AI boom strains data-center power, opening doors for Chinese suppliers

by JIANG Xi

The AI boom is straining data-center power systems, spurring demand for cooling, energy storage and backup power and creating openings for Chinese suppliers.

Electricity consumption by data centers will double by 2030 to about 945 terawatt-hours, slightly more than Japan's current annual power use, according to the International Energy Agency. The United States will account for the largest share of incremental demand, followed by China.

In China, data centres and 5G base stations consumed about 250 billion kilowatt-hours of electricity in 2024, roughly equivalent to the combined annual power use of Beijing and Shanghai, according to LI Yizhong, chairman of the China Federation of Industrial Economics. As AI workloads scale up, traditional internet data centers are being upgraded into AI-focused facilities. Research firm ABI Research estimates more than 8,400 data centers will be operating globally by 2030.

The surge in power demand is reshaping how data centers are built. Industry executives point to three pressure points: cooling, energy storage and backup power.

Liquid cooling gains traction

Rising chip power consumption is pushing cooling systems to their limits. CAO Li, an AI and data-center analyst at MIR, said mainstream GPUs now typically draw 400 to 2,700 watts, far above the 50 to 200 watts common in the CPU era, making traditional air cooling increasingly inadequate.

Policy requirements are reinforcing the shift. China now requires newly built data centers to achieve a power usage effectiveness (PUE) ratio below 1.2. Cold-plate liquid cooling can meet that threshold, while air cooling generally bottoms out around 1.3, Cao said.

Demand is accelerating. The China Academy of Information and Communications Technology estimates China's liquid-cooling market for intelligent computing centers could reach 130 billion yuan by 2029. Globally, Goldman Sachs expects the server-cooling market to expand rapidly between 2025 and 2027, reaching US$17.6 billion by 2027.

Competition is becoming more stratified. Established system integrators such as Vertiv and Schneider Electric dominate high-end solutions and standards-setting, while Taiwan-based firms hold advantages in precision components. Mainland Chinese suppliers, including Envicool, Goaland and Sugon, are gaining ground, helped by lower prices and faster delivery. Envicool has also entered Nvidia's global supply chain after securing certification.

Energy storage moves into the spotlight

Pressure on power supply is also pushing energy storage into a central role in AI data-center design.

"Storage systems are shifting from optional add-ons to essential infrastructure," said FU Qiang, an energy-sector expert at Roland Berger. Storage helps raise the share of renewable power, smooth load fluctuations and extend backup duration from minutes to several hours, partially replacing traditional UPS systems.

The role is particularly important in markets where grid stability is weaker, according to YANG Baofeng, executive president of Shuangdeng Group Co., Ltd.

Research firm GGII estimates shipments of lithium batteries for AI data-center storage will exceed 300 gigawatt-hours by 2030, about 20 times 2025 levels. FU expects annual growth of 60–80% between 2024 and 2030 and estimates China could account for around 40% of the global market by 2030.

Shuangdeng, whose battery products are sold under the Shoto brand, counts ByteDance and Alibaba among its customers and ranked first globally in communications and data-center battery shipments in 2024, with an 11.1% market share. Other Chinese players, including Narada, Sungrow and HiTHIUM, are also expanding overseas.

Backup power demand intensifies

The AI data-center build-out is also driving demand for diesel generators and gas turbines.

Diesel generators remain the most reliable backup option, with engines accounting for 60–70% of system costs. Cummins estimates the global data-center generator market will grow from US$6 billion in 2023 to US$12 billion by 2030.

Supply constraints are creating openings for Chinese manufacturers, as delivery times for some overseas suppliers have stretched to 12–18 months. China's generator exports rose sharply in 2025, reflecting the shift.

Gas turbines are also in short supply in a market dominated by GE Vernova, Siemens Energy and Mitsubishi Power. Capacity constraints among these incumbents have created an opening for Chinese firms to move into both upstream components manufacturing and downstream system integration. Demand from AI data centers in North America and Europe, where grid constraints are acute, is reinforcing the shift toward gas turbines paired with energy storage.