The soaring energy demands of data centers in the AI era have rapidly become one of the biggest headaches for executives in the industry.

Not only are racks getting denser and more power-hungry than ever before, but they are doing so against the backdrop of an energy grid that is, in many parts of the world, transitioning away from fossil fuels towards more sustainable sources of power.

Renewables, by their nature, are less consistent than fossil fuels when it comes to supplying energy, so battery energy storage systems, better known as BESS, are being delivered at many new data center developments. These systems collect and store energy at times of surplus, meaning it can be redirected to a data center - or back into the wider grid - at times when the wind drops or the sun isn’t shining.

But while the benefits of BESS are well established, the type of battery that should sit at the heart of these systems remains up for debate. Cells based on the lithium-ion chemistry currently dominate the market, but for large-scale installations, these can be problematic. Damaged lithium-ion batteries can cause fires or explosions, while geopolitical tensions between China and the US mean getting hold of the materials required to make them in the first place is a challenge.

In this context, businesses and researchers are looking to other chemistries, and flow batteries, a type of cell that doesn’t rely on lithium, could prove to be a winning formula if challenges around its adoption can be overcome.

Everything must flow

Flow batteries differ from conventional cells because they use a liquid electrolyte to store energy, rather than a solid material.

“You have two tanks, one positive and one negative, with the charged storage material dissolved into a liquid,” explains Tom Sisto, CEO of XL Batteries, which makes grid-scale flow batteries. “From those tanks it's pumped through the cells, and as it flows over the electrodes, it does the charging and discharging goes back into the tanks.”

With a flow battery, you can scale up the size of the storage tanks without needing a corresponding increase in energy, so in theory, they make an ideal storage option for squirreling away excess power. The technology has been around for years, but the liquids used in the electrolyte have traditionally been quite problematic.

“Vanadium is the classic one, which is a highly mature technology that has been scaled for grid use,” Sisto says. These batteries use vanadium ions as the charge carrier, and Sisto explains: “Vanadium is expensive and found in geopolitically sensitive regions like Russia and China specifically, and it only dissolves in sulfuric acid. This means the electrolyte solution of vanadium and sulfuric acid is very caustic and drives a lot of component costs within the device.”

XL Batteries’ solution is to use an organic compound dissolved in pH-neutral water. Its technology is based on research from Columbia University in New York, where the company’s co-founders discovered organic molecules that are stable in both charged and discharged states, making them suitable for incorporating into a battery.

Vendors of flow batteries claim they offer significant advantages over lithium-ion for data center operators looking to install a BESS, the chief one being that the likelihood of water-based cells catching fire is, for obvious reasons, fairly remote.

“The safety aspect is really important for the data center folks,” says Giovanni Damato, president of the US division of CMBlu Energy, which manufactures what it calls an organic SolidFlow battery, using a water-based electrolyte. “I think everyone's concerned that their batteries do not have thermal runaway events in the communities where their data centers are located. Our technology doesn’t have that risk.”

Thermal runaway can occur when a lithium-ion battery becomes old or damaged, and leads to the temperature of the battery increasing rapidly, running the risk of fires or explosions.

Away from safety, flow batteries could also be more cost-effective and efficient than lithium-ion for long-duration storage, which the US Department of Energy classifies as ten hours or more. “In the eight-to-ten hour storage range, our prices are comparable to lithium-ion right now at low volume,” Damato says. “As we scale up and can buy materials in bulk, we’re going to see that price drop.

“The other benefit for the type of loads required in data centers is that we can cycle a lot. Our batteries don’t degrade based on cycling like lithium-ion does. It's more of a steady calendar life degradation, so you’re looking at a 10-15 year lifespan before you have to refurbish the battery.”

Shock absorbers

With plenty of potential benefits, it’s no surprise data center operators are looking at liquid flow batteries as part of their energy solutions.

XL Batteries has agreed to a partnership with Prometheus Hyperscale, which will see batteries deployed at the company’s data centers over several phases. In the initial phase, XL will supply and install a 333kW demonstration-scale, standalone Organic Flow Battery at an undisclosed Prometheus site in 2027. Following this, Prometheus plans to acquire a 12.5MW/125MWh commercial-scale system in 2028, with another identical system to follow in 2029.

“We fit a lot of use cases, but for Prometheus specifically, we’ll be used as a ‘shock absorber’ for large compute power swings,” Sisto explains, referring to the wildly varying power draw of GPUs, which DCD reported on in April. “So as they ramp power up and down very quickly, we’ll be there as a buffer.”

Sisto believes the technology will be useful, not only for storing energy from intermittent sources of energy like renewables, but also for “flat” energy generation technologies like small modular nuclear reactors, which are expected to be deployed in data centers over the coming decades.

“You don't shift nuclear power generation quickly,” he says. “So storage allows you to match the variability of demand with a flat line of generation.”

CMBlu’s technology is being deployed at a DataHall data center in Saale, Germany, which is set to come online in 2027/28. It will initially feature a 4MW battery, with the aim of expanding to 50MW.

“We’ve got a few customers in Europe that we’re working with because they’re facing specific local constraints around electricity supply and pricing, and want a battery on site,” Damato says.

Challenges ahead

While flow batteries show great promise, issues around scaling the technology remain.

Last year, Australian vendor Redflow Batteries went into voluntary administration, having failed to secure investment for its flow battery, which used a liquid electrolyte combined with zinc-bromide in what Redflow claimed to be an environmentally-friendly solution.

Despite receiving multiple government grants, and landing a contract to supply 15.4MWh of batteries for a microgrid in California, it said it had been “unable to attract the required equity support” to continue, and administrators were unable to find a buyer, demonstrating some investor reticence around the potential of the batteries.

With lithium-ion being such a well-proven technology, Damato admits flow batteries still have a way to go before they are used widely in data centers and beyond.

“Lithium-ion has taken 60 years to get where it is today,” he says. “We’re getting close to a full commercial roll-out [for flow batteries], but it’s going to take a lot of patient capital to keep things moving. We’re in that valley between pre-commercial and commercial, and ramping up is our key challenge right now.”

XL Batteries’ Sisto is confident flow batteries have a role to play alongside other storage technologies as data centers navigate the energy transition. “The global energy market is one of the largest markets in existence,” he says. “The numbers we’re talking about are so astronomical that they’re almost incomprehensible.

“If we’re going to modernize what is the most complex machine in the world, I think it will take everybody, and I am hopeful that the industry and the markets will move together towards a new era of energy generation, storage, and consumption.”

This feature first appeared in the DCD Critical Power supplement. Register here to read the supplement free of charge.