Daniel Sottosanti of XL Batteries winning the Most Promising Startup award at the 2026 Data Center World Innovation Challenge, powered by ABB.

Energy storage has become a much bigger part of new data center project plans, now that the AI boom is forcing data centers to build more of their own power generation.

Grid constraints, lengthy interconnection queues, and growing electricity demand have shifted power to the defining constraint on data center deployment. As operators look for ways to bring capacity online faster, energy storage is becoming an urgent need.

XL Batteries is one of the startups aiming to address that challenge. Rather than relying on conventional lithium-ion batteries, the company has developed an organic flow battery designed to provide both instant power response and longer-duration energy storage.

“We can provide the fast response that lithium offers,” says Daniel Sottosanti, who leads the commercial team at XL Batteries. “But we can also deliver multi-hour discharge, meaning operators don’t necessarily need multiple storage technologies.”

The company won the Most Promising Startup award at the 2026 Data Center World Innovation Challenge, powered by ABB, where judges recognized its potential contribution to next-generation data center infrastructure.

Power Availability Has Overtaken Sustainability

Sottosanti believes one of the biggest shifts in the industry has been the changing priorities of hyperscalers.

“Originally, the conversation was around clean power,” he says. “Now the key constraint is simply electricity. They just can’t get enough power.”

Long electrical grid interconnection queues, constrained substations, and delays to new grid infrastructure mean access to electricity has become one of the primary drivers of site selection. Increasingly, developers are looking at behind-the-meter generation and storage as a way to reduce those delays.

One example is XL Batteries’ planned deployment with Prometheus Hyperscale, where the storage system is being installed behind the meter to help accelerate power availability. “Speed to power was a major driver,” Sottosanti says. “They wanted to get online as quickly as possible.”

Why Longer-Duration Storage Is Becoming More Important

As renewable generation grows, storing electricity for longer periods becomes increasingly valuable.

Solar has become one of the cheapest forms of electricity generation, but maintaining continuous power for data centers requires storage capable of bridging much longer power-generation gaps than traditional battery systems often provide.

Many lithium-ion installations are designed around two- to four-hour discharge windows. According to Sottosanti, that is increasingly insufficient for facilities operating around-the-clock with stringent uptime requirements. “You can’t sacrifice uptime for sustainability,” he says.

Instead, many operators continue relying on diesel generators to cover extended outages or renewable intermittency.

XL Batteries makes the case that longer-duration storage could eventually reduce that dependence while maintaining the reliability operators expect.

Safety Is Part of the Procurement Conversation

Beyond duration, Sottosanti believes XL Batteries will benefit as safety becomes a larger consideration for operators. The company’s flow battery uses a water-based, non-flammable electrolyte rather than lithium-based chemistry, avoiding both thermal runaway concerns and reliance on critical minerals. That distinction is beginning to influence purchasing decisions.

“One customer was specifically looking for a non-flammable solution,” Sottosanti says. “Their insurance company would not allow flammable storage at the site.”

As battery deployments become larger and are increasingly located close to critical facilities, insurers, operators, and surrounding communities are placing greater emphasis on safety alongside performance and cost.

Winning Conservative Buyers Takes Time

While a range of new battery technologies are emerging, convincing data center operators to adopt them remains one of the industry’s biggest challenges. Data centers have low tolerance for operational risk, so reliability must be demonstrated long before widespread deployment.

For XL Batteries, that means a gradual commercialization strategy built around field deployments, independent validation, and operational testing.

“We’re not inventing anything new in terms of how you build trust,” Sottosanti says. “It’s real-world deployment data.”

The company has already operated an integrated demonstration system with a customer and plans to deploy its first commercial modular units in 2027. Those early projects are intended to generate the performance data needed by customers, insurers, financiers, and project developers, and then hopefully larger deployments follow.

“It’s a multi-year process,” he says.

Solving the Bankability Challenge

For infrastructure startups, technical performance is only part of the challenge.

Sottosanti argues that one of the hardest barriers is breaking the cycle between customers wanting proven technology and financiers wanting operational history before providing funding. “Customers want bankability, and banks want deployment history,” he says.

XL Batteries hopes its phased rollout strategy will steadily solve both problems simultaneously, allowing commercial confidence to grow alongside deployment experience.

Economics Still Decide Which Technologies Win

Although sustainability remains important, economics continue to determine which technologies ultimately succeed. “If a cleaner solution costs four times as much, the market is going to choose the cheaper option,” he says. "On an LCOS basis, we expect to be about half the cost of lithium — and that's before the safety and insurance savings stack on top."

Technologies capable of improving economics while also reducing emissions have the greatest opportunity to achieve broad adoption. For XL Batteries, lowering installed costs while eliminating flammability and extending storage duration forms the core of that strategy.

Power Will Shape the Next Generation of Data Centers

Looking ahead, power planning has moved from an operational consideration to one of the primary design decisions for new facilities. On-site generation has become more common, storage durations continue to increase, and electricity availability is playing a central role in where data centers are built.

Amid those changes, Sottosanti sees operators’ priorities remaining remarkably consistent.

“Uptime, cost predictability, and risk,” he says. “Those never change.”