“One way of looking at this is that energy is becoming intelligence, and that may be its most important incremental use since the industrial revolution,” says Michele Della Vigna, head of Natural Resources Research in EMEA in Goldman Sachs Research.
We spoke with Della Vigna about his outlook for companies to use electricity generation systems, such as fuel cells, instead of using the utility grid; the advantages of using fuel cells instead of gas-turbine power generation; and the share of power demand that’s likely to be met using fuel cells.
Your team identified behind-the-meter (BTM) systems—energy generation and storage systems that go directly to a site instead of through a utility—as key to meeting the increasing demand for power. What are these, and what makes them more relevant?
Behind-the-meter solutions have become more relevant in 2025 when increasing power demand from data centers, due to the surge in AI, has exceeded the typical handling capacities of the grid. BTM solutions leverage energy generation and storage technologies to power electricity demand from the end users’ vicinity, with energy consumed directly without passing through the utility meter and the grid. They offer an important alternative means of ensuring uninterrupted operation, insulated from the vulnerabilities of the grid.
The viable BTM solutions for data centers range from onsite generation through gas turbines, fuel cells, diesel engines, solar and small modular reactors (SMR) and geothermal plants, to energy storage systems using batteries.
How much of incremental electricity demand will such systems be likely to meet?
Incremental electricity demand from data centers should total an estimated 730 Terawatt-hour over 2024-30, reflecting the rapid expansion of AI workloads and digital infrastructure. We estimate that a quarter to a third of this will be met by BTM, and this suggests that up to 25 gigawatt (GW) of BTM generation will be deployed over the next five years.
Why are fuel cells particularly well-suited to data center applications, when compared to gas turbines?
Fuel cells are electrochemical power generators that convert fuel (mostly natural gas, but could also use hydrogen) directly into electricity without combustion. Instead of burning the fuel to spin a turbine, fuel cells use a chemical reaction to produce electricity. Compared to gas turbines, fuel cells:
- can deliver power to data centers with shorter time to market: Gas turbine lead times have stretched to 5+ years, while modular fuel cell systems can be deployed in less than a year.
- are 10-30% more efficient than gas turbines, meaning they require less fuel per unit of electricity produced.
- operate with much lower noise: For data centers, this translates into a major advantage, as fuel cells can be sited directly adjacent to buildings or even indoors, while gas turbines require dedicated acoustic treatment and separation zones.
- produce fewer emissions: No combustion means no NOx and CO which is especially harmful in an urban setting where data centers are located (additionally, CO2 intensity of fuel cells is lower than that of gas turbines, especially simple-cycle, thanks to higher electrical efficiency).
- offer stronger load versatility than gas turbines, maintaining high efficiency across operating levels and better supporting the steady baseload needs of data centers.
What share of data center power demand are fuel cells likely to meet?
We estimate that 6-15% of incremental data center power demand, or 25-50% of total behind-the-meter power generation supply, could ultimately be provided through fuel cells, which would correspond to roughly 8-20GW of fuel cell capacity required to supply electricity by 2030.
What are the possible constraints for expansion in fuel cell manufacturing and installation?
Expansion of fuel cell deployment is currently constrained by its small manufacturing capacity, given its limited historical use—but we believe this is about to change, both in the US and Asia, with major manufacturing expansion.
Source: goldmansachs.com
