Data Centers Shift Towards Onsite Battery Storage Solutions

Data centers in the United States are increasingly adopting onsite battery storage systems as a response to rising electricity demand and lengthy interconnection delays. Duncan Campbell, Vice President of Data Center Solutions at Scale Microgrids, noted that three years ago, data center developers were resistant to the idea of onsite power. However, the current landscape has shifted, with many now recognizing the necessity of behind-the-meter (BTM) power solutions. The competition among power sources has intensified, particularly between off-grid solar and storage, BTM gas, and the lengthy wait times for utility interconnections.

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A notable advancement occurred shortly after the DERVOS conference, where Aligned Data Centers announced a deal for a 31-megawatt battery system to be integrated with a new facility in the Pacific Northwest. This project aims to expedite interconnection timelines significantly, allowing for operations to commence in 2026. Matt Barnes, Chief Commercial Officer at Calibrant Energy, emphasized the exponential growth in demand for onsite battery systems as data centers increasingly acknowledge their role in enhancing energy flexibility and accelerating interconnection.

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Microgrids are emerging as a critical component in addressing the power needs of data centers. These systems combine onsite generation, energy storage, and electrical load management, enabling operations independent of the main grid. The U.S. Department of Energy projects that microgrid capacity could reach 10 gigawatts by the end of 2025, up from 4.4 gigawatts in 2022. States like California and Texas are actively investing in microgrid projects to bolster grid resilience and reliability, particularly in response to extreme weather events and increasing demand from data centers.

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Despite the growing interest in battery storage and microgrids, challenges remain. The engineering complexity of onsite operations, especially for data centers that experience rapid power fluctuations, complicates implementation. Additionally, the U.S. power grid's infrastructure is not fully equipped for two-way power flows, which can hinder the integration of these systems. However, the demand for reliable power sources is driving innovation and investment in flexible power solutions, including gas turbines and energy storage technologies.

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Energy leaders have expressed concerns about the future of the power grid amid soaring demand, with projections indicating a 25% increase in electricity demand by 2030. Anne Choate, Executive Vice President at ICF, stated, “This is a pivotal moment as rising demand creates urgent challenges for the grid.” The need for coordinated efforts across the energy sector is critical to address these challenges effectively.

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Some experts caution that while onsite battery systems and microgrids present viable solutions, they may not fully replace traditional power sources. Hallie Cramer Carrao, formerly with Google, highlighted the importance of considering long-term reliability and cost-effectiveness, suggesting that batteries should ideally transition to front-of-meter solutions once interconnections are secured.

Data centers are beginning to embrace batteries for onsite power

• “The demand is strong and has grown exponentially in the last couple years as data centers increasingly recognize the critical role that energy flexibility, and specifically battery storage, can play in enabling their growth objectives,” Barnes said, specifically referencing the use of BESS to accelerate interconnection.” — Matt Barnes, Chief Commercial Officer, Calibrant Energy

Data centers are beginning to embrace batteries for onsite power

• “There is this tremendous pressure to get power faster, and the grid doesn’t react in days. The grid reacts in years,” — Marco Teruzin, Chief Revenue Officer, Energy Vault

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As data centers continue to evolve, the integration of onsite battery storage and microgrid systems is poised to reshape the energy landscape, addressing both immediate power needs and long-term sustainability goals.

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