Startup Bets on Aluminum as Cleaner Fuel to Power Data Centers

(Bloomberg) -- A California startup has raised $35 million to develop a system that turns scrap aluminum into a backup power source for data centers. The goal: to create a cleaner alternative to burning diesel.

Voya Energy's financing round was led by Energy Impact Partners LP and included billionaire venture capitalist John Doerr, Mantis VC, StepStone, Founders Fund, Overmatch Ventures and Seven Stars, the firm said Wednesday in an emailed statement. Voya plans to use the money to build generators that use aluminum-based fuel for testing at sites by the end of 2027.

Chief Executive Officer Richard Wang said the system ultimately aims to compete with diesel generators, a standard backup power source at data centers that helps keep equipment running during grid outages. Unlike burning diesel, which causes air pollution, Voya's system uses an electrochemical reaction to release energy from aluminum, with zero carbon emissions.

The firm is betting that data center developers who face increasing scrutiny for their environmental impacts will pay for a diesel alternative that Voya said is quieter, takes up less space and is cleaner than burning fossil fuels.

"The local air pollution of these generators is one of the reasons why there's a big data center backlash right now," said Shayle Kann of Energy Impact Partners, who helped conceive the idea and build Voya with Wang and his co-founders.

Voya's generator design involves feeding recycled aluminum into a chemical solution, triggering an electrochemical reaction that releases energy. The company has an in-house prototype of the technology, which hasn't been proven at a commercial scale.

Nearly a dozen companies including data centers, utilities and industrial manufacturers have partnered with Voya for near-term pilot demonstrations, the firm said, though Wang declined to name them.

Voya's aluminum-focused system is being developed during a period of soaring prices for the lightweight metal. US prices have surged in the past 18 months due to import tariffs from the Trump administration, tightening inventories and supply disruptions from conflicts in the Middle East, a significant producing region. That has helped drive up demand and prices for recycled aluminum.