Hydropower and Data Center Siting: Public Power, Allocations and Drought Risk

Hydropower has three traits that data center buyers value at once: low operating cost, no direct emissions and output that can be scheduled within the limits of the water available. That combination helped draw large campuses to the Columbia River towns of central Washington, and it is why New York’s low-cost Niagara hydro has long been used as an economic development tool.³

The resource is concentrated. EIA reports that Washington generated more electricity from hydropower than any other state, about a quarter of the national total in 2024, and that Grand Coulee on the Columbia is the largest power plant in the United States by capacity.⁵ Most U.S. hydropower capacity sits in the Pacific Northwest.⁴ Regional analysts note that hydro still provides more than half of the Northwest grid’s nameplate capacity.¹¹

For site selection, the useful distinction is between hydro as a regional advantage and hydro as power actually available to a new customer. The first is a matter of geography. The second depends on who owns the dams, who already has rights to their output and what the serving utility’s rules say about new large loads, which is where most of the diligence lies. Our Pacific Northwest site selection guide covers the region more broadly.

Much of the Northwest’s hydro belongs to public power: federal dams marketed by the Bonneville Power Administration (BPA), and county public utility districts (PUDs) that own their own projects. A PUD is a consumer-owned utility, so its board weighs data center growth against rates for residential, farm and small business customers. The glossary entry on utility ownership types explains how this differs from an investor-owned utility.

Grant County PUD shows the scale involved. It holds physical rights to 63.31% of the output of the Priest Rapids and Wanapum dams, which together exceed 2,100 MW.⁶ Its eight data center operators accounted for about 280 average megawatts in 2025, roughly 37% of the district’s average system load of about 757 aMW.⁶ In August 2024 the PUD reported 75 applications for new or expanded large-load service totaling 2,897 MW of peak demand, with data centers the largest share and Quincy the area of greatest interest.⁷

Utilities that buy most of their power from BPA face a different constraint: they must first confirm they can obtain supply for a large new load. A Snohomish County PUD official put it plainly in 2026, saying that when a very large load request comes in, “we just can’t say yes” without that work.¹² A PUD with its own dams and one that relies on BPA can give very different answers to the same request.

The common thread among hydro utilities is that legacy hydro is reserved for existing customers, and new large loads pay for the new supply they cause. Grant PUD’s large industrial schedule applies to loads of 10 MW and above, but any load that is or becomes a “New Large Load” under the district’s customer service policies is served under a separate rate schedule.¹ The district says its rate strategy is meant to protect residential, small business and agricultural customers, because growth driven largely by the industrial sector, including data centers, requires buying more expensive power.⁶

Chelan County PUD adopted a large-load framework in 2024 with guiding principles of a neutral-to-positive impact on other customers and stable rates.² It offers three supply paths:

The first contract under the framework, approved in June 2025 for Microsoft’s Malaga campus, illustrates the terms in practice: up to 18 MW of surplus hydropower at market-based prices through the end of 2025, with supply for 2026 through 2040 not yet determined, and the customer paying up front for the $86.5 million Jumpoff Ridge substation and related upgrades.¹³ For a developer, “hydro territory” now means paying for infrastructure and accepting market exposure, not inheriting low legacy rates. See large-load tariffs and electric service agreements for how these terms compare elsewhere.

Hydro plants are limited by energy as much as by capacity. A dam can run at full output for hours, but over a season it can only generate what the river delivers. Utilities therefore plan firm commitments around low-water years and sell the remainder as surplus when water is good. The Chelan contract’s “surplus hydropower” wording reflects that distinction: surplus is what remains after firm obligations, and it can shrink in a dry year.¹³

Dry years are not hypothetical. In November 2024, EIA forecast that U.S. hydropower generation that year would be 13% below the 10-year average and the lowest since 2001, citing extreme and exceptional drought, especially in the Pacific Northwest.⁴ The Northwest region was forecast at about 101.8 billion kWh, roughly 23% below its 10-year average of 132.8 billion kWh.⁹

Regional analysts argue that, with more variable resources and changing hydro operating constraints, the Northwest can no longer assume it has enough capacity to meet all demand.¹¹ The Northwest Power and Conservation Council is building data centers into its next 20-year power plan, and an expert panel told it in 2026 that a data center design standard could cut peak electrical and mechanical energy use by about one-fifth, at some cost in water use.¹⁴ For a buyer, drought risk shows up as higher replacement-power costs, curtailment of surplus supply or slower approvals, so ask how the utility treats your load in a critical water year. Our guides to firm vs. interruptible service and drought risk go further.

New York allocates its low-cost hydro through statutory programs run by the New York Power Authority (NYPA) rather than through a utility tariff. Western New York Hydropower, which combines Expansion Power and Replacement Power, is a 695 MW block from the Niagara plant awarded competitively to businesses within a 30-mile radius of the Niagara Power Project.³ State law defines eligible projects as economic development projects physically located within 30 miles of the Niagara project at Lewiston, with allocations approved by NYPA’s trustees.⁸

ReCharge New York is statewide and larger: 910 MW, half drawn from firm hydropower at NYPA’s Niagara and St. Lawrence-FDR projects and half procured from market sources.¹⁵ Awards are tied to commitments; NYPA’s report gives an example of 6.5 MW in exchange for 65 jobs and a $42 million five-year capital investment.¹⁵

Allocations are sized for industrial users, not gigawatt campuses. In 2023 NYPA’s board approved a roughly 10.7 MW Niagara allocation to an Amazon facility tied to 1,000 jobs, an example of the jobs-per-megawatt logic these programs apply.¹⁶ A large data center can treat an allocation as a cost offset for part of its load, while buying the rest at market under New York’s grid rules. Our New York site selection guide covers NYISO and local projects.

Hydro can also follow a data center by contract. In July 2025, Brookfield and Google announced a framework for up to 3,000 MW of U.S. hydroelectric capacity, starting with 20-year power purchase agreements for the Holtwood and Safe Harbor plants in Pennsylvania, 670 MW in all, to support Google’s operations across PJM.¹⁰ The framework targets plants that will be relicensed, overhauled or upgraded to extend their lives, focusing first on PJM and MISO.¹⁰

Deals like this decouple the clean-energy claim from site location: the buyer gets hydro attributes in the same grid region without needing a dam next door. They do not change the physical constraints at the site, which still needs utility service, transmission and capacity. See power purchase agreements for data centers and 24/7 carbon-free energy for how these contracts count toward clean energy goals.

1. 01Identify the serving utility and whether it owns hydro, buys from BPA or another wholesaler, or is an investor-owned utility.¹²
2. 02Read its large-load policy: which rate schedule applies to new large load, and whether legacy hydro is available at all.¹
3. 03Ask what supply backs your contract after any short-term term ends, and who bears market price risk.¹³
4. 04Ask how your service is treated in a low-water year, and whether any portion is surplus or interruptible.⁴
5. 05Budget for customer-funded substations and upgrades, which hydro PUDs increasingly require.¹³
6. 06In New York, check distance to the Niagara Power Project and whether a jobs and investment commitment for an allocation fits the project.⁸¹⁵

Water for cooling is a separate question from water for power, and it can matter as much in dry years; see data center water requirements. If you want an outside view of whether a hydro-region parcel can actually be served, you can get a site reviewed.