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TL;DR
Two October developments highlight how AI data center infrastructure is expanding beyond chips: Vantage reserved more than a gigawatt of factory capacity for a solid-state transformer, and NiSource signed a 20-year power deal with Microsoft that includes about 1,100 MW of generation and a 600 MW battery. The deals reflect growing interest in high-voltage direct current and storage, but vendor efficiency claims and the ultimate effects on electricity bills remain uncertain.
AI data center power infrastructure is drawing new investment in transformers and batteries: Vantage reserved more than a gigawatt of factory capacity for a solid-state transformer, while NiSource signed a 20-year agreement with Microsoft that adds about 1,100 megawatts of generation and a 600-megawatt battery. The deals show how operators and utilities are addressing rising electricity demand, though they do not establish how much the projects will reduce costs or affect other customers.
Vantage reserved the manufacturing capacity on October 21 for a Heron Power transformer designed to convert grid electricity into 800-volt direct current (DC). The source describes the equipment as having storage built in to help manage changes in data center demand. A factory-capacity reservation is not the same as confirmation that all of the equipment has been installed or is operating.
On October 16, NiSource signed a 20-year power agreement with Microsoft. The arrangement adds approximately 1,100 MW of generation and a 600 MW battery. The reported details do not specify the project’s full construction schedule, location, or how its costs will be allocated among the companies and electricity customers.
The deals landed amid wider interest in changing data center power designs. An October 26 Utility Dive article, sponsored by inverter maker SMA America, argued for moving some electrical conversion closer to a facility’s grid connection and distributing power as DC. Its modeled figures are vendor-sponsored estimates, not independent measurements of operating sites.
Infographic 01 · From grid to rack
AI racks near a megawatt are outgrowing the AC power chain.
Why the industry is moving to 800-volt direct current: fewer conversions, less copper, batteries on the main path. The numbers are vendor figures with different baselines, so they cannot be added up.
Today: many conversions
Typical AC chain from the grid to the rack
- Medium-voltage AC from the grid
- Transformer steps it down to low-voltage AC
- UPS converts to DC for the batteries and back to AC
- Distribution units feed the racks
- Every server power supply converts AC to DC again
Each stage loses energy, and almost all of the loss becomes heat the cooling system must remove.
800 V DC: convert once, outside
NVIDIA reference design, full-scale production planned with Kyber racks in 2027
- 13.8 kV AC from the grid
- Converted once to 800 V DC at the edge of the site, batteries on the same DC bus
- 800 V DC busway to the racks
- Stepped down inside the rack, for 1 MW racks and beyond
Bridge for existing halls: a “sidecar” cabinet next to the rack converts AC to 800 V DC, while the old chain stays in place.
Power lost per MW delivered to the rack
kW, SMA white-paper model vendor model
What NVIDIA says 800 V DC changes
NVIDIA’s engineering claims claim
Sources: NVIDIA technical blog (20 May 2025, updated 31 Jul 2025); SMA America, sponsored content in Utility Dive (26 Oct 2026). Rack density: IEA, Key Questions on Energy and AI (Apr 2026) (AI server power density 11× from 2020 to 2025, a further 4× by 2027).
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Power Systems Become a Bottleneck
AI facilities require more electricity per rack than many older data centers were designed to deliver. The International Energy Agency (IEA) says server power density rose 11-fold from 2020 to 2025 and is projected to quadruple again by 2027. It estimates that a rack could then draw as much power at peak as 65 households. That projection helps explain why operators are looking beyond conventional server-room equipment to power delivery, storage and grid supply.
Electricity connections and equipment lead times can constrain construction even when companies have funding and access to chips. The IEA says transformers can take two to three years to arrive and grid connections can take five to ten years in many places. Batteries could help manage rapid demand changes at a facility, but they do not by themselves create new grid capacity. The IEA estimates data centers could have 20–25 GW of batteries by 2030, while saying their value as grid assets depends on incentives.
For communities and electricity customers, the relevant issue is who pays for the generation, wires and equipment needed to serve new loads. The source notes that U.S. household electricity prices averaged 18.21 cents per kilowatt-hour in 2026, compared with 17.30 cents in 2025, and reports a 41% rise in wholesale prices in PJM. Those figures do not, on their own, establish that data centers caused the increases; costs and effects vary by region and contract.
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Why Operators Are Testing DC
Most data centers have historically received alternating current (AC), then converted it through several stages before servers use low-voltage DC. Each conversion can lose energy, much of which becomes heat that cooling systems must remove. As rack power rises, the amount of equipment and cabling needed to deliver electricity becomes a design concern.
NVIDIA’s 800 VDC reference design proposes converting 13.8-kilovolt grid power to 800-volt DC near the facility perimeter, then distributing DC to high-power racks. NVIDIA says the approach could use 45% less copper than 415-volt AC distribution and deliver up to 5% better end-to-end efficiency than current 54-volt systems. Those are company claims, not independently verified performance results. Full-scale production is planned with its Kyber systems in 2027.
For buildings designed around AC, SMA describes a “sidecar” conversion cabinet placed next to a rack as a possible interim arrangement. Its sponsored white-paper model estimates that a traditional conversion chain delivering 1 MW could lose about 80 kW, compared with about 20 kW in a design that converts to 800-volt DC outside the building. Results from a model should not be treated as measured savings across data centers.
“Leaving no room for compute”
— NVIDIA, describing its 800 VDC design
Costs and Deployment Remain Open
The reported announcements do not show how many transformers Vantage will ultimately receive, when they will be deployed, or the project’s final cost. The available account of the NiSource-Microsoft agreement also does not detail the generation technology, construction milestones, or the contract’s full allocation of costs and responsibilities.
It is not yet clear how much 800-volt DC systems will save in real operating conditions. NVIDIA’s efficiency and copper figures are vendor projections, while SMA’s loss estimates come from a sponsored model. Independent measurements comparing these systems at operating data centers were not provided. Nor do the reported electricity-price figures isolate the role of data center demand from other market factors.
Watch for Builds and Measurements
The next milestones are whether the reserved transformer capacity turns into delivered equipment, when the NiSource-Microsoft supply and battery projects are built, and how the parties describe their costs and operating plans. NVIDIA has identified 2027 as the planned start of full-scale production for its Kyber systems using the 800 VDC design.
Operators, utilities and regulators will also be watching for measured performance and decisions about who funds new grid infrastructure. Published operating data could help establish whether DC distribution reduces losses in practice and how batteries affect facility demand. Until those details emerge, the announcements show planned capacity and technology direction, not demonstrated savings for data center operators or lower bills for households.
Key Questions
What did Vantage announce?
Vantage reserved more than one gigawatt of factory capacity for Heron Power solid-state transformers designed to convert grid power to 800-volt DC. The report does not say that all this equipment has been installed.
What is included in the NiSource-Microsoft agreement?
The companies signed a 20-year power deal that adds about 1,100 MW of generation and a 600 MW battery. Further project and cost details are not included in the reported material.
Why are data centers considering 800-volt DC?
High-power AI racks require substantial electrical delivery capacity. Supporters say distributing power at higher voltage can reduce cabling needs and conversion losses, but the quoted performance figures are vendor claims or modeled estimates rather than independent operating results.
Will these projects lower household electricity bills?
The announcements do not establish that. The effect on bills depends on regional grid conditions, project costs, contracts and how utilities allocate new infrastructure expenses.
Source: ThorstenMeyerAI.com
