Closing the Loop: How Advanced Cooling Towers Power the Next Generation of AI Data Centers

The exponential growth of artificial intelligence (AI) and high-performance computing (HPC) has transformed the data center landscape, driving unprecedented increases in power density, heat generation, and sustainability demands. As AI workloads push rack densities well beyond 40–100 kW, traditional air-based cooling methods are rapidly reaching their thermodynamic and operational limits. In this context, closed-loop cooling towers—also known as closed-circuit or evaporative fluid coolers—have emerged as a cornerstone technology for next-generation data centers, offering substantial improvements in thermal efficiency, water conservation, operational reliability, and environmental stewardship.

Fundamentals of Closed-Loop Cooling Towers

Principle of Operation

Closed-loop cooling towers are indirect heat rejection devices that transfer heat from a process fluid (typically water, glycol, or dielectric fluid) to the ambient air, while keeping the process fluid isolated from environmental contaminants. The system comprises two distinct fluid circuits:

1. Internal (Primary) Circuit: The process fluid circulates within a sealed coil or heat exchanger, never coming into direct contact with air or external water.

2. External (Secondary) Circuit: Water is sprayed over the exterior of the coil, and air is drawn through the tower by fans. Heat is transferred from the process fluid, through the coil wall, to the spray water, and finally to the air, primarily via evaporation.

This configuration ensures the process fluid remains clean and uncontaminated, which is critical for sensitive applications such as AI data centers, semiconductor manufacturing, and pharmaceutical production.

Step-by-Step Process

• Heat Pickup: The process fluid absorbs heat from IT equipment or other sources.

• Heat Transfer: The hot process fluid enters the coil inside the cooling tower.

• Evaporative Cooling: Spray water is pumped from a basin and distributed over the coil. Simultaneously, fans draw ambient air across the coil.

• Heat Rejection: Heat transfers from the process fluid to the coil wall, then to the spray water, and finally to the air. A portion of the spray water evaporates, carrying away the heat.

• Recirculation: The cooled process fluid exits the coil and returns to the load, while the remaining spray water collects in the basin for recirculation.

This indirect approach contrasts with open-loop towers, where process water is directly exposed to air, increasing contamination and maintenance risks.

Thermodynamic Principles

The performance of closed-loop cooling towers is governed by the principles of heat and mass transfer, specifically:

• Sensible Heat Transfer: Heat moves from the process fluid to the coil wall and then to the spray water by conduction and convection.

• Latent Heat Transfer: As spray water evaporates, it absorbs significant amounts of heat (the latent heat of vaporization), which is the primary cooling mechanism.

• Enthalpy Difference: The driving force for heat transfer is the enthalpy difference between the saturated air at the water temperature and the ambient air.

The Merkel equation and effectiveness-NTU (Number of Transfer Units) methods are commonly used to model and size cooling towers, accounting for the coupled heat and mass transfer processes. The key parameters include:

• Range: The temperature difference between the entering and leaving process fluid.

• Approach: The difference between the leaving process fluid temperature and the ambient wet-bulb temperature.

• L/G Ratio: The mass flow rate of liquid to air, which influences tower size and performance.

• Cycles of Concentration (COC): The ratio of dissolved solids in recirculating water to those in makeup water, affecting water treatment and blowdown requirements.

Key Components and Materials

Closed-loop cooling towers are engineered for durability, efficiency, and ease of maintenance. Major components include:

• Heat Exchanger Coil: Typically constructed from galvanized steel, stainless steel (304/316), or copper for corrosion resistance and thermal conductivity. Coil geometry (serpentine, helical, multi-pass) is optimized for surface area and fluid dynamics.

• Spray Water System: Includes pumps, distribution piping, and non-clog nozzles to ensure uniform water coverage over the coil.

• Fans: Axial or centrifugal fans provide airflow. Axial fans offer higher efficiency and lower power consumption, while centrifugal fans are quieter and can handle higher static pressures.

• Fill Media (in combined-flow designs): Enhances heat transfer by increasing the contact area between water and air.

• Drift Eliminators: Capture water droplets entrained in the exhaust air, minimizing water loss and environmental impact.

• Casing and Structure: Made from galvanized steel, stainless steel, or composite materials for strength and corrosion resistance.

• Basin and Sump: Collect and recirculate spray water; often equipped with anti-vortex hoods and sloped floors for easy cleaning.

• Control and Automation: Modern systems integrate variable frequency drives (VFDs), smart controls, and sensors for optimized operation and maintenance.

Closed-Loop vs. Open-Loop Cooling Towers: Technical Comparison

To clarify the operational and performance distinctions, the following table summarizes the the key differences between open-loop and closed-loop cooling towers:

Feature

Open-Loop

Closed-Loop

Water-Air Contact

Direct

Indirect via heat exchanger

Water Contamination Risk

High

Low

Maintenance

Higher (system-wide)

Lower (isolated loop)

Water Treatment Volume

Higher

Lower

Initial Cost

Lower

Higher (due to heat exchanger)

Operational Cost

Higher

Lower (energy and water savings)

Water Consumption

Higher

Lower (dry/adiabatic modes)

Heat Transfer Efficiency

Lower (due to fouling)

Higher (clean loop)

Expansion Flexibility

Easier

Requires advanced design

Suitable for Dirty Water

Yes (e.g., fan-less, fill-less towers)

No

Environmental Impact

Higher (evaporation, chemical discharge)

Lower

, scaling, and increased risk of Legionella. Closed-loop systems isolate the process fluid, maintaining purity and reducing maintenance on downstream equipment such as chillers and heat exchangers.

Water Consumption: Open-loop towers lose water through evaporation, drift, and blowdown, requiring continuous makeup and intensive water treatment. Closed-loop systems minimize water loss in the process circuit, with only the spray water circuit requiring makeup. Hybrid and adiabatic closed-loop designs further reduce water use by operating in dry mode during favorable conditions.

Thermal Efficiency: While open-loop towers can achieve lower approach temperatures due to direct contact, their efficiency degrades over time from fouling. Closed-loop systems maintain consistent performance, as the heat transfer surfaces remain clean.

Maintenance and Reliability: Open-loop systems demand frequent cleaning, chemical dosing, and monitoring. Closed-loop towers require less frequent maintenance, primarily focused on the spray water circuit and mechanical components. This translates to higher uptime and lower risk of unplanned outages.

Cost Structure: Closed-loop towers have higher initial capital costs due to the integrated heat exchanger but offer lower total cost of ownership (TCO) through reduced maintenance, lower water and chemical usage, and extended equipment life.

Environmental Impact: Closed-loop systems support sustainability goals by reducing water withdrawal, minimizing chemical discharge, and lowering the risk of thermal and chemical pollution.

Sizing for AI Workloads

AI data centers exhibit unique thermal profiles:

• High Power Density: Modern AI racks can exceed 120–140 kW, compared to 7–20 kW for conventional racks.

• Continuous Operation: Training and inference workloads run 24/7, generating sustained heat loads.

• Thermal Stability: Even minor temperature excursions can cause performance degradation or hardware failure.

Closed-loop cooling towers, especially when integrated with direct-to-chip or immersion cooling, provide the necessary thermal headroom and stability. Performance modeling must account for:

• Peak and average load profiles

• Ambient wet-bulb and dry-bulb temperatures

• Desired approach and range

• Redundancy and N+1 configurations for uptime

• Integration with chillers, CDUs, and heat exchangers

Integration with Liquid Cooling Architectures

Direct-to-Chip and Immersion Cooling

The shift to liquid cooling at the server level is accelerating, driven by the need to manage extreme heat fluxes from AI accelerators. Two dominant approaches are:

1. Direct-to-Chip (D2C) Cooling:

   Cold plates are mounted directly onto CPUs, GPUs, and memory modules. Coolant circulates through these plates, absorbing heat and transferring it to a secondary loop via a coolant distribution unit (CDU).

2. Immersion Cooling:

   Servers are fully submerged in dielectric fluid, which absorbs heat and is circulated to an external heat rejection system. Immersion cooling can support rack densities exceeding 100 kW and achieves PUE (Power Usage Effectiveness) values near 1.05.

In both cases, the facility-level heat rejection is often handled by closed-loop cooling towers or hybrid coolers, which interface with the CDUs or immersion tanks.

Coolant Distribution Units (CDUs)

CDUs are critical for managing the interface between server-level liquid cooling and facility water systems. They provide:

• Hydraulic Isolation: Separate the IT coolant loop from the building water loop, preventing contamination.

• Redundancy: Multiple pumps and power supplies for uptime.

• Monitoring and Control: Sensors for flow, temperature, and leak detection; integration with building management systems.

• Scalability: In-rack, in-row, or gallery configurations to match deployment scale.

Closed-loop cooling towers supply the secondary loop, maintaining precise temperature control and supporting warm water cooling strategies that further reduce chiller energy consumption.

Cost Benefits and Total Cost of Ownership

Reduced Maintenance and Downtime

Closed-loop systems dramatically reduce the frequency and severity of maintenance interventions:

• Minimized Fouling: The process fluid remains clean, reducing the need for chemical cleaning and extending the life of chillers, heat exchangers, and piping.

• Lower Labor Costs: Maintenance is focused on the tower’s spray water circuit and mechanical components, with less frequent shutdowns.

• Extended Equipment Life: Reduced corrosion and scaling translate to longer service intervals and lower replacement costs.

Lower Water Treatment and Chemical Costs

• Reduced Water Volume: Only the spray water circuit requires treatment, and its volume is much smaller than the total process loop in open systems.

• Higher Cycles of Concentration: Closed-loop towers can operate at higher COC, reducing blowdown and makeup water requirements.

• Fewer Chemicals: Lower risk of biological growth and scaling means less reliance on biocides and inhibitors.

  
  

Energy Efficiency

• Consistent Thermal Performance: Clean heat transfer surfaces maintain high efficiency over time.

• Lower Pumping Power: Pressurized, self-contained loops require less energy for fluid circulation.

• Variable Speed Drives: VFDs on fans and pumps optimize energy use based on real-time load and ambient conditions.

• Hybrid Operation: Ability to switch between dry and evaporative modes maximizes energy and water savings.

Total Cost of Ownership (TCO)

While closed-loop towers have higher initial capital costs, studies show that their TCO is often lower than open-loop alternatives when factoring in:

• Reduced maintenance and labor

• Lower water and chemical usage

• Extended equipment life

• Lower risk of unplanned outages

• Potential for free cooling during favorable weather

Case studies indicate payback periods of 2–5 years, with annual savings in large deployments reaching millions of dollars.

Environmental Benefits

Water Conservation

• Reduced Withdrawal: Closed-loop systems minimize water intake by recirculating process fluid and reducing evaporative losses.

• Hybrid and Adiabatic Modes: Systems like BAC’s HXV and Nexus® can operate dry during cooler periods, achieving up to 70% water savings compared to traditional fluid coolers.

• Zero-Water Designs: Microsoft’s next-generation data centers employ closed-loop, zero-water evaporation cooling, eliminating evaporative water use entirely and saving over 125 million liters per facility annually.

Minimized Chemical Discharge

• Lower Blowdown: Higher cycles of concentration and reduced water volume mean less blowdown and lower chemical discharge.

• Cleaner Discharge: Isolated process loops prevent contamination of discharge water with process chemicals or byproducts.

Lower Carbon Footprint

• Energy Efficiency: Reduced fan and pump energy, minimized chiller usage, and the potential for free cooling all contribute to lower greenhouse gas emissions.

• Sustainable Materials: Use of corrosion-resistant alloys and coatings extends equipment life and reduces resource consumption.

• Heat Reuse: Elevated coolant temperatures enable waste heat recovery for district heating or other applications, further reducing carbon intensity.

Plume and Acoustic Management

• Plume Abatement: Hybrid designs and condensing modules can eliminate visible plumes, addressing regulatory and community concerns, especially in cold or humid climates.

• Low Sound Operation: Advanced fan designs and sound attenuation options ensure compliance with site noise restrictions.

Baltimore Aircoil Company (BAC) Closed-Circuit Solutions for Data Centers

Overview of BAC Product Lines

BAC is a global leader in closed-circuit cooling technology, offering a comprehensive portfolio tailored for data center and industrial applications:

• FXV Closed Circuit Cooling Tower:

  • Combined crossflow design for high efficiency and low maintenance.

  • Thermal capacity: 29–424 tons; flow rate up to 3,600 USGPM.

  • TriArmor® corrosion protection, easy access for maintenance, and CTI certification.

• FXV3 Closed Circuit Cooling Tower:

  • Largest single-cell capacity in the industry (278–765 tons).

  • Optimized for large projects and hyperscale deployments.

• PFi Closed Circuit Cooling Tower:

  • Patented OptiCoil™ system increases thermal capacity by up to 30%.

  • Counterflow design for compact footprint and high efficiency.

• Series V Closed Circuit Cooling Tower:

  • Counterflow, centrifugal fan, forced draft design.

  • High static and low sound capabilities for indoor or sound-sensitive applications.

• Nexus® Modular Hybrid Cooler:

  • Intelligent, plug-and-play modular system.

  • Automatically optimizes water and energy savings.

  • Compact, lightweight, and easy to install; ideal for confined sites or retrofits.

• HXV Hybrid Cooler:

  • Combines evaporative and dry cooling for up to 70% water savings.

  • Crossflow, axial fan, induced draft; thermal capacity up to 396 tons.

  • Ideal for water-scarce regions, high uptime requirements, and plume-sensitive sites.

• COBALT™ Immersion Cooling System:

• Patented CorTex™ technology for direct server immersion.

• Achieves up to 51% energy reduction and 95% cooling efficiency improvement.

• Modular tanks support high-density AI deployments; integrates with BAC’s outdoor cooling portfolio.

BAC Solutions for AI Data Centers

BAC’s closed-circuit and hybrid coolers are engineered to meet the demanding requirements of AI and hyperscale data centers:

• High Thermal Capacity: Supports rack densities exceeding 100 kW, with modular scalability for phased expansion.

• Water and Energy Optimization: Intelligent controls (e.g., iPilot™) balance water and energy use based on real-time load, climate, and utility rates.

• Reliability and Uptime: Redundant pumps, multiple fans, and robust materials ensure continuous operation and rapid maintenance.

• Integration with Liquid Cooling: Seamless interface with CDUs, immersion tanks, and direct-to-chip cooling loops.

• Environmental Compliance: Plume abatement, low sound, and minimal chemical discharge support regulatory and community requirements.

• Ease of Maintenance: Large access doors, internal walkways, and modular components facilitate inspection and service without downtime.

BAC’s expertise extends to engineering support, performance modeling, and site-specific customization, ensuring optimal deployment for both greenfield and retrofit projects.

Microsoft’s Use of Closed-Loop and Zero-Water Evaporation Cooling

Technical Implementation

Microsoft is at the forefront of sustainable data center design, having committed to carbon-negative, water-positive, and zero-waste operations by 2030. Key elements of their next-generation cooling strategy include:

• Closed-Loop, Zero-Water Evaporation Design:

  • All new data centers (from August 2024) employ closed-loop liquid cooling systems that eliminate evaporative water loss.

  • Once filled during construction, the system continuously recirculates water between servers and chillers, with no need for additional makeup water.

• Chip-Level Cooling:

  • Direct-to-chip cold plates and immersion cooling solutions provide precise temperature control for high-density AI workloads.

  • Enables operation at higher coolant temperatures, reducing reliance on mechanical chillers and improving energy efficiency.

• Water Usage Effectiveness (WUE):

  • Achieved a global average WUE of 0.30 L/kWh in 2024, a 39% improvement since 2021.

  • Zero-water evaporated designs are expected to reduce WUE to near zero for each new facility.

• Energy Usage:

  • Transitioning from evaporative to mechanical cooling slightly increases PUE, but is offset by the ability to operate at warmer temperatures and the use of high-efficiency chillers.

  • Ongoing innovations aim to further reduce power consumption through targeted cooling and advanced controls.

• Pilot Projects:

  • New data centers in Phoenix, Arizona, and Mt. Pleasant, Wisconsin, will pilot zero-water evaporated designs in 2026, with broader rollout planned for late 2027.

• Alternative Water Sources:

• Expanded use of reclaimed and recycled water in regions such as Texas, Washington, California, and Singapore.

Technical and Environmental Impact

• Water Savings:

  • Each zero-water design avoids the need for more than 125 million liters of water per year per data center.

  • Critical for deployment in water-stressed regions and for meeting community and regulatory expectations.

• Operational Flexibility:

  • Closed-loop systems enable precise thermal management, support for high-density AI racks, and resilience against water supply disruptions.

• Sustainability Leadership:

• Microsoft’s approach sets a benchmark for the industry, demonstrating that high-performance AI infrastructure can be delivered with minimal environmental impact.

Industry Trends and Future Directions

Liquid Cooling Market Growth

• The global data center liquid cooling market is projected to grow from $5.4 billion in 2024 to over $48 billion by 2034, driven by AI, HPC, and hyperscale deployments.

• Direct-to-chip and immersion cooling are expected to dominate, with North America and Asia-Pacific leading adoption.

Hybrid and Adiabatic Systems

• Hybrid coolers, such as BAC’s HXV and Nexus®, offer flexible operation modes (dry, adiabatic, evaporative) to optimize water and energy use based on climate and load.

• These systems are particularly valuable in regions with water scarcity, high utility costs, or stringent environmental regulations.

Integration and Modularity

• Modular, plug-and-play designs enable rapid deployment, scalability, and ease of maintenance.

• Intelligent controls and IoT integration support predictive maintenance, real-time optimization, and seamless integration with building management systems.

Sustainability and Regulatory Compliance

• Increasing regulatory scrutiny on water and energy use, as well as carbon emissions, is driving adoption of closed-loop and hybrid cooling.

• Operators are leveraging waste heat recovery, alternative water sources, and advanced water treatment to further reduce environmental impact.

Acoustic, Plume, and Site Considerations

Acoustic Management

• Closed-loop and hybrid towers can be equipped with low-sound fans, sound attenuation, and centrifugal fan options to meet site-specific noise requirements.

• Internal walkways and modular access facilitate maintenance without increasing sound emissions.

Plume Abatement

• Hybrid designs and condensing modules (e.g., Air2Air™) can eliminate or minimize visible plumes, addressing aesthetic, safety, and regulatory concerns, especially in cold or humid climates.

• Plume abatement is critical for urban sites, campuses, and regions with strict environmental standards.

Site Layout and Flexibility

• Modular and compact designs enable installation in confined spaces, on rooftops, or indoors.

• Flexible piping and control options support diverse site conditions and phased expansion.

Performance Modeling and Sizing for AI Workloads

• Accurate modeling of cooling tower performance is essential for AI data centers, where thermal loads are dynamic and peak densities are extreme.

• Key considerations include:

  • Load Profiles: Peak, average, and transient loads.

  • Ambient Conditions: Wet-bulb and dry-bulb temperatures, humidity, and seasonal variations.

  • Redundancy: N+1 or 2N configurations for uptime.

  • Integration: Coordination with CDUs, chillers, and heat exchangers.

  • Control Strategies: Automated switching between dry, adiabatic, and evaporative modes for optimal efficiency.

• BAC and other leading manufacturers provide engineering support, selection software, and performance guarantees (CTI-Eurovent certification) to ensure reliable operation under all conditions.

Conclusion

Closed-loop cooling towers represent a transformative technology for AI and hyperscale data centers, delivering superior thermal efficiency, water conservation, reliability, and environmental performance compared to traditional open-loop systems. By isolating the process fluid, minimizing water and chemical use, and enabling integration with advanced liquid cooling architectures, closed-loop systems address the unique challenges of high-density, mission-critical computing.

Baltimore Aircoil Company’s portfolio—including the FXV, HXV, Nexus®, and COBALT™ lines—offers scalable, modular, and intelligent solutions tailored for the most demanding data center environments. Microsoft’s adoption of closed-loop, zero-water evaporation cooling sets a new industry standard for sustainability and operational excellence.

As AI workloads continue to grow, and as regulatory and community expectations intensify, closed-loop cooling towers—supported by hybrid, adiabatic, and immersion technologies—will be essential infrastructure for future-proof, sustainable, and high-performance data centers.

Key Takeaways:

• Closed-loop cooling towers provide clean, reliable, and efficient heat rejection for AI data centers, supporting high-density workloads and sustainability goals.

• BAC’s solutions (FXV, HXV, Nexus®, COBALT™) are engineered for modularity, efficiency, and ease of integration with liquid cooling architectures.

• Microsoft’s zero-water designs demonstrate the feasibility and benefits of closed-loop cooling at hyperscale, achieving near-zero WUE and substantial water savings.

• Hybrid and adiabatic systems offer operational flexibility, enabling data centers to optimize water and energy use based on real-time conditions.

• Total cost of ownership is reduced through lower maintenance, water, and chemical costs, extended equipment life, and minimized environmental impact.

• Future trends include further integration with AI-driven controls, waste heat recovery, and continued innovation in materials and system design.

For engineers and data center operators, adopting closed-loop cooling towers is not just a technical upgrade—it is a strategic imperative for operational resilience, cost efficiency, and environmental stewardship in the era of AI