As the demand for AI infrastructure grows, battery energy storage systems (BESS) are becoming integral to datacenter operations. Analysts are seeing a potential deployment of 20 GW of capacity over the next ten years.

Leading tech companies view BESS as vital for managing energy demands, providing backup, and ensuring speedy interconnections, as indicated in a new report by Jefferies. The combination of grid-connection and backup systems makes BESS an appealing option for hyperscalers.

Primarily serving as backup alongside traditional generators, BESS growth is expected to be driven by the rising energy needs of electric vehicles and increased data storage facilities. Despite the Trump administration’s policies, battery storage is likely to remain a thriving carbon-neutral technology due to supportive policies and grid reliability requirements.

Analysts pinpoint a 20 GW opportunity for hyperscalers, with lithium iron phosphate solutions poised to benefit the most. However, partnerships with Chinese suppliers, offering cost-effective and advanced solutions, present a challenge amidst political tensions.

Chinese suppliers, such as CATL and Sungrow, are seen as well-positioned to meet increasing US demands, offering higher energy efficiency and density. Despite concerns over cybersecurity, Tesla and Fluence Energy present strong domestic alternatives, although cost disparities can challenge competitiveness.

The report predicts a modest growth in 2026 due to tariff disruptions yet foresees significant increases in 2027, driven by the expansion of AI infrastructures.