Electricity demand from massive data centers continues to soar, posing a challenge for grid authorities worldwide. But how countries are going to respond to this pressure is looking completely different on each side of the Atlantic. The EU is welcoming batteries at scale, while the US turns away from the energy transition and obstructs Chinese battery imports with tariffs.
The European Network of Transmission System Operators for Electricity (ENTSO-E) has launched a call for project proposals ahead of updating its 10-Year Network Development Plan (TYNDPs). The call includes the usual traditional grid expansion such as new interconnectors, but now also lays plans for large-scale battery projects.
After EU electricity demand shrank by over 3% in both 2022 and 2023, the bloc posted 1% demand growth in 2024, and further growth is expected – much of it due to the shift towards intermittent generation, and new types of demand such as EVs and data centers, with a record-high level of investment expected this year in the latter. For the first time in 15 years, overall electricity demand in the EU is set to reverse its long-term decline, with the next few years set for over 2% growth – enough to outweigh the recession caused by the 2022 fuel sanctions. Microsoft recently announced a 40% increase in its data center investment in Europe, also noting a need to strengthen cybersecurity.
European power authorities are turning to a diverse set of solutions to address these new power loads, including utility-scale batteries to stabilize the grid. Hydropower still accounts for about 90% of the world’s energy storage, but it is batteries which are being adopted at scale today, with pumped hydro set to expand later on serving as long-duration storage. Even in China, where pumped hydro stations are commissioned on a regular basis, battery energy storage systems (BESS) are being laid out on a greater scale, with 7.5 GW and 43.7 / 109.8 GWh commissioned in 2024 respectively.
In 2013, the year-on-year growth in battery deployments was a modest 0.2 GW. By 2023, that number had ballooned to over 40 GW – and at some point around 2030 the world will be installing 1 TW of energy storage batteries a year, with average storage duration lengthening towards four hours, so 4 TWh. This is easy to predict based on the already existing scale of the wind solar industries, plus the fact that they will need multi-hour storage, the vast majority of which will be met by batteries.
This growth has driven, and been driven by, plummeting costs – such that now adding between 2 and 4 hours of storage depth to a wind or solar installation will only double the capex, while vastly improving profitability, and standalone energy storage is also viable. Just a decade ago, lithium-ion battery prices exceeded $1,400 per kWh. As of 2023, the cost had dropped to around $140 per kWh – a 90% reduction, and it has since halved again. As of early 2025 China is able to produce batteries for $70 per kWh, and install BESS at $200 per KWh, while Western markets (that don’t impose tariffs) can install BESS for around $450 per kWh. Most energy projects in Europe cost a lot more than just double price, so that’s a good solid option.
Beyond lithium-ion, new technologies such as vanadium redox flow and sodium-ion are gaining traction, primarily in China. These may serve high-power or long-duration niches more efficiently than lithium, but for now they make up 3% of Chinese additions only thanks to regulatory requirements designed to foster these technologies. These alternative chemistries are better understood as something that can be adopted to dodge any future hike in the lithium price – which is currently sitting below the rock-bottom level of $10 per kg.
The U.S. is facing the same demand pressures led by data centers. But its strategy, which also has to serve healthier manufacturing and population growth figures, looks very different. While Europe combines battery storage with renewables, the U.S. is doubling down on natural gas – drawn by its stable supply, affordability, and the convenience of existing infrastructure.
PJM, the regional transmission organization for the Eastern U.S., recently announced 51 new priority projects aimed at relieving grid constraints and containing soaring electricity market clearing prices. Fully 70% of those projects were natural gas power plants. Batteries ranked second, comprising a mere 20% of total planned capacity, at 2.2 GW. This raises questions about the ESG and sustainability implications for U.S.-based data center operators.
There are exceptions within the US such as California, which continues to aggressively deploy renewables plus battery. The US played a key role in accelerating global battery deployment, with 12.3 GW / 37.1 GWh deployed in 2024, and potential shown under the Biden Administration’s policies to become a manufacturing center as well.
The Trump Administration is now slowing that momentum and allowing gas to have one last golden age instead. Just recently, the Trump administration released its 2026 budget proposal, which included a staggering $19.3 billion cut to the Department of Energy’s budget. Much of this reduction targeted programs under the Infrastructure Investment and Jobs Act (IIJA) and the Office of Energy Efficiency and Renewable Energy—both crucial for supporting battery storage, renewable energy infrastructure, and electric vehicle initiatives. In addition, the National Renewable Energy Laboratory (NREL), a key research body in grid decarbonization, laid off 114 researchers in light of these budget constraints.
Even in Europe, renewables are facing scrutiny. A major blackout in the Iberian Peninsula – affecting Spain and Portugal – sparked criticism of the region’s high solar dependency. Still, the conversation there is focused on expanding battery storage and reinforcing the grid, not retreating from clean energy altogether.
Gas capacity built today has long-term implications for battery deployment under future US administrations. Gas and batteries both serve to firm renewables and provide reliable power, and to a considerable extent they can be considered rivals – in a zero-sum game. Instead of phasing out old gas plants for new battery projects, now the US will be presented with brand-new gas power plants. It will be one thing for a renewables-friendly Administration to return to the White House and put renewables front and center in the energy strategy again, quite another to go all the way and decommission new-build gas plants.
As a more short-term consideration, any battery-friendly Administration would also have to balance between importing the most cost-effective batteries from China or staying the course with the reshoring agenda. This is a stark contrast with Europe’s energy storage industry, which can simply rely on Chinese imports, just as that region does with solar panels.