Microsoft explored underwater data centers because cold seawater could reduce cooling needs, modular units might be quicker to deploy, offshore sites could connect to renewable power, and coastal placement could bring computing closer to users. Those are plausible ways to improve parts of a data center’s economics—not proof that an underwater facility costs less overall. Microsoft’s Project Natick research did not publish a comparable lifecycle-cost result establishing that it does.
What Microsoft tested with Project Natick
Project Natick was a Microsoft-led applied research effort to test the feasibility and economic viability of containerized data centers placed offshore. Microsoft first tested a proof of concept off California in 2015. Its Northern Isles Phase 2 vessel was deployed in 2018 near Scotland’s Orkney Islands, at the European Marine Energy Centre, and retrieved in 2020 after two years on the seafloor. Microsoft says the sealed steel vessel held 864 servers and was filled with dry nitrogen. The site connected to Orkney’s grid, which was supplied by renewable-energy technologies.
The vessel used a standard cargo-container footprint. Seawater passed through heat exchangers at the server racks and was returned to the ocean, using an approach adapted from submarine systems. That design illustrates the cooling opportunity; it does not account for the full cost of manufacturing, deploying, operating, retrieving, or replacing the equipment. Microsoft’s 2020 Project Natick report describes the Northern Isles deployment and its results.
Why an underwater data center might cost less
Cooling with cold seawater
Servers generate heat that conventional land-based data centers must remove using cooling equipment and energy. The ocean offers a large heat sink, and cold subsurface water could reduce the need for conventional cooling. Microsoft’s early account described deep-sea cooling as a potential energy and cost advantage. Whether that translates into savings depends on the equipment needed to move and exchange heat, and on how much cooling energy the alternative facility would use.
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Access to renewable power
Offshore facilities might be paired with wind, wave, or tidal generation. Natick’s Orkney test connected to a grid supplied by renewable-energy technologies, but that arrangement does not establish the price, reliability, or availability of power at other locations. Electricity costs and the infrastructure required to connect a facility would still matter.
Modular deployment and siting
A standardized, sealed module could potentially be manufactured and deployed more quickly than a large conventional facility. Placing it offshore might also avoid some constraints associated with finding and developing a suitable coastal site. These were elements of the project’s rationale, not published results from an apples-to-apples construction-cost comparison. Offshore installation and recovery themselves require specialized marine work.
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Proximity to users
Microsoft also argued that placing computing capacity near coastal populations could shorten network paths and improve service performance. That is primarily a networking and service consideration, not a direct measure of facility cost. It could contribute to a business case, but it does not show that building or operating the facility is cheaper.
Reliability and equipment failures
Microsoft reports that Northern Isles servers had one-eighth the failure rate of a land-based control group. The company also described the result as eight times more reliable than a replica data center on land. This is a finding from the Phase 2 experiment, not a universal server-failure rate or a quantified lifecycle-cost saving. A reliability advantage could matter economically if it reduced replacement or service costs, but the cited result does not put a dollar value on such savings. See Microsoft Research’s Project Natick overview and its Phase 2 retrospective.
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What the evidence establishes—and what it does not
Microsoft has consistently framed Natick as research. Its current overview calls it “A research project to determine the feasibility of subsea datacenters powered by offshore renewable energy.” In 2018, Microsoft said the goal was to determine the “economic viability” of operating containerized data centers offshore near population centers. Project lead Ben Cutler later said, “We have done what we need to do. Natick is a key building block for the company to use if it is appropriate.” That describes a completed experiment and knowledge that could inform future decisions; it is not an announcement of commercial deployment or a demonstrated price advantage.
The sources do not provide a Natick-specific dollar cost per megawatt, a total-cost-of-ownership comparison, or a quantified percentage saving against a comparable land-based data center. The one-eighth failure-rate result is not a substitute for those figures. The available evidence supports the idea that underwater siting might lower some costs under suitable conditions, while leaving the overall economic comparison unresolved.
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What a fair cost comparison would include
Cooling is only one part of a data center’s economics. To establish whether an underwater facility costs less over its useful life, a comparison would need to account for the following alongside the land-based alternative:
- Cooling: energy use and cooling equipment for each design, including the systems needed to circulate and exchange seawater.
- Power: electricity price and availability, plus cables, grid connections, or generation infrastructure.
- Manufacturing and deployment: the sealed vessel, marine installation, and eventual retrieval.
- Operations and maintenance: access to equipment, marine operations, repairs, and the logistics of replacing failed components.
- Reliability and service life: failure rates, replacement needs, and how long each facility can provide usable capacity.
- Networking: connection costs and any value from locating computing capacity closer to users.
- Recovery and environmental monitoring: removal, recycling, and monitoring requirements at the deployment site.
Without comparable figures for these factors, neither the cooling rationale nor the experiment’s reliability result can settle which approach has the lower total cost.
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Why immersion-cooling figures do not prove Natick savings
A 2022 scholarly preprint comparing air cooling with an immersion-cooling setup reported about 50% lower energy use and about two-thirds less occupied space for the examined setup, while also noting maintenance and reliability concerns. That analysis concerns immersion cooling, not Microsoft’s underwater data center, so its figures should not be attributed to Natick or used to estimate Natick’s savings. The preprint is available on arXiv.
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