a march in July, with protesters carrying signs reading "Don't drink DATA" and placards featuring the Google logo in handcuffs. A public interest petition filed by residents claims that the state government waived the comprehensive water impact study. The office of Andhra Pradesh's Chief Minister, Chandrababu Naidu, a close ally of Narendra Modi, responded in writing that "not a single drop of water intended for rural or residential use will be diverted to the data centers."

A Recurring Pattern Across Three Continents

This case is not isolated. In Ireland, where data centers account for 21% of national electricity consumption according to the Central Statistics Office of Dublin, EirGrid imposed an effective moratorium on new data center connections in the metropolitan area of the capital in 2022, which is still in place. Google and Microsoft have frozen three combined projects since then. In Chile, a Google data center project in Cerrillos, in the Santiago metropolitan region, was held back for two years until the company presented an air cooling plan instead of using potable water, which was approved last November.

This global pattern creates a dilemma for the sector. The race for model training capacity pushes decisions to regions with cheap energy and technical labor in software, precisely the areas that already face water stress. "The bottleneck of AI is no longer silicon. It's megawatts and liters per second," said Alistair Speirs, senior infrastructure manager at Google Cloud, during a panel at the Reuters Next conference in May.

The Counterargument Also Deserves Examination

The reading that any new data center in an emerging country is unsustainable overlooks the numbers. The global average PUE, a measure of a data center's energy efficiency, has decreased from 2.5 in 2007 to 1.56 in 2024, according to the Uptime Institute's annual survey. The new generation of direct liquid cooling to the chip can reduce this number to near 1.1. The technical memorandum submitted by Google to the environmental agency of Andhra Pradesh anticipates closed-loop cooling and rainwater reuse, which would reduce net water intake by about 80% compared to traditional evaporative cooling tower design.

The local economy also has its counterpart. Andhra Pradesh exports software talent to Bangalore and Hyderabad but draws limited fixed investment, and Google's project is currently the largest foreign injection ever announced in the state. For Naidu's government, backing down would mean ceding ground to Tamil Nadu, which is competing with Andhra for the next wave of Asian corporate nearshoring.

What the CIO Needs to Monitor

Those relying on Google Cloud in Latin America, Southeast Asia, or Central Europe need to monitor three variables. First, the energization schedule: the first gigawatt in Visakhapatnam was expected by the fourth quarter of 2027, and each quarter of delay alters the unit cost of inference for Gemini for enterprise customers in Asia and Europe. Second, the legal precedent: if the Indian court mandates new licensing, Microsoft and Meta will have to revise plans in Pune, Mumbai, and Chennai. Third, the Adani Group: an adverse decision could reopen the discussion about the regulatory risks of the group two years after the Hindenburg report.

The most significant blow, however, is not in Visakhapatnam, but in the realization that the new generation of AI capital expenditures creates conflicts that the cloud era was unaware of. Data centers have become a top-tier environmental issue, on par with where ports and refineries stood in the 2000s.