China to launch commercial underwater data center — facility expected to consume 90% less power for cooling

Chinese company Highlander is building a server pod near Shanghai, where it will be submerged underwater to reduce the power consumption used by the facility for cooling. According to the South China Morning Post, Highlander is expected to sink the underwater pods in October. The servers will operate commercially, with state-owned institutions like China Telecom being among the first customers.

This isn’t the first underwater data center project; Microsoft concluded its own experiment off the coast of Scotland in 2024. Although Microsoft said that it has learned a lot from the project, it did not proceed with a commercial deployment of the system.

On the other hand, China started its own underwater project in Hainan in 2023, and it is still active. The Shanghai project will be the second underwater center in the country, but it will be the first one to have clients.

The biggest benefit to using ocean water to cool data centers is the massive reduction in cooling costs. “Underwater operations have inherent advantages,” Highlander vice president Yang Ye told the Morning Post. Ye also said that it will reduce cooling energy consumption by around 90%. Highlander also said that 95% of its energy requirements will come from renewable sources, further reducing its carbon footprint.

There are also significant challenges that Highlander had to overcome. “The actual completion of the underwater data center involved greater construction challenges than initially expected,” said Engineer Zhou Jun, who worked at the Shanghai project.

Salt water and electronics do not mix well, so the company had to take special precautions to protect its systems. One technique Highlander uses involves a coating with glass flakes to protect the steel capsule from corrosion. It will also have an above-sea section that serves as an access point for maintenance crews.

Although placing data centers underwater will help reduce their power consumption, some experts are concerned about the effects of ocean warming due to continuous heat output. There hasn’t been enough research on this, University of Hull Marine Ecologies Andrew Want told SCMP.

Nevertheless, the Highlander claims that an independent assessment of its test project showed that temperature changes were still within acceptable limits. But as data centers expand and hit megawatt- and gigawatt-scales, thermal pollution will become an increasingly serious matter.

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