China’s Underwater Data Centers: Revolutionizing Cooling with 90% Energy Reduction
China deploys commercial underwater data centers off Shanghai, cutting cooling energy by 90% using ocean cooling technology.
China is pioneering a revolutionary approach to data center cooling by deploying underwater facilities that promise to slash energy consumption by up to 90% compared to traditional cooling methods. The Chinese company Highlander launched commercial operations off the coast of Shanghai in October 2025, marking one of the world’s first commercial-scale underwater data center deployments.
The underwater data centers leverage natural ocean temperatures and currents to maintain optimal server temperatures without energy-intensive air conditioning systems. According to Highlander Vice President Yan Ye, the passive seawater cooling system eliminates the need for chillers or pumps, achieving dramatic reductions in power usage effectiveness (PUE). The technology represents a significant advancement in sustainable computing infrastructure, particularly for energy-hungry AI workloads.
While Microsoft’s Project Natick demonstrated the feasibility of underwater data centers between 2013-2020, the company ultimately concluded the project as research and did not pursue commercial deployment. Microsoft’s underwater data center off Scotland operated for two years at 117 feet depth and demonstrated enhanced reliability with one-eighth the failure rate of land-based centers, but faced challenges with scalability and commercial viability.
The Chinese government has provided substantial support for underwater data center development, including 40 million yuan (approximately $5.6 million) in subsidies for the Hainan pilot project. This government backing accelerates infrastructure development and aligns with China’s broader push to reduce the carbon footprint of its digital economy.
However, environmental concerns remain significant. Experts warn about potential thermal pollution impacts on marine ecosystems, as warm water discharge could attract certain species while repelling others. The physical presence of data centers in ocean environments also raises questions about long-term ecological effects that require careful monitoring and research.
Technical challenges include managing biofouling (marine organism growth on structures), ensuring structural integrity in harsh marine conditions, and developing remote maintenance capabilities. The Highlander capsule features a pressure-resistant steel hull similar to submarines, preventing water ingress and maintaining servers in a stable inert gas environment to minimize corrosion.
The deployment timeline shows rapid progression from concept to commercial operation. Following the 2022 Hainan pilot project, the Shanghai deployment in October 2025 represents the next phase of commercial scaling. Highlander’s underwater data center serves clients including China Telecom and state-owned AI computing companies, with plans to integrate offshore wind energy for additional sustainability gains.
As underwater data center technology advances, it offers a promising solution to the growing energy demands of AI and cloud computing while addressing environmental sustainability concerns. However, successful mass deployment will require overcoming significant technical and environmental challenges while ensuring marine ecosystem protection.
