Ok, it’s “Electrifying”.
Battery start-ups are moving into AI data centres where their specialist technology helps to smooth split-second power surges, driving what executives describe as “crazy” demand.
The rapid growth of AI data centres is creating a profitable niche for the battery makers, as operators seek technologies capable of responding to energy surges that can be equivalent to the electricity demand of a small town, occurring multiple times per second.
Alsym Energy, a US sodium-ion battery start-up backed by an investment arm of the Indian conglomerate Tata Group, said interest had soared over the past three months from data centre operators seeking ways to manage the frequent power transients caused by AI computing.
These extreme energy fluctuations meant that the facilities were otherwise not able to connect to the grid, Alsym chief executive Mukesh Chatter told the FT. “Battery has become an essential component, not a desired component of data centres,” he said.
Sodium-ion batteries could discharge power more quickly than traditional lithium-ion products, making them suitable for balancing AI-driven fluctuations, he said.
During conventional computing, processors tend to operate independently. But the thousands of processing units operating in synchrony during AI training and, increasingly, inference workloads — the process of running AI models — draw and shed power almost simultaneously.
Kazuhiro Sugiyama of Dutch semiconductor designer Fortaegis Technologies said this created the swings of tens of megawatts in as little as one thousandth of a second.
Existing backup systems and gas turbines are not designed to respond to millisecond-scale movements, the battery executives say.
The opportunity for specialist battery companies comes at a time when electric vehicle battery demand is challenged by the slowing pace of production and fierce competition from Chinese manufacturers.
Volkswagen-backed QuantumScape, a solid-state battery developer originally focused on EVs, said it was in talks with data centre equipment companies about supplying its technology.
Chief executive Siva Sivaram told the FT that the data centre market “clearly” offered better margins and could help the company reach profitability sooner.
“The fact that California, Hawaii, Texas and Arizona are incentivizing battery adoption is the main reason for the trend,” said Cosmo van Steenis, a solar and storage analyst at BloombergNEF.
The first-quarter increase in battery installations was sharper than the firm had originally expected — and could trigger a revision to its 2026 forecast were the trend to continue, BNEF said.
In 2023, California added incentives to motivate solar customers to buy batteries by offering more favorable pricing for electricity exported from homes to the grid after sunset. In the first quarter of 2026, the state installed 1.2 megawatts of residential storage for every 1 megawatt of solar, according to a BNEF analysis.
Hawaii, where electricity can cost over three times the national average, launched a new program last year that offers homeowners a one-time $400 cash incentive for every kilowatt of battery storage added.
“The economics have suddenly shifted towards batteries because if you add on a battery to a system, you can access all these extra revenue streams,” said van Steenis. “And solar on its own is no longer as economic as it was.”
The shift is transforming how solar and battery installation companies do business. Martyna Kowalczyk, founder and chief executive officer of Solartime, a family-owned solar installer in the Dallas area, said she’s had to move her business away from solar installations because of the slump and towards panel maintenance and battery additions.
A decade ago, a battery project measured in gigawatt-hours would have been considered almost absurdly ambitious. Today, Europe has multiple projects in the 2–6 GWh range under construction or development, while annual battery deployments are accelerating rapidly across all major economies.
Perhaps the most telling detail is that one of Europe’s largest battery projects is being supplied by BYD. China is no longer simply exporting batteries, solar panels and EVs. It is increasingly exporting the infrastructure of electrified economies themselves.
This also increasingly challenges how we think about competing technologies. Multi-GWh battery projects are now being deployed at a pace that rivals or exceeds annual additions of new nuclear capacity across much of the developed world, while also reducing the need for new peaking gas and coal infrastructure. The question is no longer whether batteries matter. The question is how quickly they become a foundational pillar of modern electricity systems.
That’s what exponential growth looks like in practice: what appears extraordinary today becomes ordinary far sooner than most people expect.