When news broke that Natron Energy — a promising US battery startup developing sodium-ion cells — had ceased operations in September 2025, it raised questions about the prospects for alternative cell chemistries in mission-critical energy storage applications such as data center UPS systems. Will any alternative batteries, primarily those based on nickel-zinc, offer a practical and economic alternative to lithium-ion (Li-ion) chemistries?

Discussions with major static UPS system vendors Eaton, Schneider Electric and Vertiv suggest a long and difficult path ahead for any battery challengers. Meeting the stringent technical and commercial standards — including volume availability at competitive costs and the financial health of the manufacturer — in mission-critical energy storage applications is a gradual and expensive process for battery companies, during which time Li-ion technology continues to evolve.

Difficult economics

Natron’s demise offers a cautionary tale of execution issues in achieving technical and commercial readiness milestones — issues which eroded investor confidence in the company’s outlook. Natron struggled to secure continued funding for product testing and development as well as the capital required to install expensive manufacturing tools in a new factory. Notably, the company failed to obtain important UL safety and fire certifications, rendering its products unacceptable to customers with existing orders. Even then, Natron would likely have required fresh capital to have a chance at winning and delivering major orders.

In the broader context, a fledgling Natron operated in a fiercely competitive market where size can outweigh some technical characteristics. Mature supply chains built around various Li-ion cell chemistries — accelerated by EV adoption — have driven prices down while also enabling heavy spending on research and development to produce battery packs that are better performing, safer and more cost-effective.

The pace of Li-ion battery development has been striking. From 2014 to 2024, Li-ion battery pack prices across all cell types fell by a (volume-weighted) average of more than 80% per kWh capacity, according to data compiled by BloombergNEF (see Figure 1). A significant component of this reduction — around 40-45% on a per-kWh basis — came from continued increases in cell energy density due to improved chemistries, cell geometry and engineering (a 50-80% density gain in 10 years). However, a bigger part of the cost reduction is attributable to economies of scale and the maturity of manufacturing processes. This rapid progress makes Li-ion a fast-moving target for other branches of battery technologies.

Figure 1 Li-ion battery pack prices per kWh have dropped across the board

Suppressed fire risks

Cell cost is not the only consideration, especially with Li-ion. There are system and facility costs associated with the characteristics of the chosen cell chemistry. Li-ion’s fundamental cost and density advantage is partially offset by the costs and space needed to mitigate its fire risk — such as increased distancing between battery cabinets and fire-fighting systems capable of cooling batteries undergoing thermal runaway for several hours to prevent it from spreading.

Li-ion’s adverse fire risk profile created an opening for Natron and other companies, such as ZincFive, a developer of nickel-zinc batteries, and slowed adoption by many valve-regulated lead acid (VRLA) battery users. Inherently, these battery technologies are not susceptible to thermal runaway. This does not eliminate fire risk completely, but unlike Li-ion, these cell chemistries do not carry the potential for an uncontrollable exothermic chain reaction capable of producing high-temperature, high-energy fires (see Anatomy of a thermal runaway).

However, the safety gap for Li-ion batteries has been rapidly closing. First, best practices for mitigating the risks associated with the highest density Li-ion chemistries, such as nickel-manganese-cobalt (NMC) types, mean that when deployed correctly, an effective battery management system will minimize cell failures. In the rare event of a thermal runaway, battery packs fitted with physical and mechanical fire barriers will likely prevent it from escalating into a major fire. Major UPS vendors report that although they have seen “thermal events” across their installed base of Li-ion batteries, they have not recorded any significant fires resulting from Li-ion thermal runaway as of 2025.

Second, chemically more stable Li-ion cells — particularly those using lithium-iron-phosphate for their cathode (LFP) as well as the metallic backing of the anode — have gained significant market traction compared with NMC and graphite. LFP batteries are more cost-competitive but come at the expense of energy density (about 10-20% on a battery cabinet level). However, they are much less prone to thermal runaway even under extreme thermal and electrical abuse. This is due to their higher onset temperature (compared with NMC or other common Li-ion chemistries) and greater resistance to hard cycling, overcharging and deep discharging.

Even in the event of thermal runaway, LFP-type cells release energy at a much slower rate due to their stronger molecular bonds, which provides more time for battery management systems and operational staff to react, thereby reducing the likelihood of a fire. While LFP batteries do not eliminate risks completely, they appear to allay concerns around fire safety.

Cradle and grave issues

With Li-ion prices continuing to fall, energy and power densities increasing, and safety performance improving — all readily available from established battery suppliers — what else is there for alternative battery chemistries to solve? Two major issues with Li-ion batteries are unlikely to be addressed in the foreseeable future:

• Environmental and social credentials. Li-ion cells benefit from a positive halo effect surrounding the environmental image of electric vehicles (EVs), yet their sustainability remains questionable. The mining and processing of raw materials rely on long, global supply chains, creating uncertainty around the environmental footprint and social issues. End-of-life disposal is also problematic due to the lack of industrial recycling capacity and the challenging economics in the face of dropping prices — particularly for LFP, where the relatively low value of its constituent metals reduces incentives for recycling. One remaining key advantage of VRLA batteries is their high material recycling rate, exceeding 99% by weight, although operators will want to ensure recycling is carried out at facilities that meet expected environmental and labor standards.
• Supply chain vulnerability. Another trade-off with Li-ion’s long supply chains is the exposure to disruptions, whether these are natural disasters affecting key regions; pandemic-related shutdowns and dislocation of container liners such as those seen during COVID-19; or, increasingly, rising geopolitical tensions and weaponized trade policies. China now commands a dominant share of raw-material processing and cell manufacturing capacities, which create cost efficiencies but also increase exposure to tectonic shifts on trade policies, such as tariffs, quotas or embargos. Again, VRLA supply chains are far more regional and therefore less exposed to these risks.

Beyond improved fire safety and harder cycling capabilities compared with Li-ion, a cornerstone of Natron’s proposition was that its batteries were made in the US, addressing several of the concerns noted above. While other Na-ion cell manufacturers exist — the largest of which is China-based CATL — there are currently no obvious substitutes for Natron.

For now, the best-placed battery challenger to reach wider availability appears to be ZincFive, which puts the company in a relatively strong position to attract investors. Indeed, it recently announced a new $30 million funding round. The fresh capital will support improvements in both technical (cell characteristics) and commercial readiness, including manufacturing capabilities and financial health, which will ultimately enable volume shipments for energy storage applications. Selling into other applications can also help build volume. Examples include displacing VRLA batteries in small office/home office UPS systems; serving as starter batteries in transport and standby power generation; and replacing nickel-cadmium and Li-ion in a range of use cases where fire safety and temperature tolerance are critical.

Nickel-zinc is most likely to appeal to data center operators seeking a combination of a favorable fire-risk profile and short ride-through times of about 2 minutes or less (switching to engine generators as soon as they are ready to take the load). It may also meet demands for higher shallow-discharge cycling capabilities to dampen AI loads than what VRLA can offer.

The following Uptime Institute expert was consulted for this report:
Dr. Tomas Rahkonen, Research Director Sustainability Europe, Uptime Institute