Sixty-Three Megawatt-Hours from Used Cars
Gas turbine delivery backlogs now stretch to 2028 or 2030 for some manufacturers. Demand for data center gas turbines is projected to increase 80 percent through the end of the decade. The companies that need power the most are the same ones driving the shortage, and the wait has begun to change how they source it.
The queue. The turbine backlog is a supply problem layered on top of a demand problem. Data centers require firm, dispatchable power, and gas turbines have been the default answer. With lead times now measured in years rather than months, operators face a choice: wait for turbines or find something that can be deployed faster. Battery storage, which can move from contract to commissioning in months for many configurations, has entered that conversation. A pv magazine analysis published February 27 explored whether solar and storage could fill the gap, concluding that four-hour lithium-ion systems cannot yet deliver 24/7 baseload power but that the economics are closing the distance.
The standoff. Companies with existing generation fleets are not rushing to build. NRG Energy, which doubled its capacity to approximately 25 GW through its LS Power acquisition, told investors during its Q4 2025 earnings call that it has “zero interest” in speculative new capacity construction. NRG will pursue at least 1 GW of data center power contracts in 2026, but only against firm customer commitments. Its 2026 EBITDA guidance of $5.3 billion to $5.8 billion, up 45 percent from standalone estimates, describes a company under no pressure to build on speculation. When independent power producers are this selective, hyperscalers who cannot secure firm long-term contracts must increasingly look to alternatives.
The recycler. Into this gap steps JB Straubel. The Tesla co-founder’s company, Redwood Materials, closed a $425 million Series E in January backed by Google and Nvidia. Redwood’s fastest-growing business segment is now its energy storage division, which repurposes second-life EV batteries into microgrids for AI data centers. The division launched in mid-2025 and has already deployed systems at industrial sites, including a 63 MWh microgrid built from repurposed EV batteries for an AI data center. The model creates a domestic supply chain from recycled materials, sidestepping the foreign entity of concern (FEOC) compliance questions that complicate new cell imports. Cells manufactured and imported years ago under previous trade rules carry none of the sourcing restrictions that apply to new procurement.
The cost divergence. While turbine lead times lengthened, battery costs moved in the opposite direction. BloombergNEF’s global benchmark for a four-hour battery project fell 27 percent in 2025 to $78 per megawatt-hour, the lowest in the 16 years the figure has been tracked. Stationary storage packs dropped 45 percent to $70 per kilowatt-hour, driven by EV manufacturing overcapacity and improved system design. The United States installed 58 GWh of new storage in 2025, and Bloomberg projects 70 GWh for 2026, a 21 percent increase. Texas is on track to overtake California as the nation’s largest storage market for the first time, propelled by ERCOT’s merchant revenue model and data center load growth.
The deployment. Redwood is not alone in pairing batteries with data centers. Aligned Data Centers is installing a 31 MW, 62 MWh battery system in the Pacific Northwest to enable grid interconnection years ahead of traditional utility upgrade timelines. The system is expected to be operational in 2026. Benchmark and Axios project that data centers will drive 83 percent of commercial and industrial behind-the-meter storage deployments by 2030, a figure that reflects not just the scale of hyperscaler power needs but the practical reality that interconnection queues can take longer than turbine deliveries.
The caveat. Batteries are not gas turbines. A four-hour lithium-ion system provides peak shaving and interconnection bridging, not round-the-clock baseload generation. The pv magazine analysis noted that the gap between what batteries can deliver and what data centers require is narrowing as project economics improve, but it has not closed. For operators who need continuous power measured in hundreds of megawatts, storage remains a complement to firm generation rather than a replacement.
The question is how long the interim lasts. With turbines backordered for years and battery projects deployable in months, data center operators are making procurement decisions today based on the infrastructure available today. Second-life EV batteries add a further variable: a growing source of domestically recycled cells that require no new mining and no new FEOC compliance review, because the original manufacturing and importation occurred under different trade rules.
The most advanced computing infrastructure on the planet may end up running, in part, on batteries that once powered a morning commute.
Sources
Can solar and energy storage plug the gas leak? (pv magazine USA)
Recycler Redwood builds 63MWh second-life EV battery microgrid for AI data centre (Energy-Storage.News)
Redwood attracts Google for its $425M Series E as AI power needs rise (TechCrunch)
Redwood Materials is cashing in on its big battery bet (Heatmap News)
Data centers are beginning to embrace batteries for onsite power (Latitude Media)
NRG has ‘zero interest’ in speculative new capacity build: CEO (Utility Dive)
Battery storage costs hit record lows (BloombergNEF)
United States installs 58 GWh of new energy storage in 2025 (SEIA)
Utilities and data centers drive battery storage (Axios)
US battery market to grow despite policy headwinds (Bloomberg)