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(Bloomberg) — Peak Energy said it’s building what it describes as the first commercial US manufacturing facility for grid-scale sodium-ion energy storage systems in Sacramento, California.

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The development aims to capitalize on AI-driven demand for large, utility-scale battery systems as an alternative to lithium-ion technology, the company said Wednesday.

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While sodium-ion batteries have been around for years, they have struggled to compete with lithium-ion systems, which typically store more energy in a smaller footprint. Sodium-ion batteries tend to be bulkier but are generally cheaper and less prone to fire, making them a potentially attractive option for the data centers powering the boom in artificial intelligence.

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Peak, which was founded three years ago, has about $1.1 billion in orders from customers including utilities and independent power producers such as Jupiter Power, Energy Vault and the North American arm of RWE AG, according to Chief Executive Officer and co-founder Landon Mossburg.

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Peak has developed a sodium-ion storage system that can operate at higher temperatures without degrading and is priced roughly in line with Tesla Inc.’s energy storage products, Mossburg said in an interview. Once fully finished, the Sacramento facility is expected to produce four gigawatt-hours of batteries annually, enough to power almost four million homes per year.

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The company is already shipping small volumes from a pilot production line in San Francisco and expects to begin deliveries from the Sacramento plant in March. Mossburg said Peak chose Sacramento in part to remain close to its Bay Area-based engineering teams.

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“I’ve seen this done very well and very badly,” he said, referring to his experience helping scale manufacturing at Tesla and Northvolt AB, respectively. One factor in Northvolt’s struggles, he said, was building a factory in northern Sweden, far from its Stockholm-based technical team.

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