Key Points:
- Power demand from data centers could jump from 4 percent today to 17 percent by 2030.
- Grid connection delays trap energy projects in waiting lines that last up to 7 years.
- The United States installed a record 57.6 gigawatt-hours of new battery capacity during 2025.
- Battery makers struggle to secure raw materials without relying heavily on Chinese suppliers.
Artificial intelligence data centers consume enormous amounts of electricity. To keep the servers running, technology companies now turn to battery storage firms across the United States. However, these battery companies face two massive roadblocks. Long wait times to connect to the power grid and heavy reliance on Chinese supply chains severely limit their ability to grow.
Building a massive data center takes about 18 to 24 months. Connecting that same facility to the local power grid takes much longer. Harvest-Time Obadire, an analyst with BMI, noted that grid connections can leave projects waiting in queues for 3 to 7 years in many parts of the country. He cited supply chain constraints and interconnection queues as the biggest barriers facing the industry today.
Battery energy storage systems offer a perfect solution for the technology industry. These giant batteries absorb excess electricity when power plants generate more electricity than is needed. They then discharge that power back into the system when demand spikes. Energy companies already use this technology extensively in states like California to keep the lights on after the sun sets and solar panels stop producing power.
Inside a data center, these batteries perform several critical jobs. They smooth out the overall power demand and optimize the capacity of the local transmission lines. During intense computing sessions, the batteries manage sudden power spikes. They also keep the servers running during temporary grid outages and help tech companies burn less diesel fuel in their backup generators.
Battery storage pairs exceptionally well with natural gas power plants. Many energy-intensive data centers rely on natural gas to generate onsite electricity. Ben Hertz-Shargel, a grid transformation expert at Wood Mackenzie, explained why batteries remain essential in this setup. He noted that gas generators simply cannot ramp up their power output fast enough to match the sudden, volatile energy demands of artificial intelligence software.
The sheer volume of electricity required to run artificial intelligence models scares grid operators. The Electric Power Research Institute estimates that data centers currently consume about 4 percent of the total United States electricity supply. By the year 2030, that number could easily jump to between 9 percent and 17 percent. At the top end, data centers would consume an astonishing 790 terawatt-hours of power every single year.
To meet this looming energy crisis, the United States is building batteries at a record pace. According to the Solar Energy Industries Association, the country added 57.6 gigawatt-hours of new battery energy storage capacity in 2025. This massive buildout pushed the total deployed national capacity to 166.1 gigawatt-hours. The association predicts that annual deployments will hit 110 gigawatt-hours by 2030, with data centers buying a massive share of that new hardware.
Major technology deals already reflect this explosive demand. Tesla generated $430 million in revenue last year just by selling its massive storage systems to xAI, the artificial intelligence company owned by Elon Musk. Calibrant Energy recently signed a contract to build a 31-megawatt battery system for an Aligned data center campus located in the Pacific Northwest.
Fluence, another major energy storage company, currently works on more than 30 gigawatt-hours of data center projects worldwide. Chief Executive Officer Julian Nebreda confirmed that a large portion of those projects is located directly within the United States. He views domestic manufacturing as a key strategic advantage and plans to continue investing in local factories to bypass foreign supply issues.
Despite the boom in business, battery makers desperately need a reliable supply chain. Companies want to build lithium iron phosphate batteries locally, but they still buy the raw materials from China. New federal tax credit rules require companies to buy materials from non-Chinese sources. Chris Dendrinos, an analyst at RBC Capital Markets, pointed out that companies must develop new material suppliers outside of China if they want to scale their operations affordably.
Even if companies find the raw materials, the bureaucratic gridlock remains a nightmare. PJM Interconnection operates the largest power grid in the country. In 2022, the operator completely stopped processing new connection applications because energy companies overwhelmed the system with new projects. The grid operator only began accepting new applications again a few months ago, creating a massive backlog of projects left stranded.
Energy executives express deep frustration over these artificial delays. They have the technology and the capital to solve the data center energy crisis right now. Nebreda stated bluntly that his company could easily build and deploy a massive utility-scale battery system in less than a year. The only thing stopping them from meeting the needs of the electric grid is the multi-year waiting line for a simple grid connection.
