Battery energy storage firms in the United States are fielding growing interest from AI-driven data centers that require large, fast-reacting power solutions. These systems - which store electricity when supply is plentiful and release it when demand rises - are already common in regions with large shares of variable renewables, such as California, where they help meet evening demand as solar generation falls.
Executives and analysts say battery storage also fits well into data center power strategies. When deployed in front of the meter, storage can help smooth overall power draw and make more efficient use of transmission capacity. When positioned behind the meter at a data center, storage can blunt sudden demand spikes, reduce stress on the grid during tight periods, provide short-duration backup during outages and lower reliance on diesel generator sets traditionally used for resilience.
Despite the promise, two structural constraints are limiting how quickly battery capacity can be brought online to meet data center demand. "Supply chain constraints and interconnection queues are two of the most important barriers," said Harvest-Time Obadire, senior power and renewables analyst with BMI, a unit of Fitch Solutions. He noted a stark difference between construction and interconnection timelines: while a data center can be physically built in 18 to 24 months, tying a project into the grid in some U.S. regions can take between three and seven years.
The potential scale of data center electricity needs is large. The Electric Power Research Institute estimates that by 2030 power consumption by data centers could grow to between 9% and 17% of U.S. electricity supply - as much as 790 terawatt-hours - up from roughly 4% today. That projected growth is one driver of the recent acceleration in battery deployments.
Industry metrics show a rapid increase in storage capacity additions. The Solar Energy Industries Association reported a record 57.6 gigawatt-hours of new battery energy storage capacity added in 2025, bringing the U.S. total to 166.1 gigawatt-hours. SEIA projects further expansion, forecasting annual deployments could reach 110 gigawatt-hours by 2030, with a substantial portion of that growth attributable to data center demand.
Analysts also point to a complementary role for batteries alongside natural gas generation in data center power designs. "Batteries will be an essential resource at data centers reliant on onsite gas generation, as gas generators are not fast enough to follow volatile AI data center demand," said Ben Hertz-Shargel, global head of grid transformation at Wood Mackenzie. In that role, batteries supply the rapid-response capability that gas-fired units cannot provide on sub-second or second-to-second timescales.
The market response is visible in project pipelines and commercial activity. Fluence, an energy storage company, said it is engaged in more than 30 gigawatt-hours of projects tied to data centers around the world, with a significant share in the United States, according to CEO Julian Nebreda. Tesla reported $430 million in revenue last year from selling its storage systems to xAi. Calibrant Energy has a contract to supply a 31 megawatt / 62 megawatt-hour battery energy storage system at an Aligned data center campus in the Pacific Northwest.
Storage vendors are intensifying efforts to build out domestic manufacturing and tailor products to the needs of hyperscale cloud providers. Fluence, which had already been establishing a U.S. manufacturing footprint before the rise in AI-related demand, sees domestic production as a strategic advantage and plans continued investment in that capacity, Nebreda said.
Still, scaling rapidly is not straightforward. The lithium iron phosphate and other lithium-ion supply chains are expanding in the U.S., but the availability of key materials remains closely tied to China. That dependence poses constraints, particularly as tax credit rules increasingly prioritize sourcing from outside China. "This is an opportunity to scale US manufacturing which otherwise would have been priced out of the market, but sourcing materials from outside of China still needs to be developed further," said Chris Dendrinos, an analyst at RBC Capital Markets.
Interconnection queues present another material hurdle, particularly for front-of-the-meter battery projects that need to connect to the grid. In many markets, the backlog of connection requests can delay projects for multiple years. The largest grid operator in the United States, PJM Interconnection, paused processing new connection applications in 2022 after its pipeline became overwhelmed, and only began accepting new applications again several months ago.
"Were it not for multi-year interconnection queues, we could deploy a utility-scale battery storage system in under a year to meet the needs of the electric grid," Nebreda said, pointing to how permitting and construction timelines for batteries can be much shorter than the grid connection process.
With demand from AI data centers expected to expand rapidly, storage companies and their customers are weighing strategies to manage these constraints. That includes investment in domestic manufacturing footprints, product design changes to serve hyperscalers, and working with grid operators to address interconnection backlogs. Industry stakeholders say these steps are necessary to align storage deployment timelines with the pace of data center growth.
Key points
- Battery storage is attracting rising interest from AI data centers for both front-of-the-meter and behind-the-meter applications, helping smooth demand and provide fast backup.
- Interconnection queues and a China-dependent materials supply chain are the primary bottlenecks slowing rapid scale-up of battery capacity in the U.S.
- Recent growth: 57.6 GWh of new battery capacity were added in 2025, with total deployed capacity at 166.1 GWh and forecasts of annual deployments reaching 110 GWh by 2030, driven in part by data center demand.
Risks and uncertainties
- Long grid interconnection timelines in parts of the U.S. can delay front-of-the-meter battery projects by multiple years, impacting utilities, developers and data center operators.
- Supply chain dependence on China for key battery materials could constrain near-term growth as tax credit rules encourage non-China sourcing, affecting manufacturers and project timelines.
- If domestic material sourcing and manufacturing do not scale quickly enough, planned battery deployments tied to rapid data center expansion may face delays or higher costs.