🔍 Read the full analysis: Why AI Data Centers Are Rethinking Electricity, From DC To Batteries on ThorstenMeyerAI.com
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TL;DR
Two recent developments highlight a shift in how AI data centers may connect to electricity: Vantage reserved more than a gigawatt of factory capacity for a solid-state transformer, while NiSource and Microsoft agreed to a long-term power arrangement that includes generation and a 600-megawatt battery. The deals reflect growing interest in 800-volt direct-current systems and storage, but efficiency figures cited by vendors are not independent measurements, and the projects do not resolve wider grid connection delays.
Vantage reserved more than a gigawatt of factory capacity for a solid-state transformer designed to convert grid power directly into 800-volt direct current, while NiSource and Microsoft signed a 20-year power deal that includes about 1,100 megawatts of generation and a 600-megawatt battery. The agreements, reported in October, show how operators and utilities are addressing the power demands of AI data centers, where electricity connections and distribution equipment are becoming constraints alongside computing hardware, as explored in the power bottleneck facing AI data centers.
Vantage’s reservation, dated October 21, concerns manufacturing capacity for a transformer from Heron Power, according to the source report. The product is designed to convert grid electricity to 800-volt DC and includes storage intended to buffer changes in data center demand. A factory-capacity reservation is not the same as confirmation that equipment has been delivered, installed or put into service.
On October 16, Indiana utility NiSource signed a 20-year agreement with Microsoft adding about 1,100 megawatts of generation and a 600-megawatt battery, the report said. The arrangement links new power resources to a major customer’s data center demand, a key issue in data center electricity use. The supplied material does not specify the generation technology, the battery’s energy capacity in megawatt-hours, or the full terms governing who pays for associated grid upgrades.
The engineering case for 800-volt DC is partly a response to rising rack demand and the broader power outlook for US data centers. The International Energy Agency says AI server power density rose 11-fold between 2020 and 2025 and could quadruple again by 2027. NVIDIA’s reference design proposes converting 13.8-kilovolt grid power to 800-volt DC near a facility’s perimeter, then distributing it to high-power racks. NVIDIA says the approach could use 45% less copper than 415-volt AC distribution and improve end-to-end efficiency by up to 5% compared with current 54-volt systems. Those figures are company claims, not independent measurements.
Infographic 01 · From grid to rack
AI racks near a megawatt are outgrowing the AC power chain.
Why the industry is moving to 800-volt direct current: fewer conversions, less copper, batteries on the main path. The numbers are vendor figures with different baselines, so they cannot be added up.
Today: many conversions
Typical AC chain from the grid to the rack
- Medium-voltage AC from the grid
- Transformer steps it down to low-voltage AC
- UPS converts to DC for the batteries and back to AC
- Distribution units feed the racks
- Every server power supply converts AC to DC again
Each stage loses energy, and almost all of the loss becomes heat the cooling system must remove.
800 V DC: convert once, outside
NVIDIA reference design, full-scale production planned with Kyber racks in 2027
- 13.8 kV AC from the grid
- Converted once to 800 V DC at the edge of the site, batteries on the same DC bus
- 800 V DC busway to the racks
- Stepped down inside the rack, for 1 MW racks and beyond
Bridge for existing halls: a “sidecar” cabinet next to the rack converts AC to 800 V DC, while the old chain stays in place.
Power lost per MW delivered to the rack
kW, SMA white-paper model vendor model
What NVIDIA says 800 V DC changes
NVIDIA’s engineering claims claim
Sources: NVIDIA technical blog (20 May 2025, updated 31 Jul 2025); SMA America, sponsored content in Utility Dive (26 Oct 2026). Rack density: IEA, Key Questions on Energy and AI (Apr 2026) (AI server power density 11× from 2020 to 2025, a further 4× by 2027).
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Power Infrastructure Sets AI’s Pace
The shift matters because a data center can have computing equipment ready but still be unable to operate at planned scale without a grid connection, transformers and distribution systems. The IEA, as cited in the source material, puts typical transformer delivery times at two to three years and grid connection waits at five to ten years in many places. These constraints can shape where projects are built and when they can start serving customers.
More efficient power delivery could reduce losses that turn into heat and require additional cooling. But the practical gains depend on equipment design, site conditions and how much of an existing facility must be replaced or adapted. One intermediate option described by inverter maker SMA America is a “sidecar” conversion cabinet beside a rack, allowing 800-volt racks to operate in buildings built around AC distribution. SMA’s October 26 article was sponsored content, and its modeled loss figures should be read as a vendor’s case rather than independent performance data.
The cost implications extend beyond data center operators. The source reports average US household electricity prices of 18.21 cents per kilowatt-hour in 2026, up from 17.30 cents in 2025, and a 41% rise in wholesale prices in the PJM region. Those figures do not establish that data centers caused the increases. Who pays for new generation, transmission and distribution infrastructure varies by contract and regulatory decision, making local utility arrangements important to customers and ratepayers.
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From AC Chains to High-Voltage Racks
Traditional data centers receive alternating-current power, step it down through transformers and other equipment, and convert it to low-voltage DC inside servers. Each conversion loses some energy, much of which becomes heat. The design worked when racks used tens of kilowatts; the source says upcoming AI systems could push individual racks toward one megawatt, intensifying the demands on conductors, power shelves and cooling.
NVIDIA’s technical material says supplying a one-megawatt rack at 54 volts could require up to 200 kilograms of copper busbar. Its proposed 800-volt architecture aims to carry more power with less conductor material and fewer conversion stages. NVIDIA says full-scale production is planned with its Kyber systems in 2027. Separately, the IEA estimates global data center electricity consumption could rise from 485 terawatt-hours in 2025 to about 950 terawatt-hours in 2030. These are projections, not final measurements of future demand.
Batteries are part of the discussion because AI workloads can change power demand quickly. The IEA says storage may help manage large, rapid swings and estimates that data centers could have 20 to 25 gigawatts of batteries by 2030. That is a forecast. The agency says storage could become a grid asset if incentives are in place; the role will depend on how facilities are operated and connected.
“NVIDIA says its proposed system could use 45% less copper than 415-volt AC distribution.”
— NVIDIA, in its 800-volt DC technical material
Costs and Performance Still Unsettled
The reported agreements do not show how much of the proposed equipment will be installed, when it will be operational, or how its performance will compare with existing systems in real data center conditions. Vantage’s factory-capacity reservation does not confirm completed production or deployment. The NiSource-Microsoft summary does not detail the generation sources, project locations, delivery timetable, or allocation of costs between the company, utility and other customers.
Efficiency and copper-saving figures cited for 800-volt systems are largely vendor claims or modeled estimates in the supplied material. Independent operating data are not provided. It is also unclear how rapidly operators will retrofit existing facilities, whether battery systems will routinely support the grid, or how proposed projects will affect electricity bills in particular regions. Broader demand forecasts and connection-queue figures indicate pressure, but they do not determine the outcome of any one project.
Deployment and Grid Terms Ahead
The next useful milestones are delivery and installation details for the Heron transformer, the schedule for the NiSource-Microsoft generation and battery projects, and operating data from facilities using higher-voltage DC distribution. NVIDIA has said full-scale production with Kyber systems is planned for 2027; that timetable is a company plan, not confirmation of deployment at a particular site.
Utilities, regulators and data center customers will also have to settle how new generation, batteries and grid upgrades are funded and dispatched. Those decisions will determine whether storage mainly serves a facility’s own reliability needs or also provides services to the wider grid. For now, the deals signal investment and changing design priorities, while the scale of real-world efficiency gains and effects on ratepayers remains to be established.
Key Questions
What did Vantage reserve?
Vantage reserved more than a gigawatt of factory capacity for a solid-state transformer designed to convert grid power to 800-volt DC. The report does not say the equipment has been delivered or installed.
What is included in the NiSource-Microsoft deal?
The 20-year agreement includes about 1,100 megawatts of generation and a 600-megawatt battery, according to the source material. It does not provide the battery’s storage duration or a full breakdown of project costs.
Why are data centers considering 800-volt DC?
Higher-voltage distribution is intended to move large amounts of power to AI racks with fewer conversion stages and less copper than some existing designs. The savings and efficiency estimates cited here come from vendors and have not been independently verified in the supplied material.
Will data center batteries lower household electricity bills?
That is not established. Batteries may help manage a facility’s demand or provide grid services, but whether they affect local bills depends on operating arrangements, utility rules and how infrastructure costs are allocated.
Source: ThorstenMeyerAI.com
