Rooftop solar, batteries, heat pumps will help the grid handle data centers: Report
Electricity demand is expected to surge, but homes could be doing more to support the grid. A new report from the nonprofit Rewiring America suggests home energy upgrades like solar power, batteries and heat pumps can offset the electricity demand from data centers.
The report cites data from the firm Aterio that the grid will need 93 gigawatts of additional power by 2029 for data centers that are announced or currently under construction. That’s about as much power as the state of California. Researchers at Rewiring America, which advocates for renewable energy and electrifying transportation and home appliances, estimate that installing rooftop solar, at-home batteries and upgrading electric heating and air conditioning could yield enough electricity gains to meet 100% of the data center demand.
The nonprofit has spent $500,000 on lobbying firms so far in 2025, according to OpenSecrets.
Cora Wyent, head of research and data science at Rewiring America, told Straight Arrow News the present moment is a “crossroads in the energy transition,” adding that “we have a choice to make about how we meet that increase in electricity demand.”
Across America, utility companies are asking state regulators to approve rate increases. Many are also making plans to build new gas power plants to meet demand from data centers. Instead of relying on new power plants, Wyent said she hopes to spark a conversation about investing in households as essential energy infrastructure, which could save consumers money. Some analysts, however, expressed doubts that home energy upgrades can make a difference against data center demand.
How did Rewiring America conduct its analysis?
Rewiring America built its findings on a state-by-state analysis of residential electricity demand and grid capacity. The organization examined the peak electricity demand on the grid and calculated how household upgrades could reduce that load.
The researchers then modeled three types of high-efficiency heat pump installations: upgrading electric resistance heating, replacing central air conditioning and converting electric resistance water heaters to heat pump water heaters. For each state, they determined which upgrade would deliver the most grid capacity and used that as their heat pump solution.
For solar and storage, the analysis modeled adding a five-kilowatt solar system to every American home with a suitable roof — about 81% of single-family homes nationally — and paired it with a home battery roughly the size of a Tesla Powerwall. The report calculated how much these installations could reduce stress on the grid during peak demand by generating and storing electricity during off-peak hours, then discharging it when demand surges.
“There’s a solution to the capacity needs that data centers have on the grid that can be widely beneficial to households across the country,” Wyent said.
‘No way you can do it fast enough’
Although experts agree that there are benefits to energy efficiency upgrades and distributed resources like batteries and rooftop solar, the report’s conclusion that these upgrades can meet data center demand has been met with skepticism.
“It seems like you’re swimming against a really big current,” Doug Sheridan, a veteran of the pipeline industry and managing director of EnergyPoint Research. “There’s no way you can do it fast enough,” Sheridan told SAN, expressing doubts over how fast home batteries and solar can be installed.
Sheridan also pointed out that many of the policies Rewiring America supports, such as drivers switching to electric vehicles and converting gas furnaces to heat pumps, will also drive up demand for electricity.
Justin Kirkpatrick, an environmental economist and professor at Michigan State University, said solar combined with sufficient battery storage is among the most cost-effective ways to power new data centers. But for that purpose, he said it’s more efficient to build solar and storage in a centralized fashion.
“Is it more efficient to put eight solar panels on 100 houses or put 800 solar panels in the field next to the data center, right by the battery?” Kirkpatrick told SAN.
However, Kirkpatrick does think households can play a role in reducing peak load on the grid through demand response programs. These are utility-run programs where customers can get money back on their electrical bill by voluntarily reducing their electricity consumption during peak demand.
“Every household has a price for reducing their demand,” Kirkpatrick said. “That is an area where households have a role.”
How would energy upgrades be financed?
Big Tech is already making major investments in power generation. Wyent said the tech industry could pay for energy infrastructure that also directly benefits homeowners. Under this model, data center developers would cover about 50% of heat pump costs or 30% of solar and battery installations, with homeowners paying the remainder.
Some utility companies are charging higher rates to large customers such as data centers. As an alternate model, Wyent said the utilities could offer a portion of new revenues toward incentives for household upgrades rather than utility-scale projects.
The report comes as federal tax credits for home energy efficiency and rooftop solar are set to expire at the end of this year, while grid-scale renewable projects retain longer-term incentives.
“We think that one potential source of funding is from hyperscalers and utilities looking for capacity on the grid,” Wyent said.
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Ella Rae Greene, Editor In Chief
