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When goals move beyond simple standby backup and require an active, value-generating asset, BESS may be the way to improve day-to-day data center economics
In the U.S., data center consumption is expected to account for 9-17% of electricity produced by 2030. The need for reliable, cost-effective energy storage will become critical – especially as diesel generators become less popular because of high operational costs, environmental impact, and growing pushback from communities concerned about the exhaust and air quality, fossil-fuel reliance, and noise pollution.
Battery Energy Storage Systems (BESS) could become the go-to choice for integration into microgrids, or as independent infrastructure where a more efficient option is needed to transform a cost center into an active asset that generates value.
Currently, APAC leads in total BESS capacity and growth, but the U.S. holds the largest revenue share (approx. 40.2%) in the global data center battery market, driven in large part by high-density, large-scale data centers, as well as growing adoption of electric vehicles.
What are the key components of BESS?
- Batteries
- Racks to house and connect battery modules in series or parallel to meet voltage and current requirements.
- Containers that provide secure housing for the racks
- Inverters (power conversion systems) that convert the direct current (DC) from batteries into alternating current (AC) for grid use, and back again during charging.
In tandem with those components are battery management systems for monitoring battery health, software to control charges and discharges, and transformers that adjust voltage in alignment with the grid. Also important are thermal management and safety systems around heating, ventilation, and fire suppression.
Why is BESS momentum growing?
While generators often sit idle for 99% of their life, BESS provides near-instantaneous (milliseconds) power. With generators, you need about 10–15 seconds to spin and sync – something that necessitates a separate Uninterruptible Power Supply (UPS), which BESS can provide. But the real value of lithium-ion banks is their ability to transform power infrastructure from a passive cost center into an active, value-generating asset.
By interacting with the utility grid, batteries can inject or absorb power as needed, and through peak shaving and energy arbitrage, they can optimize when and how data centers use power. Not only does that enable data operators to run more efficiently and reduce electricity costs, but it also sets the stage for monetizing assets. Through frequency regulation or demand response programs, operators can buy electricity in off-peak hours and sell it back at times that prices are highest. Additionally, BESS gives data center operators the option to be a reserve or backup to local utilities, especially in times of peak usage or emergencies.
When stable becomes unstable
Installed adjacent to high-value data center assets, it’s critical that BESS comply to the highest safety standards, not only to eliminate risk to the data center environment, but to also ensure battery storage systems are performing optimally. Solutions have to provide consistent power at optimal operating temperatures, as well as redundancy (N+1, 2N), and fault tolerance.
The biggest concern is fire safety, specifically the high risk of thermal runaway in lithium-ion batteries, which is an event in which a battery cell’s temperature enters an uncontrollable, self-heating state that causes a fire, toxic gas release, or an explosion that can threaten an entire facility.
“While traditional sensors track temperature or voltage, lithium-ion cells typically vent a very small amount of hydrogen at the start of a failure,” says David Suter, CEO of Fast Sense, which focuses on detection of hydrogen, namely fugitive molecules that can float into the atmosphere without detection. “Nanoparticle detection of fugitive hydrogen at low PPM is needed to protect facilities from thermal runaway,” says Suter. “Protecting sensitive, high-value equipment requires an extremely sensitive safety layer built specifically to detect hydrogen.”
Because there are usually 5 to 20 minutes before thermal runaway occurs, it’s important to detect a problem before there is any smoke. Though there can be higher upfront costs to comply with stringent regulatory requirements, especially in countries racing toward sovereignty and self sufficiency, Suter notes that batteries come from many places, “including countries with less stringent requirements than Europe or the U.S.” He explains batteries can be “used” or “second-life” batteries. “You want to make sure that whatever goes into the container is safe, as one container next to tens or hundreds of containers can cause a catastrophic explosion. You have to know what you are dealing with, and you have to have a safety layer sitting within the BESS environment to read temperatures and detect abnormalities on the pack itself.”
The bottomline
With caution as the default, there is a cost to the storage economics of BESS, but solutions designed for proper cooling, safety and fire suppression can make data centers more sustainable. They can be a bridge to renewable strategies that ultimately lower greenhouse gas emissions and provide emission-free backup power. That’s where BESS is best, as a cleaner and more efficient alternative to traditional fossil fuel-based energy. It has the potential to efficiently store excess energy and stabilize the grid, especially in instances where there are massive power constraints or long wait times for substations. In those cases, advanced storage solutions can accelerate time to market, manage power peaks, and ensure data centers stay within their capacity limits.
In the long run, BESS will be a critical steppingstone to mitigating or replacing carbon-intensive diesel generators, offering long-duration backup (often 4–8 hours), and opening the door to carbon-free energy from solar or wind. This is why it’s increasingly considered a cornerstone to sustainable, “firming” strategies for renewables by efficiently storing on-site solar or wind energy.
