Behind-the-meter (BTM) power lets data centres generate electricity onsite, bypassing grid queues for faster deployment, resilience and cost control.

Power is generated onsite and delivered directly to a data centre facility before it reaches a utility meter. It means that a data centre operates independently of national and public grids for its primary power needs, separating its demand from the community in which it operates.

A data centre company bringing its own power means that the site doesn’t have to rely on the public grid. This is beneficial for two reasons: it doesn’t burden the local area with rising energy bills or system strains, and it enables the site to have a consistent source of power to avoid project delays.

Why BTM power is reshaping the industry

During a turbulent time in the wider technology ecosystem, data centres are expected to benefit more from sourcing their own power, rather than relying on a grid connection. Typically, connections can now take up to a decade or more, delaying data centre projects and clogging up essential services.

A BTM solution would enable operators to bring data centres online immediately using localised generation. Modern AI racks require gigawatt-scale power densities that public grids often can’t supply without major infrastructure upgrades, so having access to their own power source is beneficial.

It also enables stronger reliance and cost control, as it minimises reliance on long-distance transmission lines. Not only are operators reckoning with grid wait times, but they are also faced with high upfront costs in high-demand areas as a result. Congestion has caused significant price differences across regions faced with interconnection pressures.

BTM power can offer a way around these challenges by offering greater resilience against supply issues like potential outages. Additionally, it can shield facilities from localised grid outages and volatile regional pricing.

As hyperscaler demand booms, technology giants are prioritising speed-to-market and power certainty, both things BTM power can offer, and utility providers cannot guarantee.

A sustainable edge to power

The most immediate power solution for data centre operators, according to DC Byte, is natural gas. This is because in most US markets, it’s quicker to purchase and deploy turbines and reciprocating engines than it is to queue for a connection.

Critically, the more popular markets like Texas and Northern Virginia have access to a significant amount of natural gas.

“Developers are turning primarily to natural gas generation as a scalable, dispatchable near-term solution, often complemented by renewables and battery storage to address sustainability goals,” noted Alexandra Desseyn, Americas research manager at DC Byte.

“While nuclear (particularly SMRs) and hydrogen remain longer-term considerations, the current market reality is that BTM solutions are being deployed to bypass grid bottlenecks, ensure reliable capacity and align with both development timelines and evolving decarbonisation objectives,” she added.

Another solution is fuel cells, which are starting to play a bigger role in BTM deployments. It works by converting natural gas or hydrogen into electricity without combustion and offering a lower-emissions option that can be deployed quickly. Companies like Equinix, for instance, have deployed solid oxide fuel cells at 19 data centres in the US, in partnership with Bloom Energy.

Solar-plus-storage and similar renewable energy solutions are being used more for BTM configurations outside of the US. Within the US, hybrid configurations pairing solar and gas or fuel cells to mitigate intermittency problems remain more common.

Next steps for the industry?

As demand continues to surge, BTM is expected to become a much more popular solution to meet expectations. Analysts are expecting a significant shift in how data centres are powered, with 25% to 33% of net new generation for data centres expected to operate totally BTM, according to McKinsey.

Often, BTM is co-located with large-scale battery energy storage systems (BESS), which can be combined with solar power to offer more power flexibility – particularly in locations like the UK where the weather is varied.

Without data centres installing BESS alongside solar, BTM power may not be as effective as there won’t be energy available when energy generation is low. To ensure reliability, data centre operators will need to have robust strategies to ensure their facilities are online as much as possible when working off the grid.

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