A recent analysis by IDTechEx highlights how rapid growth in artificial intelligence (AI) is reshaping power and energy strategies for data centers, with a growing focus on safer and more reliable energy storage solutions. As AI workloads increase, data centers are experiencing more volatile power demands, making dependable backup systems essential to prevent data loss or service disruptions.

Currently, most data centers rely on lithium-ion batteries and valve-regulated lead-acid (VRLA) batteries for uninterruptible power supply (UPS) systems, often supported by diesel generators. While lithium-ion batteries are widely used due to their efficiency and compact size, they face challenges such as performance degradation over time and safety concerns, particularly the risk of fires. These limitations are prompting operators to explore alternative battery technologies that can deliver improved safety and longer operational life.

One promising solution is long-duration energy storage (LDES), which can provide power for extended periods and reduce dependence on diesel generators. Among these, redox flow batteries (RFBs) are gaining attention for their non-flammable nature, long cycle life, and ability to handle fluctuating energy loads with minimal degradation. Companies like Terraflow Energy are developing advanced systems that integrate directly with data center operations. These systems allow electricity to flow through the battery before reaching the facility, ensuring seamless power delivery even during outages without the need for switching mechanisms. In case of a blackout, such systems can supply power for more than 10 hours, significantly enhancing reliability.

Beyond backup power, these advanced storage systems also support grid stability. By acting as an intermediary between the grid and the data center, batteries can absorb sudden changes in electricity demand. For instance, if a data center suddenly reduces its load, the battery can store the excess energy, preventing disruptions to the grid. This creates a mutually beneficial relationship between data center operators and utilities, improving overall energy management.

At the same time, data center operators are rethinking how they procure electricity. Power purchase agreements (PPAs) remain a common strategy, allowing companies to secure energy at fixed prices, often from renewable sources. Physical PPAs involve direct delivery of electricity through the grid, while virtual PPAs (vPPAs) function as financial contracts that help companies manage price fluctuations while supporting clean energy projects.

However, there is a growing shift toward greater control over energy supply. Large technology companies are beginning to adopt vertically integrated approaches, investing directly in power generation and storage assets. A notable example is Google, which acquired renewable energy developer Intersect Power in 2025. This move enables the company to secure power capacity more directly and accelerate the development of new data centers. One such project includes a large-scale facility planned with 840 MW of solar power and 1.3 GWh of battery storage.

According to IDTechEx, the market for battery storage in commercial and industrial applications, including data centers, is expected to grow significantly, reaching a value of $21 billion by 2036. While traditional battery technologies will continue to play a role in the near term, the shift toward safer, longer-lasting, and more integrated energy solutions is likely to define the future of data center power strategies.