Data centers’ energy demand is well-documented. Hyperscale AI data centers owned by big-tech companies are placing acute strain on energy infrastructure in the United States, the global data center capital, and many more are expected to come online. There is ongoing debate about how policymakers, grid operators, regulators and the energy industry – renewable or otherwise – can respond to the situation. Battery energy storage systems (BESS) can provide grid-balancing solutions, but not all are convinced they can fully replace gas.
The United States had more than 5,400 data centers as of March 2025, according to Statista. This was more than 10 times the data center density of the next highest country, Germany, which had 529.
This number is set to increase as US cloud technology giants continue their AI growth apace. The US Department of Energy (DoE) predicts data centers could account for as much as 12% of the nation’s electricity demand in the next three years.
Arman Shehabi, staff scientist at the DoE-funded Lawrence Berkeley National Laboratory (LBNL), explained to pv magazine that about a decade ago, data centers made up roughly 1% of grid demand, which even then was considered cause for concern due to their large electricity consumption.
Predicting future data center energy requirements is difficult because the industry is still relatively new and doesn’t have the data-sharing tradition of established high energy consumption industries like iron or steel. Shehabi’s team at LBNL’s Energy Analysis and Environmental Impacts Division published a report in December 2024 that provides a scenario of US data center demand to 2028 using a bottom-up modeling approach.
“Together, the scenario variations provide a range of total data center energy estimates, with the low and high end of roughly 325 and 580 TWh in 2028,” the report stated. “Assuming an average capacity utilization rate of 50%, this annual energy use range would translate to a total power demand for data centers between 74 and 132 GW. This annual energy use also represents 6.7% to 12% of total US electricity consumption forecast for 2028.”
Interconnection issues
In the short term, as data center energy consumption grows, power is the main constraint, as Oliver Kerr, managing director for Aurora Energy Research’s North American division, pointed out.
“Already across the US there are well-documented issues around interconnection queues.” Different system operators and power markets deal with these issues differently, added Kerr. “Depending on where you are, it can take up to eight years or more from conceiving of a project, putting it in the interconnection queue, and then finally getting it online and up and running. When you add all the recent policy and regulatory uncertainty since the passage of the One Big Beautiful Bill Act, that has led to a situation where you’ve got this potential for rising load, challenges bringing new generation online, and higher prices for consumers.”
From a control room in Valley Forge, Pennsylvania, the largest US power grid PJM Interconnection serves 67 million customers across 13 states and the District of Columbia.
PJM has been critized by customers frustrated by high energy prices in recent months, as well as from politicians and regulators. Asim Haque, senior VP of governmental and stakeholder relations for PJM Interconnection, told pv magazine that PJM has complied with regulatory orders to reform its interconnection process and that progress is being made.
“We have roughly 46 GW of resources that are through the queue that have nothing left to do with PJM Interconnection –almost entirely renewable resources that can safely plug into the power grid but are not plugging in because of challenges that are outside of PJM’s control, and frankly, sometimes outside of the developer’s control,” he said.
Supply chain issues, financing, and permitting are all holding up deployment, Haque said. “We’ve got another roughly 63 GW that we are going to process over the next 16 months, and we will be done with our queue reform effort then with lots of resources available to plug into the grid.”
He added that of the resources still in PJM’s queue, about 43% are solar and 27% are some form of battery storage, whether standalone or hybrid.
But Haque cautioned that historically the queue completion rate is about 20%, and the percentage for renewables is even lower. Pushing power sources off the grid prematurely is a major headache for grid operators such as PJM, who are trying to get a handle on supply and demand. To avoid attrition, developers need more support at state and local level, particularly around permitting, as NIMBY-ism (not in my back yard) is a big issue, said Haque.
Haque reckons demand response will play a big role in grid operators being able to maintain system reliability, so peak shaving programs need to be in place.
Foggy forecast
He said that utilities can help grid operators like PJM sharpen their load forecasting by providing their data on the data centers planning to connect. That way grid operators can create a demand curve to clear the market and create the price. “On the demand side, we get our information primarily from the utilities that are connecting these data centers,” he explained, adding that PJM is not a regulator, so obtaining data from a patchwork of different states and utilities can be difficult.
“What we’re starting to see is some states take action that will assist in helping us to sharpen our pencils on the load forecast,” he said, mentioning the recent move by Ohio’s Public Utilities Commission to require data centers to pay significant fees upfront to connect to the distribution system. Data center operators involved in the negotiations in Ohio plan to contest this measure. And this is a problem. Many of the solutions being proposed do not work for data center providers. For example, load shifting using batteries doesn’t work 100% effectively for hyperscale data centers running 24/7 with no ‘off-peak’ demand time.
A Duke University Study from February 2025 found that nearly 100 GW of large loads could be added to the grid with minimal impact, if those loads are flexible. If a developer accepts some curtailment, the number of possible grid locations vastly increases. But many data center developers don’t want to curtail their energy at all. Storage makes flexible interconnection feasible and reliable for data centers, according to the report. By placing batteries behind the meter, a provider can switch to stored power during peak demand periods and meet curtailment requirements without sacrificing uptime or power quality and control over their energy strategy.
The long wait time for gas turbines means data centers are looking at solar and storage, according to LBNL’s Shehabi, among other energy sources to power their operations.
“Right now, time is of the essence since they’re all in a rush to develop technology,” said Shehabi, adding that he is seeing a direct impact on demand growth owing to new data processing hardware coming on the market.
Backed by BESS
Aurora’s Kerr agreed, adding that solar and storage tend to be among the most shovel-ready projects. “There are huge opportunities for batteries right now, batteries thrive on volatility to the extent that new load drives some volatility, particularly in certain parts of the grid.”
“The other thing with the US is it can be, depending on the market, relatively challenging and costly to build new transmission,” said Kerr. “Batteries effectively act as transmission in that they help alleviate congestion in certain areas, so I think there will be a strong business case for batteries in many regions across the US over the next five years.”
Julian Nebreda, president and CEO of US battery storage company Fluence, said on the company’s third-quarter 2025 earnings call that batteries are fast becoming “one of the most competitive energy solutions for meeting capacity needs and [are] superior to gas storage.”
“One of the most transformative trends we see in the energy market is the rapid growth of data center demand, driven by AI and machine learning workloads.” He said BESS can “play a critical and unique role” in balancing localized demand spikes on the grid coming from these workloads by absorbing excess power and releasing it during high-demand intervals. “BESS can act as a buffer,” he said, again emphasizing its superiority over both fossil fuels and other renewables in this application context.
Battery storage can be co-located at the data center or deployed at the transmission level, offering both behind the meter and grid-level flexibility. Nebreda was optimistic about US market prospects in the future.
Kerr pointed out that the amount of gas generation under construction is only a fraction of the amount of wind, solar, and storage. “If you want projects that are close to completion, you don’t have many options, and batteries are a key option for a dispatchable resource that can get to market quickly. Batteries also have the benefit of not being particularly affected by the One Big, Beautiful Bill Act, their tax credits remain intact out to the early 2030s.”
Despite the positive outlook for batteries, Aurora remains “pretty bullish” on gas, according to Kerr. “We think it’s needed in the US market especially if you want to meet rising load. But there are issues with supply chains and issues with getting gas plants up and running quickly,” he added. Long-term gas revenue streams are also far from certain, so it is a risk to build new gas generation. Companies like Fluence can benefit here. Nebreda said Fluence is engaging with data center operators to provide battery storage and that initial estimates put demand for the company’s solutions at $8.5 billion through to 2030.
More power on the grid is needed to meet rising demand, and it doesn’t matter to data centers where this comes from. Ideally, their operations can be connected quickly, cheaply, and conveniently. If a battery energy storage provider can offer attractive demand-side flexibility solutions to grid operators, utilities, and hyperscale data center operators alike, they have a reasonable chance of eventually becoming at least as essential as gas generation is today.
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