Immersion Cooling: A High-Growth Opportunity in a Stagnant Lubricant Market
According to Petroleum Trends International Inc., the U.S. lubricant market in 2024 reached roughly 2.1 billion gallons, with industrial lubricants leading at about 1.25 billion gallons, commercial automotive at just over 450 million gallons, and consumer automotive at around 380 million gallons. While industrial demand remains steady, automotive engine-oil volumes continue to decline—a result of longer drain intervals, improved engine efficiencies, and the gradual shift to hybrid and electric vehicles. These trends underscore a sobering reality: the lubricant industry’s traditional growth engines have stalled. Yet where volumes stagnate, innovation often follows. New frontiers are emerging where lubricant-formulating expertise, base-oil chemistry, and thermal-management know-how converge to meet new technological demands. Among the most promising of these frontiers is immersion cooling—an application that could represent one of the most dynamic growth areas for base-oil and specialty-fluid producers in decades.
What Is Immersion Cooling?
Immersion cooling involves submerging electronic components—such as servers, GPUs, and power electronics—directly into a dielectric fluid that absorbs and transfers heat. Unlike traditional air or indirect liquid cooling, immersion offers superior heat removal, enhanced energy efficiency, and improved system reliability.
Conventional air and water-based cooling systems, while widely used, have fundamental efficiency limitations. Air cooling relies on convective heat transfer, which becomes increasingly ineffective as rack power densities rise. In contrast, water-based systems—though more efficient than air—introduce risks of corrosion, electrical conductivity, and increased maintenance complexity. Oil-based dielectric fluids, by comparison, offer up to 1,200 times greater heat capacity than air and enable direct contact with heat-generating components without electrical hazard. This allows tighter thermal control, reduced energy consumption, and quieter, more compact system designs.
Immersion cooling is particularly well-suited for high-performance computing (HPC), artificial intelligence (AI) data centers, and advanced manufacturing environments where energy density and thermal loads continue to increase.
For lubricant and base-oil producers, immersion cooling represents not only a thermal-management challenge but also a market that rewards fluid-engineering excellence—where properties such as dielectric strength, oxidation stability, and low volatility are critical to both performance and longevity.
Understanding the Base Stocks Behind Immersion Fluids
Most immersion fluids are composed of refined hydrocarbon or synthetic base stocks, selected for their low electrical conductivity and high thermal stability. Fluids used in single-phase systems typically circulate continuously through pumps and heat exchangers. In contrast, those used in two-phase systems boil on contact with components and condense elsewhere in the loop, much like a refrigerant cycle.
Currently, the majority of single-phase immersion-cooling systems utilize PAO- and GTL-based fluids. These synthetic hydrocarbons deliver an optimal balance of dielectric reliability, oxidative stability, and viscosity control, making them ideally suited for continuous operation in high-density computing environments. Their high flash and fire points—often exceeding 220 °C—further enhance safety and extend service life compared with lower-cost mineral-oil alternatives. As a result, PAO and GTL formulations account for roughly three-quarters of installed single-phase systems worldwide, with mineral-oil blends and synthetic esters representing smaller, cost- or sustainability-driven niches.
The table below summarizes the typical base-stock families used in immersion-cooling fluids and their general performance profiles.
| Base-Stock Family | Typical Chemistry | Key Attributes | Common Applications |
|---|---|---|---|
| Hydrocarbon (Mineral / PAO / GTL) | Paraffinic, isoparaffinic, GTL, or PAO derivatives | Cost-effective, stable, low conductivity | Single-phase systems, bulk deployment |
| Synthetic Esters / Eco Fluids | Diesters, polyol esters | Biodegradable, high thermal stability | “Eco” or sustainable single-phase fluids |
| Fluorinated Liquids | Perfluorocarbons, fluoroketones | Non-flammable, extreme dielectric strength | Two-phase systems, specialty electronics |
| Silicone / Other Synthetics | Silicones, siloxanes | Excellent oxidation resistance, low surface tension | Aerospace and niche electronics |
Market Size, Value, and Growth Outlook
Publicly available estimates for immersion cooling vary widely—a not-uncommon outcome for a rapidly evolving sector. The variation reflects differences in scope (fluids-only vs. full systems), timing, and assumptions about adoption rates across AI and high-performance-computing infrastructure. Some analyses also include non-dielectric systems, such as deionized water-based cold plates or hybrid designs, which further expand the apparent market size but do not directly compete with oil-based immersion fluids. These definitional differences account for much of the spread among published market estimates.
IMARC Group estimates the U.S. immersion-cooling market at USD 75.5 million in 2024, projected to reach USD 401.5 million by 2033 at a 20.4% CAGR, driven by AI, high-performance computing, and hyperscale data centers. Grand View Research values the global immersion-cooling market at USD 286.8 million in 2024, with North America holding a 35.4% share (implying a U.S. market of roughly USD 86 million in 2024 and USD 107 million in 2025), and projects growth to USD 1.0 billion by 2030 at a 23.6% CAGR.1,2
While the published summaries from IMARC and Grand View do not specify exact market boundaries, their descriptions and segmentation suggest they measure the broader immersion-cooling market—potentially encompassing systems, equipment, and related services. By contrast, Petroleum Trends International’s (PTI) modeling focuses specifically on the fluids-only segment most relevant to lubricant and specialty-oil producers.
Drawing on a comprehensive review of public data and PTI’s proprietary modeling, global demand for immersion-cooling fluids in 2024 is estimated at approximately 5.5 to 6.0 million gallons. Within that total, PTI estimates that U.S. consumption of oil-based immersion-cooling fluids ranged from 1.0 to 1.5 million gallons, underscoring the country’s concentration of hyperscale data centers and early momentum in AI-driven computing.
Based on the estimated 2024 U.S. range and current market composition, PTI values the U.S. immersion cooling fluid market at approximately $15–18 million, with bulk pricing averaging around $13.50 per gallon. Roughly 75% of the volume consists of GTL-based formulations, with PAO representing a smaller share. These fluids are preferred for their superior thermal stability, dielectric reliability, and overall performance-to-cost ratio. Mineral-oil-based fluids account for about 10% of the market, while other synthetics make up the remaining 10%, primarily serving specialized or modular applications.
Looking ahead, PTI projects that the U.S. immersion-cooling-fluid market will expand at an average annual rate of 20–25% in volume through 2029, despite experiencing modest downward pressure on pricing from competition. Under the base scenario, U.S. demand is projected to rise to 3.0–3.5 million gallons by 2030, with total market value increasing from approximately $20 million in 2024 to around $35–45 million by 2030.
In a pessimistic scenario—marked by slower data center construction, delayed AI scaling, or the extended lifespan of oil-based immersion fluids, which reduces the need for replacement—growth could moderate to roughly 15% annually, bringing the 2030 market value to nearly $30 million. Conversely, an optimistic outlook—fueled by accelerated hyperscaler investment, broader adoption of immersion platforms, and the entry of new OEM-certified fluid suppliers—could drive the market to $50–55 million or more by decade’s end.
Across all outlooks, the trend signals that immersion cooling is moving from experimental deployments to early commercial scale—creating a new and expanding frontier for base-oil producers, additive formulators, and lubricant distributors alike.
New Entrants Are Reshaping the Field
As this market takes shape, a growing roster of companies—from lubricant majors and specialty-fluid formulators to startups—is investing heavily in immersion-cooling technology.
Producers of base oils and specialty fluids are commercializing proprietary immersion-fluid lines based on hydrocarbon and GTL chemistries, while niche suppliers are focusing on dielectric-purity refinement and additive design. At the same time, electronic-hardware manufacturers are partnering with fluid developers to standardize testing, certification, and warranty frameworks.
This convergence of lubricant expertise, electronics innovation, and data-center engineering positions immersion cooling as one of the most promising intersections of the lubricant and technology industries—a space where traditional fluid science finds a high-growth, high-value frontier.
What This Means for Lubricant Distributors
Given that immersion coolants are primarily purchased in large volumes in bulk by very large companies, such as hyperscale data center operators, these entities are likely to engage in direct business with major oil companies or specialty fluid producers rather than through distributors. This direct sourcing leverages their scale for customized formulations, competitive pricing, and integrated supply chains. However, opportunities for distributors remain—not only in niche segments like small-batch, customized cooling fluids, which provide a key advantage in serving localized markets such as edge data centers, but also in supplying turbine oils, engine oils, gear oils, and other industrial lubricants for on-site power generation. By offering flexible delivery, technical support, and services, distributors can address the specialized needs of these decentralized, high-performance setups.
These are smaller facilities located closer to data generation and usage points, designed for low-latency processing in areas such as retail hubs, manufacturing sites, or urban environments. Edge deployments often encounter unique constraints around space, power, and cooling, making tailored fluid solutions essential. By offering flexible delivery, technical support, and rapid response, distributors can address the specific needs of these decentralized, high-performance setups.
As data centers scale and AI workloads intensify, many operators are increasingly turning to localized power generation, including gas turbines, microgrids, and modular power plants, to ensure grid independence, reduce transmission losses, and enhance reliability. Industry analysis suggests that as many as 27% of data-center facilities could be fully powered by on-site generation by 2030.3 This represents a significant increase from just 1% in 2024.
This shift toward behind-the-meter energy systems broadens the lubricant opportunity far beyond immersion-cooling fluids alone.
Localized generation facilities require a full suite of industrial lubricants—turbine oils, gear oils, bearing greases, and compressor lubricants—to support the rotating equipment used in continuous-duty power plants. The global turbine oil market, valued at approximately $1.1 billion in 2024, is projected to grow at a compound annual rate of around 8.8% through 2034, driven in part by the increasing adoption of distributed power installations and renewable energy integration.4
Similarly, demand for lubricants in power generation—including those used in turbines and ancillary equipment—is expected to reach $7.5 billion by 2032, growing at nearly 5% annually as new-generation assets come online.5
Macro trends in energy demand highlight the magnitude of this transformation. Deloitte projects that power demand from AI data centers in the United States could increase more than thirtyfold by 2035, escalating from 4 GW in 2024 to 123 GW.6 Data centers currently account for over 4% of total U.S. electricity consumption, a share that could climb to 9–14% by 2030 under aggressive AI expansion scenarios.7
While these trends generate substantial downstream opportunities, it is crucial to acknowledge that most large-scale data center projects are developed and operated by global technology, infrastructure, and energy giants—organizations with the resources and leverage to procure directly from major suppliers.
Consequently, high-volume contracts for immersion coolants and on-site generation lubricants will often involve direct supply agreements, restricting distributors’ involvement in primary sales or bulk logistics.
Nevertheless, this does not eliminate distributor opportunities; rather, it redirects the value proposition toward regional service support, small-batch blending, top-off supplies, system maintenance, and localized technical assistance—especially for emerging edge sites, regional AI clusters, and secondary facilities that may not have the scale for direct sourcing.
These channels reward agile distributors with robust technical expertise and local responsiveness.
By partnering early with fluid manufacturers and data center operators, lubricant distributors can evolve from mere commodity suppliers into integrated service partners, enhancing uptime, reliability, and energy resilience in one of the decade’s fastest-growing industrial ecosystems.
As an emerging market, immersion cooling remains in its formative stages, with many players—both suppliers and end-users—still navigating uncharted territory. The absence of a fully established market structure presents a unique window for distributors to shape their role, forge early partnerships, and capture share in a sector poised for exponential growth. Those who act swiftly to build expertise and relationships will be best positioned to thrive in this dynamic, yet-to-be-defined landscape.
The fluidity of this emerging market also introduces significant uncertainty in forecasting demand and determining which immersion coolants will ultimately dominate. Current projections, while promising, vary widely due to evolving adoption rates, technological advancements, and shifting regulatory priorities, such as sustainability mandates. Similarly, preferences for coolant types—whether PAO, GTL, mineral oils, or synthetic esters—remain in flux, as end-users test competing formulations for cost, performance, and environmental impact. Distributors must remain adaptable, investing in versatile supply chains and technical knowledge to pivot as market standards solidify.
Sources
- IMARC Group. United States Immersion Cooling Market: Industry Trends, Share, Size, Growth, Opportunity, and Forecast 2025–2033. IMARC Group, 2024.
- Grand View Research. Immersion Cooling Market Size, Share & Trends Analysis Report by Application, by Cooling Liquid, by End Use, and Segment Forecasts, 2024–2030. Grand View Research, 2024.
- Bloom Energy. On-Site Generation Expected to Fully Power 27 Percent of Data Center Facilities by 2030. June 2025.
- Global Market Insights. Turbine Oil Market Report. 2024.
- GlobeNewswire. Lubricants in the Power Generation Market Eyes $7.47 Billion Opportunity by 2032. January 2025.
- Deloitte. Data Center Infrastructure and Artificial Intelligence: Powering the Future. 2024.
- Engineering News-Record. Power-Hungry, AI-Fueled Data Center Boom Sets Energy Delivery’s New Course. 2024.