All I'm asking is if the water is colder than the air and the RH of the air is high...how can there not be condensation?
Condensation as you imply will depend on the % of saturation that the humidity is in the room and the temperature difference (Delta T) between the chiller and the humid air.
As the temperature falls, the air is able to hold less water in solution and it falls out of solution.
The engineering design requirement for such a system would be regulating the temperature and air flow of the chiller so that the air volume was higher and the Delta T across the exchanger was lower, so as to produce less condensation.
Convection heat is of course only one heat source from the lights and ballasts (if they are also in the room), with the primary source being radiant energy from the light itself.
It all went into the room as energy and has to go somewhere, because energy can be neither created or destroyed, only changed in form.
There are a couple of traditional ways to deal with the heat from the lights and water from the plants. Dilution ventilation to keep the heat and humidity down, vis a vis refrigeration and dehumidification.
Internal fans can buffet the plants and keep the oxygen boundary layers off their leaves, but some ventilation is required to remove the oxygen that the plants expire from the room, and during blooming that air can be highly aromatic. If smell is an issue, then that exhausted air must be treated. That is usually done with a carbon filter, ozone, or a negative Ion generator.
Using sealed lights with just outside air is an alternative to removing the convection heat produced by the lights (about ~20% of total) without having to treat the air. The chiller most directly competes with that cost.
That means that the incremental return on investment for a light exhaust chiller would be the capital amortization cost over the life of the unit, plus its operation cost and maintenance, versus the cost of simply operating a fan. Carbon filtration or the electronic alternatives to do the whole room is a separate issue.
Looking at the bigger issue of heat and humidity, removing the ~80% radiant heat from the room, budget versus level of control, are usually the controlling factors.
Dilution ventilation is cheaper to install and operate than air conditioning and dehumidification, as long as Mother Nature cooperates, but you can't reduce the inside temperature of the growing room below ambient outside temperature, simply by replacing the inside air with outside air, or keep the nutrient solution temperatures down for hydro.
From a design stand point, that is where I would personally use chillers and air conditioning.
For instance, if you used two automobile radiators for the heat exchangers, with a simple circulating pump between them, you could drape one with wet fabric and blow air through it to achieve non contact evaporative cooling in the second radiator.
Locally here in the Pacific Northwest, there is on average 21% F between wet bulb and dry bulb temperatures and we can achieve up to about 8 to 10 degrees of that difference in cooling through evaporation, or say 10 to 12 degrees F. In the dryer climates the difference between wet and dry bulb is of course much greater and the return on investment shorter.
The second radiator could also be replaced with a heat exchanger to cool just the hydro nutrient solutions for root rot control, and let the room temperatures float with ambient, if ambient was above ~85F.
GW