Recently, a new concept has become popular in the energy storage industry: AIDC. It was a highlight area mentioned in the financial reports of many energy storage companies in the first half of the year and is currently a hotly pursued target in the capital market. AIDC, which stands for Artificial Intelligence Data Center, has become a buzzword associated with the rise of artificial intelligence (AI) and can be considered the “heart” of the current digital economy. With the rapid advancement of AI technology, traditional Internet Data Centers (IDCs) are accelerating their transformation and upgrade to AIDC. Energy supply is crucial for AI. Zhang Lei, Chairman of Envision Technology Group, once bluntly stated that the essence of artificial intelligence is energy, and the amount of energy determines the amount of intelligence. The annual electricity consumption of some large data centers is even comparable to that of a small city.
Li Yizhong, President of the China Federation of Industrial Economics, noted that last year, domestic data centers and 5G base stations consumed a total of 250 billion kWh of electricity, equivalent to the combined annual electricity consumption of Beijing and Shanghai. The development of AIDC has placed ever-more stringent demands on the stability, reliability, and sustainability of energy supply. Energy storage is experiencing unprecedented growth opportunities within this sector, and some leading companies with a long-term vision have already begun seizing opportunities in this still relatively nascent market.
Sungrow Power Supply (300274.SZ), the world’s leading energy storage system company second only to Tesla, executives at this year’s semi-annual earnings conference dedicated significant time to its AIDC business. They revealed that while the company currently has no customers, it has established an AIDC division and is intensively researching and developing products, aiming to launch a product next year.
In February of this year, lithium battery leader CATL (300750.SZ) specifically mentioned data center energy storage demand in its Hong Kong IPO prospectus. The company projects that data center energy storage battery shipments will grow at a compound annual growth rate of 76.3%, from 10 GWh in 2024 to approximately 300 GWh in 2030.
“AIDC’s demand for energy storage is broadly reflected in three areas,” Yang Baofeng, CEO of energy storage company Shuangdeng Co., Ltd. (06960.HK), recently told reporters. The first category is emergency backup, using high-rate lead-acid or lithium-ion batteries, typically in conjunction with a UPS (uninterruptible power supply) or high-voltage direct current (HVDC) transmission system, primarily to address power outages in data centers. The second category is BBU batteries, or battery-powered units (BBUs) within the cabinet. These batteries are smaller and have a shorter power supply lifespan, primarily addressing immediate, short-term issues like voltage fluctuations. Currently, there are some examples of this happening overseas. The third category is integrated energy storage systems, which can meet the overall power needs of data centers. This is also the market that energy storage companies are hoping to seize.
Currently, demand for traditional backup batteries for AIDC applications is growing significantly, a trend already reflected in the performance of some companies. On August 26th, Shuangdeng Co., Ltd. successfully listed on the Hong Kong Stock Exchange, earning the industry acclaim as the “first AIDC energy storage stock.” According to Frost & Sullivan data, Shuangdeng Co., Ltd. will rank first among global suppliers of communications and data center energy storage batteries in 2024, with a market share of 11.1%. AIDC intelligent computing center batteries have become Shuangdeng Co., Ltd.’s largest revenue driver, with its primary customers including internet companies like ByteDance and Alibaba, as well as companies that specialize in building and operating data centers and leasing them to internet giants.
According to the financial report, Shuangdeng Co., Ltd.’s AIDC intelligent computing center battery and system business saw sales revenue increase by 113.1% year-on-year in the first half of this year, with its revenue share jumping to 47.2%, becoming the company’s largest source of revenue.
Yang Baofeng stated that since last year, the development of AI has accelerated, and the rise of intelligent computing data centers and supercomputing has led to a rapid increase in demand for batteries. Narada Power (300068.SZ) also highlighted the data center market as a key area of expansion in its financial report. This year, the company has won bids for GDS’s 1.2 GW high-voltage lithium battery data center procurement project and a 520 million yuan high-voltage lithium battery project for a US data center. In the first half of the year, Narada Power’s communications and data center energy storage revenue reached 1.89 billion yuan, a year-on-year increase of 34.09%, making it the only segment among its three main businesses to experience positive revenue growth. In comparison, the market for emergency backup batteries is relatively limited. Equipping data centers with energy storage systems and developing them into flexible regulation assets that participate in grid interaction offers a larger market opportunity and is more attractive to businesses.
“At the North American New Energy Exhibition, almost all energy storage integrators mentioned AIDC solutions,” an exhibitor told reporters. Representatives from several energy storage companies expressed optimism about the application of energy storage in the AIDC sector, predicting a significant increase in demand for energy storage systems and related solutions.
An industry insider noted that the United States, Saudi Arabia in the Middle East, and Malaysia in Southeast Asia are regions with high demand for data center construction, and his company is already in discussions for single projects with a capacity of 1-2 GWh. Haichen Energy Storage stated that the company has received inquiries and orders from data center owners and power solution providers both domestically and internationally, with demand currently concentrated in the United States and Europe. Companies such as Huawei and Sungrow Power Supply (300274.SZ), which specialize in inverters, have accumulated experience in power supply and electronic power conversion technologies, which offer significant technical synergies with AIDC power supplies. Therefore, they are also seizing the opportunity to enter this growing market.
During RE+, North America’s largest clean energy exhibition, several Chinese companies, including Haichen Energy Storage and Jingkong Energy, launched specialized AIDC energy storage solutions for overseas markets.
Qinghai is China’s first pilot province for green computing-powered synergy, and the region is vigorously promoting computing power development. The Sanjiangyuan demonstration project, jointly developed by Trina Solar and China Unicom in Qinghai, is a prime example of a “wind, solar, storage, and charging + computing power center.” AI data centers have extremely high stability requirements, far exceeding those of traditional internet data centers (IDCs). These demands go beyond simply “no power outages” to encompass zero interruptions and low volatility across the entire supply chain, including power, network, environment, and computing power scheduling. This places higher demands on the technical capabilities of energy storage companies seeking to tap into this market. Compared to conventional energy storage systems, the power converter (PCS) and energy management system (EMS) for AIDC require customized development. This can be simply understood as a small-scale source, grid, load, and storage solution. The PCS must respond faster and have a higher online rate. Furthermore, it must provide system protection, load smoothing, and black start functionality, and even seamless transitions in low-voltage scenarios.
Most existing energy storage solutions still rely on a single product for different operating conditions. Their performance and degradation models are not tailored to the unique power demands of AI data centers, making it difficult to meet the “all-weather, highly compatible, and highly reliable” energy supply requirements.
Energy storage companies need to gain a deeper understanding of load variations in data, respond to complex power conditions, and ensure high reliability. To meet the demands of AIDCs, companies must be able to develop the most cost-effective solutions for the green transformation of data centers in terms of technology and products, such as exploring longer discharge times.
