Renewables and batteries have traditionally been linked, but for US data center operators, batteries are increasingly being paired with natural gas. The surge in demand for artificial intelligence is pushing data center operators to explore every available power solution. One unexpected trend is the combination of batteries - once seen primarily as a way to support renewables - with fossil fuels.
BloombergNEF has tracked 4.9 gigawatts of energy storage announcements co-located with on-site fossil fuel generation at data centers, representing about 32% of announced global on-site data center battery capacity. These sites include some of the largest AI data center complexes under development, such as Elon Musk’s Colossus supercomputer in Memphis, Tennessee. The pairing has become so popular that companies like Caterpillar Inc. and GE Vernova Inc. have launched products and partnerships that combine energy storage with gas generation.
Batteries are essential for maximizing the potential of solar and wind energy by storing excess power and releasing it when needed. However, the sharp decline in battery costs now allows energy storage to be used alongside natural gas, providing more reliable power for data centers. While gas can deliver continuous power, not all plants operate around the clock. Many behind-the-meter facilities use gas turbines that run for shorter periods and cannot ramp up quickly enough to meet computing demands. Hyperscalers are turning to batteries, which can discharge power rapidly, to bridge these gaps and protect gas turbines from damage caused by frequent ramping cycles.
“I assumed batteries would be a tool for decarbonization,” said Michael Thomas, founder of clean energy research firm Cleanview. “What we are learning in this new AI era is that they can also be used as a tool for fossil fuel power because their technological advantages make it possible to build and operate an off-grid power plant.”
With data centers now facing an average wait of four years to access grid power, they are increasingly relying on gas generators paired with energy storage as a temporary solution, according to Allison Weis, Wood Mackenzie’s global head of energy storage. As long interconnection queues delay utility-connected power, developers are finding it faster to generate their own electricity.
Data centers experience sharp demand spikes from computing-intensive tasks like model training. Batteries paired with gas can deliver power quickly enough to maintain smooth operations. Some of the largest US data center projects are deploying batteries alongside gas generators. At xAI’s Colossus facility, Tesla Megapacks are being installed next to gas turbines as part of a 1.2 gigawatt off-grid power plant. In West Texas, Pacifico Energy’s GW Ranch off-grid data center will feature 1.8 gigawatts of battery storage alongside 7.65 gigawatts of gas-fired generation.
Williams Cos., a natural gas pipeline operator, plans to install Tesla batteries with natural gas-fueled power plants for several data center projects. “Batteries really help support the turbines and give us the 99.999% reliability,” said Executive Vice President Rob Wingo at the S&P Global Power Markets Conference in Las Vegas.
Fluence Energy Inc., a global energy storage provider, is in discussions with major natural gas companies to supply batteries that can help data centers begin operations before turbines are installed, according to Chief Customer Officer Jeff Monday. “We are seeing massive demand coming out of the hyperscalers and data center operators,” Monday said, noting that projects pairing batteries with gas generation are the fastest-growing segment of the company’s energy storage pipeline.
Pairing batteries with natural gas also extends the life and usefulness of fossil fuel plants. This positions batteries for a dual role: enabling more green energy on the grid while also delaying the retirement of fossil fuels.
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