MILWAUKEE (CBS 58) -- On Thursday, June 25, tech giant Microsoft announced construction is completed on its first data center in Mount Pleasant, and the facility is now fully operational.

It's the first hyperscale AI data center in the state to be up and running, which means Wisconsin resources like water and energy are now powering the data center boom.

Photo of the completed Microsoft hyperscale AI data center in Mount Pleasant Microsoft

This new development is keeping a spotlight on the resources data centers consume.

In the latest installment of our series of deep dives into data centers, we're digging into the water resources that are required.

Tens of thousands of gallons of water are needed each day to cool the data centers on site, but analysts say there's an even bigger impact off site.

David Strifling is an associate professor of law at Marquette University, and the director of the Water Law & Policy Initiative. Strifling told us, "You need a lot of cooling water. So, the more power you're producing, the more energy you're using at the power plant."

Data centers generate an enormous amount of heat as they compute 24/7 and that heat needs to be removed.

The cooling systems pass cold water across the equipment to keep the temperature down.

There are generally two types of cooling systems for data centers.

Open loop systems require a steady supply of fresh water coming in, cycling through, then going out. They use a lot of water, anywhere from one to five million gallons a day.

CBS 58

Closed loop systems have a finite amount of water cycling through. They don't require as much water, but they need a lot of energy to keep the recycled water cool.

CBS 58

We asked Strifling if he's concerned about having enough water. He said, "I think it's certainly a concern. And you don't think of Wisconsin as a water needy state, because we have the Great Lakes, of course, right on our boundary."

But only a fraction of the state falls within the Great Lakes basin. "Most of Wisconsin is outside the Great Lakes basin," Strifling said. "And certainly in those communities there are water stressed areas."

CBS 58

Most data centers will not draw directly from Lake Michigan. Instead they're plugging into the municipal systems, which draw from the lake.

Amy Barrilleaux of Clean Wisconsin said, "Our water utilities, our municipal utilities, are required to serve. So they can't say, 'No, we're not going to give you water.'"

Using that middleman approach means the data centers don't have to follow certain reporting rules.

Strifling said, "That also makes it difficult to get a handle on exactly how much water they are using because those cities don't have to report, and typically don't track, in many cases, how much water each one of their customers are using."

Developers of the Port Washington data center maintain its closed loop cooling system will only use "22,000 gallons of water on a peak day." That's the amount of water in a typical backyard swimming pool, what the city says amounts to "less than 2% of daily water usage in Port Washington."

CBS 58

But environmentalists caution there's a big difference between water usage that is on site vs. off site.

Barrilleaux said, "The water that's being used just at that municipal level is not a true reflection of the impact of that data center on our water system."

Power plants also require a lot of cooling water independent of data centers.

With more generation stations planned to meet the data center demand, more water is needed to cool them.

"We live in an uncertain climate future," Barrilleaux said. "We don't know what's around the corner. We don't know when the next long-term drought is going to be."

Policy analysts are urging moderation and a methodical approach.

Strifling said, "It's a difficult problem, there's no doubt about that."