Energy Storage and AI-Driven Data Centre Demand: A Five-Year Investment Opportunity in Energy Infrastructure

The AI revolution is no longer a distant promise-it's a seismic force reshaping industries, and with it comes a voracious appetite for energy. As data centers expand to meet the computational demands of artificial intelligence, the U.S. grid is buckling under the strain. For investors, this crisis is an opportunity: energy storage is emerging as the linchpin of a resilient, future-proof infrastructure. Over the next five years, companies that can deliver scalable, sustainable power solutions to AI-driven data centers will dominate the market. Let's break down why this is a must-watch sector-and how to position your portfolio for the ride.

The Grid Under Pressure: A Crisis in the Making

According to a Pew Research short-read, U.S. data centers consumed 183 terawatt-hours (TWh) of electricity in 2024, accounting for 4% of the nation's total electricity use. By 2030, this figure is projected to surge by 133%, reaching 426 TWh, the report notes. The culprit? AI-optimized hyperscale facilities, which guzzle power at an unprecedented rate. Servers alone account for 60% of data center energy use, while cooling systems add another 7–30%, the report says.

The consequences are already materializing. In the PJM electricity market, data centers drove a $9.3 billion price spike in the 2025–2026 capacity market, hiking residential electricity bills in regions like western Maryland and Ohio, according to the report. Deloitte's survey of power and data center executives underscores the gravity: 72% view grid stress as a "very or extremely challenging" obstacle to infrastructure development, the Deloitte report finds. With long interconnection timelines and supply chain bottlenecks exacerbating the problem, the grid is at a breaking point.

Energy Storage: The Lifeline for a Grid in Peril

Enter energy storage-the unsung hero of this energy crisis. As AI-driven power demand surges, storage systems are becoming essential for load balancing, backup power, and reducing grid dependency. The global data center energy storage market, valued at $1.6 billion in 2024, is projected to grow at a compound annual rate of 8.1%, hitting $2.5 billion by 2030, according to a Globenewswire report. Goldman Sachs Research forecasts an even steeper climb: global data center power demand will rise 165% by 2030, with AI accounting for 27% of that demand by 2027, the Globenewswire report says.

Technological advancements are accelerating this transition. Lithium-ion and solid-state batteries are improving efficiency, while AI-driven energy management systems optimize power usage. For example, Meta's partnership with Ørsted to power its Arizona data center using solar and battery storage highlights the shift toward hybrid solutions, a Tamarindo analysis notes. These trends aren't just theoretical-they're reshaping corporate procurement strategies.

Key Players and Investment Opportunities

Ormat Technologies (ORA) is a prime example of a company capitalizing on this shift. Known for its geothermal energy solutions, Ormat recently commissioned the Lower Rio energy storage facility in Texas, backed by a seven-year tolling agreement, a SimplyWall ST article reports. This move positions the company to benefit from grid instability while leveraging its expertise in sustainable power. Analysts project Ormat to reach $1.2 billion in revenue by 2028, with a fair value of $98.10-implying a 10% downside from its current price, the SimplyWall ST article says. However, risks remain: margin pressures, high capital requirements, and supply chain vulnerabilities in battery sourcing could derail its growth.

Other players to watch include companies developing advanced cooling systems and grid-enhancing technologies. Deloitte's report emphasizes that regulatory changes and collaborative business models between data centers and power companies will be critical for scaling capacity, the Deloitte report says. Investors should prioritize firms with diversified energy portfolios and strong partnerships, as these will navigate the sector's volatility more effectively.

Risks and the Road Ahead

No investment thesis is complete without addressing the risks. Energy storage is capital-intensive, and battery supply chains remain fragile. Regulatory shifts, such as changes in grid interconnection policies or subsidies for renewable energy, could also disrupt market dynamics. Additionally, the rapid pace of AI innovation means demand could outstrip even the most optimistic projections.

Yet, the upside is undeniable. As UBS notes, data centers are set to drive an "energy storage boom cycle" over the next five years, according to a Reuters article. For investors with a five-year horizon, this is a sector where patience and strategic positioning can yield outsized returns.

Conclusion: Powering the Future, One Megawatt at a Time

The intersection of AI and energy storage isn't just a passing trend-it's a structural shift in how we power the digital economy. While the grid struggles to keep up, companies that can deliver reliable, scalable storage solutions are poised to thrive. Ormat, Ørsted, and others in the space offer compelling entry points, but they require careful monitoring of operational and regulatory risks.

For the long-term investor, the message is clear: the future belongs to those who can store it.