Battery start-ups are racing to equip AI data centers with specialized power smoothing technology, as executives report 'crazy' demand for systems that can handle split-second energy surges. Alsym Energy, a US sodium-ion battery company backed by Tata Group, said interest from data center operators has surged over the past three months for managing frequent power transients caused by AI computing.

Sodium-ion batteries discharge power faster than traditional lithium-ion products, making them ideal for balancing AI-driven fluctuations that can reach small-town electricity demand multiple times per second. During AI training and inference workloads, thousands of processors operating in sync create tens of megawatts swings in just one thousandth of a second. Existing backup systems and gas turbines cannot respond at this millisecond scale.

The opportunity emerges as EV battery demand weakens amid slowing production and fierce Chinese competition. Quantum Scape, backed by Volkswagen, is in talks with data center equipment companies, with CEO Siva Sivaram noting this market offers better margins than automotive. Nyobolt of the UK is shipping samples with installations planned for next year.

Prime Batteries Technology, a Romanian producer, finds data center customers prioritize rapid deployment and energy security over cost concerns. CEO Vicentiu Ciobanu warns other battery segments face commoditization and intense competition, making this niche particularly attractive for achieving profitability.