Data center power infrastructure is undergoing a significant technological shift as operators navigate utility interconnection constraints and seek greater capital efficiency, according to a recent webinar hosted by Philip Shen, Managing Director and Senior Research Analyst at ROTH Capital Partners.
The discussion, featuring Bill Mazzetti, Senior Vice President at engineering and construction firm Rosendin, detailed how on-site power delivery is moving away from traditional diesel backup toward battery storage, solid-state transformers, and high-voltage direct current (DC) architectures.
The shift from diesel to BESS
Historically, data center backup design relied on a 1-to-1 ratio of diesel generators to cover 100% of the facility’s load. Mazzetti noted that traditional generator backup coverage has dropped to between 15% and 40% on new projects. Hyperscale operators are increasingly using software to shift computing workloads geographically during grid disturbances, reducing the need for complete physical redundancy on-site.
In place of diesel assets, battery energy storage systems (BESS) are becoming a standard component of new data center designs. The trend is driven by utility demand-response requirements and regional policies, such as Texas Senate Bill 6, which incentivizes on-site dispatchable power for loads exceeding 50 MVA. Mazzetti stated that BESS is now present on virtually every data center project Rosendin constructs.
Power electronics convergence
Data center developers are also looking to simplify the electrical powertrain to lower capital expenditures, which currently average approximately $13 million per megawatt of build capacity.
By transitioning to solid-state transformers (SSTs) and medium-voltage UPS solutions, operators can eliminate up to two-thirds of the traditional electrical conversion steps. Mazzetti noted that vetted hardware solutions from solar inverter manufacturers, including Enphase and SolarEdge, are technically viable for these applications.
This technological convergence represents a potential new addressable market for solar hardware manufacturers facing a slower domestic residential solar market. While large power-equipment incumbents like Vertiv, Eaton, and Schneider currently dominate the space, the demand for efficiency could drive acquisition interest in smaller, agile power-electronics players.
Microgrids and inference nodes
With utility interconnection queues for massive 100 MW+ training facilities extending up to seven years in some regions, developers are turning to smaller, localized solutions.
Over the next two to three years, Mazzetti expects older, legacy data centers of around 12 MW to be retrofitted and doubled in capacity using localized microgrids. These facilities will serve as “inference nodes” to process local AI workloads, bypassing the long interconnection queues associated with larger regional hubs. This trend offers a clear pipeline for commercial-and-industrial (C&I) solar and microgrid developers.
Market outlook
Despite the current momentum, ROTH notes that the data center capital expenditure boom is part of a cyclical trend. Mazzetti views the market as being 2.5 years into a projected seven-year cycle.
Rosendin projects data center buildout volumes to grow at 35% to 40% annually through 2029 before cooling to a growth rate of roughly 15% in 2030, aligning with pre-AI cloud demand.
While developer capital plans are locked in for the next three years, long-range forecasts remain uncertain. Early indicators of a potential market cool-off include a reduction in ISO interconnection grid applications, deferred orders for long-lead equipment, and a shift toward single-building contracts rather than multi-building campuses.
