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Data centers – the vast, physical warehouses where IT servers and systems are kept – are experiencing a boom in demand, particularly across the USA. Driven by the rapid ascent of AI, analysts project that the global electricity demand for data centers is expected to double by 2030, reaching consumption levels that rival entire developed nations. Still, the challenge goes beyond the sheer volume of power needed. Data centers operate 24/7 and experience pronounced swings in demand which legacy grids simply aren’t engineered to handle.

Luckily, answers are emerging. Grid-scale batteries can respond quickly enough to tame this volatile demand, and when properly coordinated by a sophisticated operating system – like Kraken – they can contribute to building a healthier, better-balanced grid overall.

Data centers have uniquely volatile demand profiles

The fundamental nature of data center electrical loads distinguishes them from traditional industrial consumption, being not just especially large, but unusually “spiky” and unpredictable. When tech companies launch AI training algorithms or massive computing clusters activate, the resulting power draw is instantaneous and intense. This poses a pressing stability problem. The grid’s legacy generators, such as slow-ramping gas-fired peaker plants, aren’t merely relatively expensive and slow to build, but are ultimately technically incapable of matching huge demand spikes that occur in milliseconds.

This critical mismatch between fast demand and slow supply results in immediate frequency instability, severe stress on local transmission and distribution networks and significantly higher balancing costs for grid operators (if they can meet that demand at all). And this volatility is only compounded as clusters of data centers concentrate in particular geographical regions. A faster, smarter solution is clearly needed.

Coordinating grid-scale storage to tame demand

Fortunately, the flexibility afforded by large batteries is well-suited to addressing pronounced immediate swings, charging up whenever energy is cheapest and cleanest and discharging instantaneously to flatten out spikes and maintain critical grid frequencies.

But installing batteries along the grid isn’t enough. These flexible assets must be intelligently optimized to keep up with data center demand. To achieve this, operators need a few things:

• Digital operating systems that can provide real-time visibility into both grid signals and market pricing
• Accurate forecasting that accounts for changes in data center load, broader grid constraints and the wider availability of electricity
• Automated, synchronized dispatch across entire portfolio battery assets

When these batteries are intelligently managed, they also allow owners to ‘value-stack’ – unlocking new, overlapping, non-speculative monetization opportunities for their owners through energy arbitrage, balancing markets and capacity services.

This sophisticated, real-time coordination between dynamic grid signals, fast-moving market pricing and on-site operational demands requires robust software solutions. Today’s digital operating systems are ready and able to deliver this support and Kraken’s Generational Flexibility capability is a case in point.

Co-locating batteries and data centers creates overlapping benefits

Grid-scale batteries are especially useful when ‘co-located’ together with data centers (situated alongside a data center behind its grid connection). These batteries can then charge up at times when the grid is least constrained and energy is cleanest and cheapest, and in turn, discharge to save data centers from relying on more expensive grid electricity, especially during peaks in demand.

Data centers themselves can use next-generation operating systems to internally balance the energy they draw from the grid and any stored electricity that they draw from their batteries to meet demand most efficiently. Additionally, these batteries could also be used to help balance the grid outside of peak times, providing other sources of income for data centers, while enhancing grid flexibility. By coupling a facility with storage and allowing it to participate in local or national flexibility markets, operators ultimately offset operational costs and dramatically enhance both their own resilience and that of the wider grid.

This also opens the door to building more data centers in places where grid capacity is constrained.  Electricity distribution infrastructure is built to handle a maximum electrical load at peak times during the day, and will have spare, underutilized capacity the rest of the time. In fact, a EU Joint Research Center study calculated that some grid infrastructure is used between just 2-20% of the time. Many data center projects are denied or delayed because utilities and grids can only supply the required power for (say) 95% of the year. In this case, grids would normally aim to upgrade their infrastructure to meet capacity 100% of the time, which is costly, and time-consuming.

However, where data centers are co-located with batteries, they could use their own backup storage to cover those 5% of time periods that the grid alone cannot meet, using an intelligent operating system to forecast and schedule this off-grid generation. This would delay, or remove, the need for upgrades, allowing many more data-center projects to go ahead, without putting additional build costs and pressure on utilities, and ultimately, consumers.

Data center demand will define the grid’s next decade

Data centers will undoubtedly define the next decade of grid planning. It’s not a question of whether grids accommodate them, but how. If this new, volatile demand is managed intelligently – with responsive distributed assets and smart, optimizing software – then data centers could become an integrated part of tomorrow’s smarter, cleaner energy system.