• Fire concerns are increasing investor scrutiny and community engagement needs.
• Massachusetts, Virginia, and other PJM states offer promising storage growth opportunities.

Storage developers in the distributed generation space are racing to meet AI data centers’ power demand, but Carson Power CEO Emilie Flanagan said emotional community opposition is turning the sprint into a marathon.

Flanagan spoke on an October 22 panel on the emerging role of distributed-level storage among data centers during NPM’s DG and Data Center Development Forum in New York City, alongside Joe Fiori of EDPR NA; Tyler Yorke of Eneon ES; Spencer Tweed of FOSS & Company; and ESI Energy Partner Gage Kellogg, while Sven Hodges of Mayer Brown moderated.

Kellogg said ESI’s core business model has always been in commercial real estate, and now companies are coming to them to ask whether those commercial buildings can house AI computing facilities.

For DG resources, panelists said DG storage can achieve behind-the-meter power faster than their utility-scale counterparts, but the challenge is whether localities will permit the projects at all.

Flanagan said that Carson Power is “showing up to towns with incredibly emotional public hearings where folks are crying and imploring, like absolutely asking for battery storage to be banned.”

She noted that there are more than 90 moratoriums in New York that have outright banned battery energy storage, and part of the opposition stems from recent fires at BESS facilities in Upstate New York. A series of thermal runaway events in New York have prompted state agencies to review the fire code, resulting in an updated code that Flanagan described as “the strictest in the country.”

On top of that, Flanagan said there has been “a rush into the queue,” which has resulted in a statewide moratorium on data centers in New York.

As a result, she said residents are lumping community storage and data centers into the same conversation and emotional response.

“It’s a pretty interesting time to be a developer walking into some of these towns when there’s been so much misinformation thrown ahead of the public, and you’re trying to backtrack kind of what your project could bring in benefits,” she said. “I mean, no one’s talking about property taxes right now. It’s really more about, ‘Will my kids’ school burn in a fire? Will our children get contaminated by the water if the battery leaks?’ I mean, it’s really heavy discussions.”

On the financing side, Tweed said that investors don’t want to be associated with a battery fire, and that results in a lot of comprehensive questions to answer “what-if” scenarios. Likewise, Yorke said that, six years ago, Eneon would send a technical package that reviews the components used for a project.

Now, Yorke said they face an increasing number of questions to prevent or plan for thermal runaway. In addressing those challenges, Flanagan said Carson Power prioritizes investing in grassroots support.

She noted that the oil and gas industry spends 26 times more than the renewables industry on public engagement and messaging, “so we’ve got a lot of wood to chop.” Looking beyond local opposition, Flanagan and Fiori pointed to a number of state incentive structures that create fertile ground for storage resources.

Fiori said that DG-level storage is still “in the early days,” and so the execution phase remains in the future. He said that, despite the good incentives for storage in New York, PJM Interconnection states hold the most positive momentum for front-of-the-meter storage.

Panelists highlighted Virginia as an emerging state for DG storage meeting data center needs. Yorke added that Massachusetts remains an active market for them, especially for their debt-flip model.

As far as who wants to buy storage, beyond just data center companies, Flanagan said that Carson Power is seeing a lot of its solar customers interested in breaking into the storage market.