The case for BESS
- Steven Carlini
- 26 Jun 2025
- 4 min
The lights can never go out in a data center — until they do. And traditional backup systems weren’t built for climate change in the 21st century.
Overview
- AI workloads and extreme weather expose data centers to potential vulnerabilities, forcing operators to rethink traditional backup power systems.
- Battery storage provides hours of backup power, turning costs into revenue.
- BESS technology delivers competitive advantages through enhanced resilience, cost savings, and contribution to sustainability efforts.
The data center industry is grappling with a trio of challenges that threaten to upend decades of established practice. Artificial Intelligence workloads are devouring electricity at unprecedented rates, while increasingly volatile weather patterns and renewable energy integration strain an aging power grid beyond its limits.
This convergence creates a compelling case for Battery Energy Storage Systems (BESS) that transform data centers from passive consumers into active participants in the energy economy, and a new strategic component of modern data center operations.
Schneider Electric's Data Center Research & Strategy group identifies several critical market dynamics reshaping data center power requirements. The exponential growth of AI applications has amplified energy consumption patterns , while the accelerating transition to renewable energy sources—despite their sustainability benefits—introduces intermittency challenges that traditional backup systems cannot adequately address.
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Battery Energy Storage Systems represent a fundamental evolution from conventional data center power architectures. Unlike Uninterruptible Power Supply (UPS) systems that provide five to 15 minutes of backup power, BESS typically store one to two hours of energy, enabling multiple operational benefits beyond emergency backup.
The technology operates as an electrochemical device that stores energy from the utility grid and supplies it back to the grid or connected loads when needed. This dual functionality positions BESS as both a solution to increase resilience and a strategic asset for data center providers to participate actively in the grid.
BESS that are deployed on site at data center facilities offer operators several distinct advantages:
Flexibility and resilience
Better operational continuity during grid outages or fluctuations through extended backup power duration.
Cost optimization
Peak shaving and load shifting capabilities to offset peak demand charges, which can account for between 30% and 70% of monthly electricity bills for commercial customers.
Sustainability leadership
Supporting carbon reduction goals while addressing increasing regulatory challenges.
The financial implications of BESS deployment extend beyond traditional cost-avoidance metrics. Demand charges, based on the highest power consumption during 15 or 30-minute intervals within a billing period, represent a significant operational expense that BESS can directly address through strategic discharge during peak periods.
Recent regulatory developments and tax incentive clarifications in many countries have further enhanced the economic proposition. Government programs may reduce BESS deployment costs while creating opportunities for data centers to monetize stored energy by providing grid services during utility peak load periods, potentially transforming energy infrastructure from a cost center to a revenue generator.
Despite the compelling value proposition, BESS deployment requires careful consideration of site-specific factors. The return on investment varies significantly based on load profiles, local market conditions, regulatory frameworks, and specific use cases. Organizations must address several strategic questions before implementation:
Strategic alignment
Integration requirements with long-term business objectives and sustainability commitments.
Cost-benefit analysis
Comprehensive financial modeling comparing BESS to conventional backup solutions, including upfront investment, operational expenses, and potential savings.
Regulatory compliance
Navigation of jurisdiction-specific deployment frameworks and permitting processes.
Risk management
Operational risk mitigation strategies for grid outages, energy price volatility, and environmental compliance.
As the energy landscape increasingly adopts renewables and the grid is further decentralized, data centers that proactively integrate BESS capabilities will be better positioned to navigate operational challenges while capitalizing on emerging market opportunities.
Discover comprehensive strategies behind BESS in 'The Case for BESS' - our executive brief featuring ROI modeling insights, regulatory guidance, strategic alignment frameworks, and real-world implementation considerations
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