OceanWell Research

The Water-Energy Nexus

OceanWell

October 26, 2026

The Water-Energy Nexus

OceanWell

Jamie Spotswood

Senior Director of Business Development

An environmental and utility professional dedicated to advancing sustainability, water conservation, and green technology through smart, practical solutions that support long-term environmental health and resilience.

Flip on a light or turn on a faucet, and you are using two systems most people think of as separate. In reality, moving and cleaning water takes huge amounts of energy, and generating most of our electricity takes huge amounts of water. As droughts and heat waves intensify, this water-energy nexus is becoming one of the most important and least discussed issues in infrastructure.

Water runs on energy

Water-related energy is roughly 4% of U.S. electricity, but far higher in some regions. A 2005 California Energy Commission study found that water-related uses consumed 19% of the state's electricity and 30% of its natural gas. Pumping alone accounts for about 80% of the energy used at drinking water plants.

California's State Water Project, which serves about 27 million people, is the state's largest electricity user. Its Edmonston Pumping Plant lifts water nearly 2,000 feet over the Tehachapi Mountains, can draw up to 840 megawatts, and uses about 40% of the project's electricity.

Energy runs on water

Coal, gas, and nuclear plants boil water into steam and need more water to cool it. In 2015, thermoelectric power accounted for 41% of all U.S. water withdrawals, more than any other use. Closed-loop nuclear plants withdraw about 700 to 1,100 gallons per megawatt-hour and lose most of it to evaporation.

Hydroelectricity

Hydroelectricity depends directly on water availability. Dams generate electricity by directing flowing or falling water through turbines, but droughts can reduce reservoir levels and limit power generation. In California and other western states, prolonged drought can therefore affect both water supplies and electricity reliability. Hydropower also involves trade-offs, as reservoirs lose water through evaporation, particularly in hot, dry climates.

Hydrogen

Hydrogen production can require significant amounts of both water and energy, depending on the production method. Electrolysis, which uses electricity to split water into hydrogen and oxygen, requires approximately nine liters of water per kilogram of hydrogen as a theoretical minimum, with additional water often needed for purification and cooling. When produced using low-carbon electricity, hydrogen can help decarbonize industries such as steelmaking and heavy transportation. However, scaling up production will require careful planning to ensure that water demand does not place additional pressure on already stressed supplies.

Oil and Gas Refineries

Oil and gas refineries depend on water for cooling, steam generation, and processing, making reliable water supplies essential to their operations. Water is also required throughout the broader energy supply chain, including oil extraction, natural gas processing, and fuel production. During droughts, water restrictions or rising supply costs can create operational challenges for energy facilities, particularly in water-stressed regions. Improving water recycling, reuse, and efficiency can help reduce freshwater demand while strengthening industrial resilience.

How renewables are reshaping the relationship

Wind and solar barely drink. Wind turbines need essentially no water, and solar panels need only a little for cleaning, so every megawatt-hour they replace frees up water.
Water agencies are going solar. In 2026, the California Department of Water Resources brought the 105 megawatt Pastoria Solar Project online to help power Edmonston. It is the largest renewable purchase in State Water Project history and a step toward a 2035 carbon neutrality mandate that is proving hard to meet.
Water systems can act like batteries. During California's August 2020 heat wave, the State Water Project shut off pumps and released water through generators when grid demand peaked.
Canals are becoming power plants. Project Nexus, a 1.6 megawatt pilot over Turlock Irrigation District canals, cut evaporation beneath the panels by 50% to 70% and algae growth by 85%, while the water below keeps the panels cool and efficient. Covering all 4,000 miles of California's canals could save up to 63 billion gallons a year.
Wastewater plants are producing energy. In 2012, East Bay Municipal Utility District's Oakland plant became the first in North America to generate more energy than it uses, turning sewage and food waste into biogas and saving about $3 million a year.

Why this matters

Saving water saves energy, and low-water power protects water supplies. The two systems also share risks: drought shrinks hydropower and heat stresses power plants just when demand peaks. The most resilient communities will plan water and energy as one system, pairing new water supplies with clean, reliable power from the start.