May 13, 2026
Renewables and battery storage are poised for growth amid rising data center demand, according to recent data from kWh analysis. In an interview earlier this year, CEO Jason Kaminsky discussed how data centers will impact the market in 2026, as well as potential policy headwinds.
As technology companies’ growth ceilings increasingly depend on the availability of electricity, energy will become a business constraint if demand is not met. Renewable energy combined with battery storage becomes the only scalable answer in this cycle: nuclear power plant construction is too slow, the supply of gas turbines is limited and coal expansions only marginally offset demand. Rapidly deployable and in most cases cheaper than ramping up coal production, renewable energy will play an increasingly important role in meeting unprecedented load demand, largely driven by AI and data centers.
Operationally, we expect battery storage to increasingly be combined with data centers to manage both the short- and long-term storage needed to handle peaks, shape demand and maintain interconnection stability. Reportedly, greater reliance on renewable energy will not only power data centers but also alleviate concerns about their impact on the environment.
Kaminsky explained how data center projects are powered by renewable energy, both islanded and grid powered.
Read the kWh Analytics 2026 Solar Risk Assessment report
“We are seeing a very recent shift towards data centers that contribute more of their own energy, often behind the meter,” says Kaminsky. “According to data from an upcoming Clean view According to the report, about 48 GW of proposed data center capacity, about a third of the planned projects, now plans to skip the grid in whole or in part by building behind-the-meter generation. This is a big change from a few years ago; At the end of 2024, there was less than 2 GW of planned capacity behind the meter.”
However, Kaminsky explained that this shift does not mean that data center projects across the board will tend to operate entirely in islands.
“Most projects will probably still remain connected to the grid in some form,” he says. “The important thing here is that data centers cover more of their own impact on the system to protect other consumers.”
Market restrictions
While renewable energy and BESS are playing an increasingly important role in meeting increased data center load demands, Kaminsky says these projects face constraints to keep pace.
“While quick to deploy and in most cases cheaper than ramping up coal production, renewable energy and BESS projects face headwinds that are increasing fast enough to keep pace with data center demand,” he says. “The location and permits are probably the biggest limitations. The technology works and is readily available, but the question is whether projects can be built.
Kaminsky explains that interconnection queues remain a bottleneck to project completion, with some regions taking years to get through the queue.
“Supply chain and production delays can still matter, especially when multiple large loads and generators are vying for approval at the same time,” he adds. “And renewables and BESS also face competition from alternatives favored by regulators, such as oil and gas.”
Kaminsky explains that data center energy demand is growing at about 5% per year, which he says is “very fast.”
“A recent one report Grid Strategies shows that data center load growth is expected to reach roughly 90 GW by 2030,” he says. “And data centers represent only about a third of total demand growth, along with manufacturing, industrialization and transportation electrification, so the need for capacity is significant.”
Besides speed and cost, there are other factors that make renewable energy + BESS ideal for data centers, Kaminsky says.
“Batteries are an ideal fit because data center loads are not static. They fluctuate throughout the day, creating peaks and valleys that storage can smooth out,” he says. “Short-lived batteries can reduce sudden shocks to the grid, while longer-duration storage can help maintain a more consistent demand profile. Additionally, behind-the-meter deployment is a major benefit of renewables, allowing projects to monitor reliability, manage demand internally and reduce stress on the grid.”
Minimal impact of regulatory headwinds
Regulatory headwinds will have minimal impact on renewable energy development, Kaminsky says. Current regulatory policies will only minimally dampen renewable energy development as developers quickly adapt to looming deadlines.
With the Foreign Entities of Concern (FEOC) cut-off on December 31, 2025 and the Investment Tax Credit (ITC) construction start deadline of July 4, 2026 shaping the near-term strategy, developers are already finding creative solutions such as purchasing custom transformers to achieve the start of construction and avoid persistent production bottlenecks.
Domestic production capacity is unlikely to scale up quickly enough to meet rising demand, ensuring continued dependence on imported equipment. We can expect some projects to forego tax credits altogether to avoid FEOC restrictions. These short-term adjustments indicate that policy constraints will shape tactics but are unlikely to significantly slow broader sustainable growth.
Kaminsky explains how the regulatory landscape is expected to remain stable for renewables after the changes in 2025.
“It is unlikely that there will be a major new federal bill that fundamentally changes the recently implemented framework,” he says, adding that developers are already adjusting to the ITC deadline and changes to FEOC rules.
“We are seeing creative strategies, such as purchasing custom transformers or taking early construction actions, to ensure eligibility,” Kaminsky says. “Domestic manufacturing is expanding, especially in battery storage, and we are even seeing some EV manufacturers convert their facilities to work on grid-scale battery storage production. Some projects may choose to forego tax credits altogether to avoid the complexities of the FEOC.”
Overall, Kaminsky explains that policy restrictions will determine tactics but will not stop development, adding that “the fundamentals still favor renewables.”
Looking at market growth in 2026, Kaminsky sees that continued demand growth is driving development. “The exponential growth of renewable energy is expected to continue globally and, in the US, to be driven by demand growth, cost competitiveness and speed of deployment,” he says. “We will likely continue to see a push from this administration to support oil and gas buildout. The fact remains that gas turbines will remain difficult to obtain before the 2030s, and nuclear power will remain extremely challenging to build. Renewable energy and battery storage projects are often the only s
Tags: data centers, interconnection, kWh Analytics, policy
