The types of batteries and energy storage technologies are likely to evolve over the next decade, shifting toward alternatives that mitigate the drawbacks of lithium-ion. Furthermore, data center owners need to rethink their energy procurement and supply strategies; while power purchase agreements (PPAs) have been widely adopted, some companies may opt for more vertically integrated approaches.
Taking these trends into account, and according to the IDTechEx market report, “Battery Storage for Data Centers, Commercial & Industrial Applications 2026-2036”, battery storage for data centers is expected to drive the growth of the battery energy storage systems (BESS) market in the commercial and industrial (C&I) sector, reaching an estimated value of $21 billion by 2036.
Long-duration energy storage for data centers:
Data centers currently use diesel generators and short-duration VRLA and lithium-ion batteries as part of their UPS systems. However, long-duration energy storage (LDES) technologies could become key elements in energy management, as they reduce reliance on polluting generators and flammable batteries, and help balance electricity supply and demand.
Redox flow batteries (RFBs) stand out as a suitable solution thanks to their long lifespan, safety (non-flammable), and ability to handle variable AI loads with minimal degradation. One example is the LDUPS technology developed by Terraflow Energy, which allows power to be supplied directly through the battery without the need for switching during outages, offering more than 10 hours of backup power.
Furthermore, these technologies help stabilize the electrical grid: if the data center's power consumption suddenly drops, the battery absorbs the excess energy, preventing grid instability.
Energy supply strategies for data centers
Data center operators should consider long-term strategies such as PPAs, which allow them to purchase electricity at agreed prices, often from renewable sources.
There are two main types:
Physical PPAs: electricity is supplied directly from the source through the grid.
Virtual PPAs (vPPAs): financial contracts that protect against electricity price volatility.
However, large technology companies are moving toward more integrated models. In December 2025, Google acquired Intersect Power for $4.75 billion, reflecting a trend toward direct control of energy generation. This approach allows for faster data center development and secures their own energy capacity.
IDTechEx Perspectives:
While VRLA and lithium-ion batteries remain dominant, safer and longer-lasting alternatives are likely to emerge. Usage models will also change to better support grid stability.
PPAs will remain relevant in the short term, but large companies may pursue vertical integration for greater energy control, a strategy limited to companies with significant investment capacity.
Author: Conrad Nichols, Principal Technology Analyst
