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Table Of Content
July 2025
The global data center lithium-ion battery market size is calculated at USD 5.92 billion in 2025 and is forecasted to reach around USD 17.69 billion by 2034, accelerating at a CAGR of 12.94% from 2025 to 2034. The market sizing and forecasts are revenue-based (USD Million/Billion), with 2024 as the base year.
The global data center lithium-ion battery market size accounted for USD 5.24 billion in 2024 and is predicted to increase from USD 5.92 billion in 2025 to approximately USD 17.69 billion by 2034, expanding at a CAGR of 12.94% from 2025 to 2034. The market is significantly growing due to the unprecedented offerings of lithium-ion batteries, like high scalability and low thermal runaway, which is crucial for data centers to avoid accidents. Ongoing advancements in battery chemicals and their applications are boosting higher efficiency, aligning with cutting-edge technologies.
The integration of artificial intelligence with lithium-ion batteries is evident in the battery management system (BMS) of such batteries. As the BMS is a crucial part of any battery and its lifecycle, it is essential to reduce deterioration and avoid potential explosions due to mismanagement. AI has emerged as a transformative tool, providing innovative solutions to increase efficiency, forecast failures, and extend the working life of lithium-ion batteries.
AI algorithms can be incorporated to check battery parameters such as voltage, current, temperature, and its state of charge, ensuring the battery operates in a healthy state. These algorithms process collected data from the BMS system, offering insights to evaluate and restore it if any imbalances are found, which further reduces downtime and prevents massive failures. Moreover, AI algorithms can optimize energy consumption in data centers by dynamically adjusting battery usage based on real-time demand, grid conditions, and renewable energy availability. This helps to reduce energy costs and improve the overall efficiency of the data center. Some of the AI techniques are listed below that can be useful for Li-ion batteries.
The data center lithium-ion battery market refers to the global industry focused on supplying lithium-ion (Li-ion) battery systems for backup power and energy storage in data centers. These batteries are increasingly replacing traditional valve-regulated lead-acid (VRLA) batteries due to advantages such as longer lifespan, smaller footprint, faster charging, better temperature tolerance, and lower total cost of ownership. Li-ion systems are critical for uninterruptible power supply (UPS) units and provide power during grid outages or system transfers, especially in edge, colocation, hyperscale, and enterprise data centers.
| Report Coverage | Details |
| Market Size by 2034 | USD 17.69 Billion |
| Market Size in 2025 | USD 5.92 Billion |
| Market Size in 2024 | USD 5.24 Billion |
| Market Growth Rate from 2025 to 2034 | CAGR of 12.94% |
| Dominating Region | North America |
| Fastest Growing Region | Asia Pacific |
| Base Year | 2024 |
| Forecast Period | 2025 to 2034 |
| Segments Covered | Battery Chemistry, Data Center Type, Component, Application, End User, and Region |
| Regions Covered | North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa |
Growing rate of rack density due to complex technologies
The escalating rack density within data centers, fueled by the rapid adoption of complex technologies, is a primary driver for the growth of the data center lithium-ion battery market. As more powerful servers and equipment are packed into each rack, the demand for robust and reliable power backup solutions intensifies. This increased density translates to a higher concentration of critical IT infrastructure, making the need for an uninterrupted power supply even more crucial.
Lithium-ion batteries, with their ability to offer instant recharge capabilities and a smaller footprint, are ideally suited to meet these demands. Furthermore, the superior cycle life and overall efficiency of lithium-ion systems make them a preferred choice for data centers aiming to optimize their operations and ensure high availability in the face of growing rack densities. This shift is also supported by the industry’s move towards sustainable solutions, making lithium-ion batteries an ideal choice.
Safety concerns and high costs
Although the adoption of Li-ion batteries in data centers is rising, they pose a greater fire risk compared to alternatives like valve-regulated lead-acid batteries. Heat buildup in lithium-ion batteries, often exceeding the rate of heat dissipation, raises significant safety concerns. Furthermore, the extraction of lithium through deep mining processes has a detrimental impact on overall environmental safety. Improper disposal of these batteries further exacerbates safety concerns. Moreover, the initial investment in lithium-ion battery systems is higher than that of lead-acid batteries, which creates challenges for some data centers, particularly smaller ones.
Integration of microgrids and renewable energy sources with Li-ion UPS system
A significant opportunity for the data center lithium-ion battery market lies in integrating renewable energy sources and microgrids into lithium-ion UPS systems. Data center operators are increasingly adopting hybrid power setups that combine Li-ion UPS arrays with solar, wind, or hydrogen-powered backups to maintain efficiency and avoid downtime. This integration reduces reliance on the main power grid and lowers overall operating costs. This approach aligns with carbon neutrality goals. As data center operators aim to minimize the total cost of ownership and comply with environmental regulations, the contribution of Li-ion batteries to market expansion is further reinforced.
Why did the lithium-iron phosphate (LFP) segment dominate the market in 2024?
The lithium-iron phosphate (LFP) segment dominated the data center lithium-ion battery market in 2024, driven by the increased demand for LFP-based batteries in EVs, given their cost-effectiveness compared to nickel or cobalt. LFP battery chemistry is exceptionally safe, less reactive to heat and air. It demonstrates thermal stability, which minimizes overheating risks, a critical advantage for data centers in preventing fire-related damage or explosions. These batteries also withstand numerous charge-discharge cycles, reducing replacement frequency and costs. Government support for green data centers and reduced carbon emissions through various policies further fuels this segment’s expansion.
The lithium nickel manganese cobalt segment is expected to expand at the fastest CAGR during the forecast period of 2025-2034. This segment is expanding due to several factors, including the rising demand for high-energy storage, scalability, and cost-effectiveness offered by nickel-manganese-cobalt-based batteries. These batteries are widely used in EVs for their energy density and high performance.
What made hyperscale data centers the dominant segment in the data center lithium-ion battery market?
The hyperscale data centers segment dominated the market with the largest share in 2024. Specific and unique characteristics of lithium-ion batteries are highly suitable for the uninterrupted operation of hyperscale data centers, which require zero downtime and a reliable energy supply. A single instance of downtime can lead to significant financial and operational repercussions. Furthermore, many hyperscale data centers are adopting green energy initiatives by integrating renewable energy sources and lithium-ion batteries, which is expanding the segment’s growth globally.
The edge/micro data centers segment is expected to grow at the fastest rate over the projection period. This segment is expanding due to the adoption of technologies like IoT, 5G, and AI/ML models, which require real-time processing with enhanced safety measures to prevent unauthorized access. This shift necessitates low-latency and high-bandwidth data processing to improve network efficiency and reliability through edge/micro data centers.
How does the uninterruptible power supply (UPS) segment lead the data center lithium-ion battery market in 2024?
The uninterruptible power supply (PUS) segment led the global market in 2024. This is mainly due to the shift from traditional lead-acid batteries to lithium-ion-based batteries. This change is driven by the superior offerings of lithium-ion batteries, including a longer lifespan, high energy density, and faster recharge times, which contribute to minimizing the total cost of ownership for data center operators.
The energy storage systems (ESS) segment is expected to expand at the highest CAGR in the upcoming period. The growth of the segment is attributed to the push for renewable energy integration into data centers and the need for high-density, reliable power sources to ensure continuous operation, along with backup power when renewable energy sources are unavailable.
Why did the battery racks/modules segment dominate the market in 2024?
The battery racks/modules segment dominated the data center lithium-ion battery market in 2024. The segment is dominating due to their durability, stability, and ability to accommodate different battery types within a steel rack/module, along with their high scalability. With the substantial expansion of data centers, operators are seeking robust solutions to safeguard batteries from physical harm, potential explosions, and other dangerous conditions. Consequently, racks and modules are vital components, significantly supporting market growth.
The battery management systems segment is expected to expand at the fastest CAGR during the forecast period of 2025-2034. The battery management system (BMS) is crucial for monitoring and controlling battery parameters, including current and voltage, preventing overheating and physical damage, and ensuring optimal battery performance. Moreover, BMS enables integration with smart grid technologies, which minimizes energy costs and enhances battery lifespan.
How does the cloud service providers segment dominate the data center lithium-ion battery market?
The cloud service providers segment dominated the market in 2024, driven by the increasing adoption of cloud services, the expansion of big data technologies, and the rise of IoT. Cloud providers require a reliable, uninterrupted power supply, which lithium-ion batteries offer to ensure data availability. Lithium batteries’ extended charge and discharge cycle rates enhance their efficiency for modern, high-energy-consumption data centers.
The telecom operators segment is expected to expand at the fastest CAGR in the coming years, driven by the expansion of 5G networks, the rise in mobile usage, and increased internet availability, especially in rural areas, all of which are bandwidth-intensive applications. Lithium-ion batteries are essential for energy storage to support these high-demand applications. Additionally, government policies supporting green energy, along with incentives for telecom companies, further drive this segment’s growth.
By Battery Chemistry
By Data Center Type
By Application
By Component
By End User
By Region
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