Data Center Chillers (1/3): Primer and free cooling economics

Research evidence excerpt

Data Center Chillers (1/3): Primer and free cooling economics

22 June 2026

U.S. Multi Industry & Electrical Equipment

Chillers are a critical part of data center cooling infrastructure both in liquid-cooled and Varun Govindaraj

+1 917 344 8543 air-cooled environments. They are responsible for creating chilled facility water that then

varun.govindaraj@bernsteinsg.com pumps to CDUs to extract heat from the coolant or to CRAHs to reduce the temperature of

air blowing through the data center. We size this as a ~$8B market in 2026 (fully loaded

Specialist Sales cost including installation and ancillaries), but the growth outlook can vary significantly

Steve Song based on how you think chiller penetration changes. Assuming no such changes (our base

+1 917 344 8401 case), we project a ~20% CAGR for the market with 2030 estimated at ~$16.5B.

steve.song@bernsteinsg.com

We often hear debates of when it makes sense to use air-cooled vs. water cooled units. As

a quick primer, both types of chillers operate using a refrigerant cycle, but air-cooled units

reject heat from the refrigerant into ambient air, while water-cooled units reject to another

water loop (either a cooling tower or a dry cooler). Air-cooled units are lower capex, but

much less energy efficient. Water-cooled units need more upfront investment and consume

large quantities of water (if a cooling tower is used), but tend to consume less power for the

same tonnage. So it really is a sensitivity analysis of what you think your operating

conditions and input costs will be when making the decision.

To illustrate this, we looked at how much it would cost to run an 800 ton chiller (roughly 2.5

MW) - assuming it was air-cooled or water-cooled. When the compressor of the chiller ran