Onsite Power for Data Centers: How to Choose the Right Solution

This article compares onsite power generation options for AI data centers, helping you navigate the key factors in selecting the right solution. Before we dive in, let’s take a closer look at these 5 power-related considerations when future-proofing power needs for your data center's power.

• Time to power is the #1 priority. AI data centers need fast deployment to avoid grid delays. The right provider should offer solutions that go live in months, not years.
• Total cost of ownership. Fuel efficiency, maintenance, and uptime affect the total cost of ownership. High-efficiency, low-maintenance solutions provide the best value.
• Load-following is a growing need for AI data centers. AI workloads fluctuate, requiring power solutions that scale output in real-time without efficiency losses.
• Power density is critical in urban and high-demand areas. Where land is expensive or limited, higher power output per acre maximizes efficiency.
• Emissions and permitting impact deployment speed. Strict regulations in urban and high-density areas make low—or zero-emission solutions easier and faster to deploy.

As AI-driven applications scale, technology companies have traditionally relied on the local grid to power their data centers. But with soaring demand, the grid is struggling to keep up, facing capacity and transmission constraints. As a result, data center developers—who typically focus on facility design and optimization—are increasingly looking for alternative power solutions that are reliable, scalable, and have low carbon emissions.

Why AI Data Centers Are Turning to Onsite Power

AI data center developers are finding that onsite power is the fastest way to overcome grid constraints and avoid utility waitlists. The 2025 Data Center Power Report shows that over 30% of data center projects announced in 2024 are expected to use onsite power as a primary source by 2030. By generating electricity where it’s needed, data centers can reduce reliance on high-voltage transmission infrastructure, get online faster, and start generating revenue sooner.

Factors to Consider for Onsite Power

As data centers plan for expansion through 2030, key factors in selecting a distributed onsite energy source include time to power, load following, ease of permitting, and the ability to scale efficiently.

With an extensive infrastructure of over 3 million miles of pipelines in the US, natural gas remains the preferred fuel source due to its reliable supply and low risk of disruption. Data center developers typically consider three natural gas-based power generation options:

• Gas turbines
• Reciprocating engines
• Fuel cells

All three can function as behind-the-meter, island microgrid solutions, enabling data centers to operate independently where grid infrastructure is insufficient or unavailable.

In locations where grid operators require onsite power to contribute to the electricity market, these technologies can also run in parallel with the grid as dispatchable resources, providing additional flexibility.

We’ll share the trade-offs between these three technologies so you can make an informed decision that aligns with your data center’s growth plans, energy needs, and sustainability goals.

Time to Power: Data Centers Need Power Fast

The time required to power a data center depends on three key factors: lead time of the power generation equipment, the permitting process, and how long it takes to set up the power plant once the equipment arrives.

Small turbines/engines and fuel cells come in modular, pre-assembled systems that are factory-tested, wired, and ready to be shipped. This allows them to be installed and running within months, speeding up project timelines and ensuring data centers can start operating GPUs as soon as possible.

In contrast, large gas turbines/engines require extensive site preparation, including heavy construction and large concrete foundations. These projects typically take 9 to 12 months to install, and work only begins after permits are secured.

Supply chain issues have made matters worse, especially for rotating generation units, with gas turbine lead times now exceeding four years in some cases. Fuel cells, on the other hand, have a strong supply network and are much easier to install, allowing large-scale power plants to be up and running within months.

Temporary Power: Consider Hidden Costs

For developers needing a temporary power source while waiting for grid access, mobile combustion technologies like gas engines or turbines represent a low-cost, short-term fix. However, these options come with hidden costs, including site preparation, permitting, noise containment, emissions control equipment, and high removal costs once they are no longer needed.

Even if utilities eventually build the required power generation, constructing the necessary transmission infrastructure can take years, delaying grid availability. As a result, data centers often end up relying on less efficient, high-maintenance gas turbines or reciprocating engines for much longer than planned.

Fuel cells offer a better alternative as a bridge power solution.

They require minimal maintenance, provide continuous power without downtime, and operate more efficiently, lowering long-term costs. Their modular design makes it easy to scale the site capacity as needed, and they can integrate seamlessly with the grid when utility power becomes available (Figure 1) or be redeployed to another site that requires power.

This flexibility enhances the overall energy reliability and reduces unnecessary infrastructure costs, making fuel cells a smarter investment for data center developers.