Data Centers Drive Interest in Alternative Battery Technologies for Enhanced Energy Storage Solutions

Data centers could bring alternative battery types into the mainstream, developers say

Artificial intelligence data centers have distinctive energy requirements, prompting industry experts to highlight a renewed interest in energy storage technologies that have yet to gain traction with utilities.

Data centers’ demand for substantial power supplies on short timelines could pave the way for mature but underutilized energy storage technologies, according to industry insiders. While flow batteries are not a novel technology, their adoption has been slow despite cost reductions. However, recent developments indicate a potential shift. In May, energy storage developer XL Batteries announced a contract to pilot a 333-kW organic flow battery at a data center owned by Prometheus Hyperscale in Wyoming. Other companies in the energy storage sector have made similar announcements in recent months.

Eos Energy Enterprises, known for its zinc-based batteries, is currently in discussions with a large-scale data center developer that remains unnamed. Although data center operators have a vested interest in renewable energy, which typically necessitates some form of energy storage, Prometheus’s decision to proceed with XL Batteries’ flow battery pilot was not primarily driven by this factor. According to XL Batteries CEO Tom Sisto, the company sought a non-flammable technology capable of responding quickly to significant shifts in power demand, and their organic flow batteries met these criteria.

Industry leaders concur with Sisto’s assessment: as more data centers seek to secure substantial power supplies rapidly, there is potential for mature yet underutilized energy storage technologies to gain traction. Currently, most projects are relatively small-scale pilots as operators and developers explore new solutions, but XL Batteries has already received interest from potential buyers, anticipating that the Prometheus project will meet expectations by its completion in 2027. Prometheus has already signed contracts to procure up to two 12.5 MW systems, one planned for 2028 and another for 2029, contingent on the pilot’s success. “Once this is shown to be working, we’re probably already sold out,” Sisto stated.

### An Appetite for Innovation

Data centers have unique power requirements that could lead them to explore new and underutilized forms of energy storage, according to Sam Allen, the mission-critical director for technical innovation at Burns & McDonnell, an engineering and construction firm involved in several data center projects. Traditional cloud-type data centers typically operate with steady, predictable loads, while AI-driven data centers often experience sudden, significant load fluctuations, leading to more complex power needs.

Like other large infrastructure projects, data centers have faced permitting and interconnection challenges, prompting operators to seek independent, flexible, and reliable power sources to accommodate inconsistent demands, as noted by Tisha Scroggin-Wicker, decarbonization director at Burns & McDonnell. Although lithium-ion batteries remain the most commonly discussed solution in conversations with clients, alternatives like flow batteries are gaining attention due to their ability to support a high number of charge-discharge cycles with minimal performance degradation over time. This durability makes them well-suited for applications requiring long-term reliability and where rapid load fluctuations are common.

Nickel-zinc batteries are also being considered by data centers due to their high power density, enhanced safety profile, and environmental advantages. Additionally, supercapacitors may be of interest because of their capacity to deliver substantial power over short durations. “Ultimately, the industry is focused on solutions that balance speed to market, operational reliability, and sustainability,” Allen explained. “There’s a clear appetite for innovation and for moving beyond any single technology to support broader energy goals and future-proof infrastructure.”

### Use-Case Based Decisions

While there is interest among data centers in behind-the-meter energy storage that could connect to the grid and participate in virtual power plant programs, most of the data centers currently being constructed have not pursued this direction. Many of Burns & McDonnell’s clients who have built onsite energy storage have opted to disconnect from the grid, pairing storage with dedicated generation to bring the data center online more rapidly than if a utility were involved.

The firm has also observed growing interest among data centers in acquiring and operating existing energy storage projects, regardless of the storage technology. These include lithium-ion projects, flow batteries, compressed air energy storage, and other forms of long-duration energy storage. Such technologies could enhance data center operators’ ability to manage higher power densities, integrate more renewable energy, and ensure a reliable, flexible power supply—all on a much shorter timeline than connecting to the grid.

However, it remains uncertain whether any specific energy storage technology will dominate among data centers. Jason Abiecunas, executive vice president of business development at FlexGen, a software provider for energy storage systems, noted that data centers express interest in a wide array of storage technologies. This adaptability is essential, as data centers have unique operational needs that may lead to a more technology-agnostic energy storage landscape. When it comes time to implement an energy storage system, however, only a limited number of new technologies have proven successful.

“The trend is becoming clearer: battery chemistry decisions are increasingly driven by use cases,” Abiecunas stated. “For instance, when energy storage is deployed to replace traditional generators or extend backup capabilities, there is growing interest in long-duration chemistries.”

Sisto expressed skepticism regarding data centers’ need for what the utility sector would categorize as long-duration energy storage. Like Abiecunas, he believes that interest is mainly driven by specific use cases, and the costs associated with owning and operating an energy storage project decrease with more frequent cycling. He contends that storage technologies with a 36-48 hour range are most likely to gain acceptance among data center operators, while seasonal or ultra-long energy storage options may fall short.

Currently, many of the technologies that pique the interest of data centers remain relatively untested in real-world scenarios, even if, like flow batteries, they are based on technologies that have been studied in laboratories for decades. Most data center operators are hesitant to be the first to deploy an unproven technology on a large scale. Consequently, many potential customers are adopting a wait-and-see approach, observing how ongoing pilot projects develop before committing, which could lead to a rush on the limited manufacturing capacity available for some of these technologies as soon as one proves successful. “That’s the natural tension,” Sisto remarked. “Everyone would love to wait and see, but at that point, you may have missed the boat.”