Delta Power’s Bet on Hydrogen Backup Generators Is the Right Call for Data Centers

In October, Delta, a major supplier of thermal and power systems for clients, including NVIDIA, announced that it would begin investing in Solid Oxide Electrolyzer Cell (SOEC) and Solid Oxide Fuel Cell (SOFC) research, through a long-term collaboration agreement with Ceres Power—an existing developer of SOEC technology. Mass production is planned to begin by 2026 and will initially be used to decarbonize operations in India and Southeast Asia, where Delta Power is furthest from reaching its 2030 renewable energy goals.

Commenting on the partnership, Ping Cheng, Delta’s Chief Executive Officer (CEO), emphasized the reliability and efficiency of hydrogen-fueled SOFCs for microgrids, uninterruptible manufacturing processes, and, pivotally, data centers. The announcement follows a recent pilot project by Microsoft, which, in partnership with Plug Power—a U.S. electrolyzer and fuel cell producer—tested the viability of hydrogen fuel cells for providing backup power at its data centers. Other big technology companies, including Amazon, are exploring similar approaches to decarbonizing these energy-intensive facilities.

SOFCs are a generic technology that can utilize a range of fuels to produce electricity. When fueled with hydrogen, these cells can be used to decarbonize various processes and products, such as vehicles. Until recently, automotive applications were the most widely recognized use case for SOFCs, with Fuel Cell Electric Vehicles (FCEVs) providing an alternative to Battery Electric Vehicles (BEVs). However, as BEVs have dominated the automotive market, FCEVs have fallen behind, and where hydrogen SOFCs can, and should, be applied next is a matter of debate.

Today, SOECs are one of the least prevalent electrolyzer types, despite boasting superior efficiencies and productive rates. This low adoption reflects that SOECs are relatively nascent technologies and are comparatively expensive, costing 2X to 3X more than Polymer Electrolyte Membrane (PEM) equivalents. Additionally, while other electrolyzer types are expected to reach economical Capital Expenditure (CAPEX) levels by 2027-2028, solid oxide cells will remain costly until the technology matures. SOEC electrolysis also requires constantly high temperatures, which is energy-intensive and expensive.

Subsequently, while the wider green hydrogen ecosystem has gained pace, interest in SOFCs and SOECs has remained relatively stagnant. Yet, data centers may soon offer these technologies a uniquely suitable use case. These facilities require large supplies of uninterrupted electricity—a demand that has grown significantly with developments in Artificial Intelligence (AI). While data centers are increasingly adopting renewable energy sources for normal operations, backup power for keeping facilities online during outages is still widely provided by diesel generators, posing a considerable challenge to decarbonization.

SOFC and SOEC technologies, when applied in tandem, may offer a robust solution. Fuel cells could be very effective and sustainable alternatives to conventional generators, able to produce on-site electricity on demand, at high efficiency, with no emissions. Vendors are already exploring their viability. Rehlko (formerly Kohler Energy) has developed hydrogen SOFC generators for hospitals, water treatment facilities, and data centers, and is currently working with partners to better understand these use cases. Longevity advantages are already apparent: fuel cell generators can provide power for longer periods than batteries, and hydrogen can be stored for greater durations than electricity can. SOFCs are also less dependent on critical materials like lithium and cobalt than large-scale batteries, making them more resistant to bottlenecks and supply shortages.

By adopting on-site hydrogen production, data center providers and partners can ensure that intake fuels are readily available for SOFCs. But why use solid oxide electrolyzers instead of cheaper alternatives? First, while SOEC hydrogen production is harder to countenance for other applications, CAPEX limitations will be less important for data centers that must otherwise install expensive batteries to meet sustainability targets. Additionally, SOECs have an industry-specific edge over alkaline and PEM processes, as they can repurpose waste heat—a major concern for data centers, which produce significant quantities of excess thermal energy—by very efficiently converting it into green hydrogen. This can then be stored and used to fuel SOFC systems when backup power is required or sold to local markets to generate additional revenue.

Delta Power is not entering uncharted territory by developing SOFCs for data centers. Bloom Energy, a U.S. SOEC and SOFC producer, has installed fuel cells at facilities across Asia, Europe, and the United States over the past few years. However, ABI Research forecasts that the availability of green hydrogen is set to grow to nearly 35 million tons by 2030, with Hydrogen (H2) fuel prices falling by almost two-thirds over the same period. Therefore, by the end of the decade, synergies between SOFCs and on-site hydrogen production could be realized. Bloom, Delta, and other vendors that seize this opportunity will be well situated to support centers when this time comes. For their part, firms looking to secure sustainable backup generation for their data centers should be aware of the potential of SOFC-SOEC solutions—and seek out strategic partnerships with vendors that are developing them.

For detailed forecasting, a timeline of when green Levelized Costs of Hydrogen (LCOHs) will be reached, and a guide to where—and at what time—supply and demand in specific regions and industries will develop, access our recent Hydrogen Market Data and The Economic Viability of Green Hydrogen for Industry and Enterprises reports.