Adoption of artificial intelligence (AI) is rapidly accelerating across nearly every sector of the economy, drastically changing the course of U.S. energy demand with the need for computational power. The U.S. Department of Energy estimates that data center power demand will triple by 2028. By the end of decade, data centers are expected to be 11% to 12% of total U.S. power demand, up from today’s 3% to 4%.
Even if utilities could wave a magic wand and add more centralized generation to meet this demand, there’s another layer to the AI energy challenge: a dramatic rise in server rack power density. Liquid-cooled AI racks will require eight times more power than the average rack today, drawing over 120 kW with loads that spike and drop in seconds. Such a significant leap in intensity and timing adds new complexity to the energy equation.
All of this is occurring on top of aging grid infrastructure — much of which is over 60 years old — which only amplifies the challenges for data center stakeholders who need large quantities of reliable energy to power AI progress.
Fortunately, battery energy storage systems (BESS) are responsive, high-availability solutions that are well-suited to support data center power consumption needs and are already demonstrating their worth as an established technology to help with the timing mismatches of the grid’s supply and demand, as well as providing millisecond services. Utility-scale battery capacity in the U.S. saw record-breaking growth in 2024 — increasing by 66% — and experts expect 2025 to be another record-breaking year. While data centers are a newer application for BESS, the technology has already proven itself as a fast-to-market, reliable power solution.
How Battery Storage Supports Data Center Power Needs
Utility-scale batteries enable data centers to deploy a range of energy strategies, from speeding up interconnection timelines to managing seamless power source transitions and ensuring power quality as onsite energy portfolios evolve. BESS delivers critical benefits when it comes to speed, cost, and reliability for data center owners and developers.
Fastest Time to Power
In the AI race, securing power faster is a competitive edge that can mean the difference between leading the market and lagging behind. The sooner data center developers can access more electrons, the sooner and the better they can scale operations, train models, and deploy AI-driven applications to meet rising demand.
There are two major elements of speed that batteries bring to the table: faster deployment and faster interconnection.
Accelerated, Agile Deployment
BESS can be deployed faster than other energy resource and integrate with all power supply assets, from solar and natural gas to nuclear and geothermal. This gives data center owners and developers the flexibility to incorporate battery storage across their power strategy, no matter their base energy supply.
Additionally, BESS offers unique deployment agility. Battery storage projects have a smaller footprint than other energy resources, making for higher energy density and more siting flexibility. Modular battery units are then delivered in blocks, minimizing onsite labor and enabling phased construction alongside expanding data center campuses. Integration and control systems can be pre-configured in lab settings, significantly reducing field commissioning time. And with performance governed by software instead of a programmable controller or analog instrumentation, BESS enhancements come via overnight updates, not infrastructure overhauls. This makes BESS especially well-suited for data center energy planning.
Accelerated Interconnection
But what good is an accelerated deployment if data centers get stuck in a multi-year interconnection queue? The good news is, with BESS as part of a data center’s power strategy, developers can cut years off their interconnection timeline and bring capacity online sooner.
Long interconnection queues with utilities are notorious for delaying project timelines. The primary bottleneck for data centers is securing a firm interconnection, which guarantees an uninterrupted connection to the grid and the continuous power that is critical for running data center operations. However, a firm interconnection often requires extensive grid upgrades and very long approval processes.
Alternatively, if developers opt for an interruptible interconnection agreement and leverage batteries to ensure stable, uninterrupted power, they can gain approval faster and bring capacity online sooner. BESS helps data centers ride through power interruptions when the grid is stressed, enabling continuous operations even when grid power is curtailed. Newest models suggest this flexible, interruptible strategy could unlock up to 76 GW of new capacity for data center development in the US.
Lower Total Cost of Energy
Energy is by far the largest operating expense for data centers, and their power consumption is quickly growing with highly energy-intensive workloads like AI. BESS not only enables data center owners and operators to lower their overall energy costs, but batteries can also unlock new revenue streams by participating in power markets.
In the simplest use cases, batteries unlock the ability participate in energy arbitrage, meaning data centers can buy electrons when they’re plentiful and cheap and then use those stored electrons later when grid electrons become more constrained and expensive. Additionally, data centers with large-scale batteries can participate in ancillary services like frequency regulation, voltage support, spinning reserves, and fast frequency response (FFR). The resulting earning potential from these various revenue strategies can oftentimes cover the cost of the battery storage system over the lifetime of a data center.
Owners can go even further by combining battery storage with onsite power generation to control their energy patterns long-term, lower costs, and ensure operational continuity through power independence.
How Battery Storage Can Evolve with Various Power Sources
Diagram illustrating BESS integrated with a variety of generation assets to enable grid independence.
Power Reliability
Ensuring reliable, resilient energy is a battery’s superpower. BESS acts as chameleon that can adapt to varying power sources and customer and grid needs, from backup power to peak shaving and frequency regulation.
When it comes to ensuring reliable data center power, battery storge plays key roles in reducing demand, enhancing power quality, and delivering uninterruptible supply.
Reduced Demand
Battery storage delivers on reliability during daily grid stress when demand is at risk of outpacing supply, causing strain and congestion. Fortunately, the challenge of delivering data centers reliable power is primarily contained to a 4-hour window from about 4 p.m. to 8 p.m. — or peak demand.
Using today’s 4-hour, utility-scale batteries, data centers can shift their demand curves to more economical times of day and lower data center grid use during these peak demand periods. This strategy has dual benefits. As we mentioned before, reducing a data center’s reliance on the grid, especially during peak hours, can move projects to the front of the line for interconnection. Additionally, relying on battery power during this 4-hour window helps lower peak demand charges, saving data center owners money.
How Battery Storage Reduces Consumption
Diagram illustrating utility-scale batteries deployed behind the meter to give data centers unprecedented control over their energy strategy.
Enhanced Power Quality
Data centers’ servers, routers, storage systems, and cooling infrastructure require the utmost power stability. Even the slightest deviation in voltage, frequency, or waveform can have serious consequences for data center uptime, performance, and hardware lifespan. At the same time, power demands per server rack are evolving from today’s average of a steady 15 kW to a volatile 120+ kW for advanced AI workloads, with power profiles that spike and drop in sub-seconds. This combination of high energy density and rapid fluctuations creates a new kind of challenge that can either be met by costly utility-scale grid upgrades paid for by data center developers, or by deploying software-controlled batteries at the campus level, right where the volatility occurs.
With millisecond-fast cutovers, batteries are better suited to react to power disturbances than traditional mechanical solutions. BESS acts as a real-time stabilizer and shock absorber, helping smooth voltage and frequency fluctuations, reduce harmonics, and ensure a stable power supply for data centers.
Large-scale, 4-hour batteries equipped with a high-performance energy management system can even replace legacy Uninterruptible Power Supply (UPS) systems by providing instantaneous backup power and a power control software layer at the campus-level.
How Battery Storage Supports Power Quality
Diagram illustrating how BESS can function as a medium-voltage, line-interactive UPS system.
We know power quality and UPS systems are a top priority for data center developers. Reach out here to talk with a FlexGen expert about data center power quality and UPS systems.
The Ready-Now Solution for AI Energy
As the age of AI continues to accelerate, data center power consumption will only become a more critical challenge for developers and owners to solve. Today’s BESS technologies can support ever-growing data center demand with key benefits, from speeding up interconnection to optimizing for lower operating costs and reliable power quality.
FlexGen offers turnkey and hardware-agnostic solutions for designing, integrating, and operating BESS. Learn more about how we support data center owners and developers to quickly get online, stay online, and continuously optimize operations here.
