The Power Hunger of AI

Europe’s data centre electricity consumption is on a steep ascent. The International Energy Agency (IEA) projects that global data centre electricity demand could more than double to 945 terawatt-hours (TWh) by 2030. This surge is propelled chiefly by the rapid adoption of artificial intelligence, which requires immense computational power for training and inference. AI workloads are particularly challenging because they create large and unpredictable spikes in power draw, unlike the steadier demand of conventional cloud services. Grids across the continent are already feeling the strain; in 2024, some regions reported near-capacity conditions during peak hours. Moreover, an estimated 72 TWh of renewable electricity is wasted annually in Europe due to grid bottlenecks and insufficient storage, at a cost of nearly €7 billion. This waste represents a massive missed opportunity for decarbonisation and underlines the urgent need for robust energy storage solutions that can bridge the gap between intermittent generation and constant demand.

Rust and Funding

Enter iron-air batteries. Ore Energy, a spin-out from the Delft University of Technology in the Netherlands, has pioneered a technology that stores energy by leveraging the reversible oxidation of iron—essentially, controlled rusting and unrusting. The battery uses iron, water, and air, materials that are abundant, cheap, and free of the geopolitical baggage that plagues lithium and cobalt supply chains. The design allows for energy storage durations of up to 100 hours, far surpassing the 4–8-hour capability of typical lithium-ion systems. More importantly, the levelized cost per kilowatt-hour of capacity is about one-tenth that of lithium-ion, making it economically viable for multi-day storage that can replace natural gas peaker plants.

The startup’s momentum got a major boost this week with the announcement of a €43 million Series A round led by Plural and HV Capital, bringing its total funding to €61 million. In a press release, the company’s CEO stated bluntly, “Our direct competition is natural gas. We are here to break its monopoly on filling multi-day supply gaps.” Ore Energy has already secured a 1 GWh supply agreement with Dutch energy supplier Budget Thuis and is collaborating with French utility EDF on pilot projects. These early contracts validate the market’s appetite for a clean, long-duration alternative to fossil backup. The fresh capital will be used to expand the team, accelerate product development, and prepare for gigawatt-hour-scale manufacturing by 2028.

Europe’s Clean-Tech Sovereignty

The iron-air approach dovetails neatly with European policy ambitions. The EU’s Green Deal and the Net-Zero Industry Act actively encourage domestic manufacturing of clean technologies to reduce reliance on imports. Because iron-air batteries require no lithium, nickel, or cobalt, they can be produced entirely within Europe, insulating the continent from the supply disruptions and price volatility that have plagued the lithium-ion sector. This aligns with Brussels’ push for “strategic autonomy” in critical technologies. The competitive landscape adds urgency: US-based Form Energy is the only other company with a comparable iron-air product, having raised over $1.2 billion and broken ground on a factory designed for 500 MW of annual capacity by 2028. If Europe wants a seat at the table, it must nurture its own champions quickly.

Scaling up, however, is fraught with risk. Iron-air is still unproven at commercial scale, and moving from pilot projects to mass manufacturing requires huge capital investment and tight supply chain coordination. Utility adoption is notoriously slow, and regulatory frameworks may not keep pace. Yet the market pull is increasingly powerful. Tech giants like Google and Microsoft have pledged to run on 24/7 carbon-free energy by 2030, a goal that demands precisely the kind of long-duration storage Ore Energy offers. Data centre operators are already the largest corporate buyers of renewable power, and as they face pressure to back up their AI workloads with clean baseload, iron-air batteries could become indispensable.

The current wave of investment in long-duration energy storage recalls earlier inflection points in clean technology. When lithium-ion batteries first entered the automotive market in the early 2010s, many doubted their cost-effectiveness. Yet a decade of scaling drove prices down by nearly 90%, enabling the electric vehicle revolution and reshaping grid storage economics. A similar cost-reduction curve for iron-air could fundamentally alter the calculus for integrating renewables into power grids worldwide. The UK’s experience with wind curtailment—paying almost £6 billion since 2011 to shut down turbines when the grid cannot absorb excess electricity—illustrates the mounting cost of inaction and the value that storage can unlock.

Another instructive parallel lies in the history of solar photovoltaic manufacturing. Europe once led in solar panel production, but a combination of insufficient policy support and aggressive Chinese scaling saw that advantage erode. European policymakers are determined to avoid a repeat with next-generation energy storage. By channeling substantial public and private funding into homegrown iron-air technology, the EU aims to secure not just a cleaner grid but also the industrial and employment benefits of owning the supply chain. The lessons of lithium-ion’s ascent and solar’s manufacturing shift provide crucial context for evaluating Ore Energy’s €43 million raise—it is more than a startup success story; it is a litmus test for Europe’s ability to fuse digital and green ambitions into lasting strategic advantage.