Jon Parrella, Founder & CEO, TerraFlow Energy

In an interview with Invest:, Jon Parrella, founder and CEO of TerraFlow Energy, discussed how rising data center demand is reshaping the energy market, why long-duration flow batteries offer a different approach to grid-scale storage, and how Houston supports the company’s growth. “Being in Houston has given us access to many of the industry’s key players,” Parrella said.

What trends have had the greatest impact on TerraFlow Energy’s strategy over the past year?

Data centers were not where we started the business, but demand for artificial intelligence infrastructure has driven much of our growth. One of the most significant developments has been the Ratepayer Protection Pledge and the changing expectations surrounding how rural data centers connect to the grid.

The emerging requirements are that data centers bring their own power, pay for interconnection, and lower the cost of electricity for local constituents. To accomplish that, they must become responsive loads by curtailing demand or dispatching behind-the-meter generation back to the grid.

Those policy changes have forced many developers to rethink projects already in interconnection queues. Some have withdrawn projects altogether, while others are redesigning their facilities to meet the new requirements.

We anticipated this shift because there is no other practical way to support the scale of development the industry is pursuing. As a result, demand for our technology has increased dramatically because it enables customers to satisfy those new requirements. Even if only a fraction of the proposed projects move forward, demand will still far exceed current manufacturing capacity.

How does TerraFlow’s technology differ from other energy storage solutions?

We are not a lithium-ion company. We use a flow battery, which is essentially a liquid or chemical battery consisting of tanks containing chemistry, pumps, and a stack where the electrochemical reaction occurs.

The advantages are that there is no thermal runaway, no cycle degradation, and the battery can charge and discharge simultaneously. The tradeoff is that it is not portable, but it is designed for long-duration stationary storage, which is what the market increasingly needs.

Our batteries are installed inside buildings rather than in shipping containers spread across a site. That design also changes where the battery sits within a data center’s electrical architecture.

Why does that design matter?

Most battery systems are installed on the medium-voltage portion of a data center campus. Because batteries operate on direct current while the grid operates on alternating current, those systems require additional conversion equipment and switching infrastructure.

We instead install the battery on the low-voltage side, between the transformer and the circuit breaker panel before power reaches the server racks. We size each battery to match the capacity of the data center.

Since our battery can charge and discharge simultaneously, power flows through it continuously. That allows it to act as both a shock absorber and a filter. It eliminates the need for several other pieces of equipment, including uninterruptible power supplies, harmonic filtering, and medium-voltage battery systems.

Although our battery can cost more than some competing technologies, the overall implementation cost is significantly lower because the electrical architecture is much simpler.

How does the system help data centers become responsive loads?

Instead of a battery that provides roughly 90 minutes of storage, we can provide around 10 hours. That allows a data center to operate from the battery for much of the day while dispatching behind-the-meter generation back to the grid when needed.

There are several approaches to creating responsive loads, including shifting computing between facilities or curtailing compute by shutting down servers. Our approach allows operators to continue running the data center while removing its demand from the grid for extended periods.

We’re the only solution that I’ve seen that can do that.

It also helps facilities comply with evolving state regulations and grid requirements while simplifying the overall power system and reducing the amount of equipment required.

What are the long-term advantages of flow batteries?

For grid-scale stationary storage, flow batteries offer a combination of safety, longevity, and low operating costs. They can last 25 to 30 years, are fully recyclable, and do not carry the same fire risks associated with lithium-ion technology.

Maintenance is largely limited to the pumps. Operating costs and insurance costs are lower, and communities are generally more comfortable with a technology that cannot experience thermal runaway.

We are also building Centers of Excellence with major partners to demonstrate how data centers can be designed with lower risk, lower power costs, reduced noise, minimal water consumption, and significant economic benefits for surrounding communities.

Why is Houston an ideal location for TerraFlow?

Houston provides the infrastructure, talent, and customer base we need. We have rail access, and we are developing another Texas site with port access, giving us multiple transportation options.

Most of our customers are already in Texas because it is one of the country’s strongest data center markets. Houston also provides access to expertise in power, chemistry, engineering, and energy, making it much easier to recruit experienced executives and technical talent.

The region also supports our plans to expand into Central America, South America, and the Caribbean through its port infrastructure.

I’ve lived here since 2015, and I probably would never go back to the Northeast. It’s been a much more conducive place to build factories, expand manufacturing, and grow the business.

Can Texas’ power infrastructure keep pace with demand?

Not at the scale currently proposed. The interconnection queue contains far more demand than today’s grid can support, even though many of those projects will never be built.

Our approach helps transform data centers from grid liabilities into grid assets. With behind-the-meter generation and long-duration storage, they can inject power back into the grid when needed instead of only consuming electricity.

Data centers also bring roads, schools, tax revenue, and other infrastructure improvements to communities. I’m supportive of rural data center development when projects are designed correctly.

There is still a great deal of misinformation surrounding water use and other impacts. Modern cooling systems can significantly reduce water consumption, and properly designed facilities can earn strong community support while delivering meaningful economic development.

Where do you see the greatest opportunities for future growth?

Even if data centers disappeared tomorrow, I don’t think the energy industry would slow down. Manufacturing is returning to the United States, electricity demand continues to rise, and battery demand already exceeds manufacturing capacity.

Energy infrastructure will remain central to economic development regardless of political changes. Storage and transmission infrastructure have long-term value because every industry is using more power.

We’re not simply building a manufacturing facility. We’re helping build an entirely new industry while expanding the supply chain needed to support it. A major part of that effort is continuing to educate the market about how these systems should be designed.

We’re also expanding internationally with operations planned in Europe and Brazil. Our first factory is coming online, we’re raising capital, and we’re scaling as quickly as possible.