Power demand and storage build-out

A new UBS analysis says surging U.S. power demand from AI data centers will drive a five-year boom in grid-scale energy storage. As more wind and solar come online, batteries are needed to smooth intermittency and keep data centers supplied during peak hours. Utilities are revising integrated resource plans to add four-hour and, increasingly, longer-duration storage. Developers expect accelerated interconnection queues where states streamline permits and offer clear capacity payments. The report frames storage as a reliability tool first, with emissions cuts as a co-benefit.

Costs, siting and policy friction

Analysts warn timelines can slip: transformer shortages, transmission bottlenecks, and local siting pushback remain constraints. Cost declines have resumed after a bumpy 2023, but lithium and balance-of-plant prices still matter for project viability. Policy design is pivotal—capacity accreditation, ancillary-service pricing, and tax credits determine whether storage pencils out. For tech companies, long-term power contracts bundled with renewable projects can hedge both price and reputational risk. If forecasts hold, the next cycle could see storage paired by default with new solar and wind, especially near data-center clusters in the Southeast and Midwest, tightening the loop between AI demand and clean-power buildout.