A data centre is a large building used to house computer systems and information technology (IT) equipment. It contains a network of servers, storage systems and networking equipment. This is designed to store and process the enormous quantities of data needed for AI, streaming services and other digital activity, such as online banking, cloud computing and telecommunications. In many countries, data centres have become part of the national infrastructure, alongside essential services such as water, electricity and the emergency services. With the boom in AI in the 2020s, the building of more data centres has accelerated. However, there are concerns about the huge amount of energy and water the new data centres will consume.

A major issue for new data centres is obtaining sufficient electrical power, placing a huge strain on local power grids. In Ireland, for example, data centres consume over 20% of the country's electricity, while in Virginia, which has the highest concentration of data centres in the US, the figure is more than 25%.
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In India, the world's largest data centre operator, Amazon, leases a large number of data centres. Known as colocation units, they are shared with other companies. In 2023, Amazon’s Mumbai colocation data centres used enough electricity to power over 400,000 households for a year.

To meet this huge demand, some of India's coal-fuelled thermal power stations—many due to be closed—are kept in operation. Diesel generators are used for backup at the data centres, to ensure they are not affected by blackouts. Emissions from both contribute to greenhouses gases driving global warming. They also add to air pollution. For example, toxic heavy metals in coal ash from Tata’s coal power station in Mahul, a suburb of Mumbai, are likely to cause health issues for local residents.

Data centres also need vast amounts of water. It is used for humidification (adding moisture to the air inside the building), evaporative cooling systems (in which the air is cooled before it enters the rooms of servers) and cooling towers (where water is used to remove heat from the data centre).

​​​​​​​Data centres' water usage worldwide is estimated at 560 billion litres annually. As with electricity usage, this figure is likely to double by 2030 due to increasing AI demand. Since 2022, more than two-thirds of all new data centres have been built in water-stressed areas such as Texas, Nevada and Arizona in the US, Saudi Arabia and India. In these parts of the world, freshwater scarcity is already a significant environmental issue.