Battery storage is now cheaper than a type of natural gas power plant favored by many data center developers, according to a new report from Wood Mackenzie.
On every continent and in each of the 43 markets that Wood Mackenzie surveyed, four-hour duration batteries were less expensive than open-cycle gas turbines. The consultancy predicts that the cost of electricity from batteries will continue to decline while electrons from gas turbines will only grow more expensive in the coming decades.
The report lands as energy prices in the U.S. and elsewhere continue to rise, fueling inflation as data centers push electricity demand to new heights. Prices for gas turbines have been driven up by AI data center developers, which have been buying any model they can get their hands on. The effects have been more acute for open-cycle gas turbines, which are more readily available but less efficient and more expensive to operate.
Those turbines are often used by utilities as peaking power plants, which step in to generate electricity in periods of high demand. As prices for those turbines rise, it can raise costs for utilities, too.
Open-cycle turbines are simpler to make than closed-cycle turbines, but even they now take two to four years to procure. Waitlists for closed-cycle turbines now extend into the early 2030s. Both backlogs have been spiking prices for all new natural gas power plants.
That’s not the case for every generating technology. Solar is now the cheapest form of new power in every market in Wood Mackenzie’s survey.
While solar remains cheapest even in North America, the situation remains complicated there. Solar prices are “under pressure” from tariffs and import restrictions though utility-scale solar is expected to fare better. There, 168 gigawatts is largely protected from those near-term price shocks thanks to safe-harbor provisions in the One Big Beautiful Bill, which kept tax credits for projects that have begun construction or are completed before the end of 2027
The market for U.S. natural gas will narrow in the coming decade. In the Middle East and Africa, four-hour batteries will be 33% cheaper by 2035, “displacing gas peaking on cost across every gas market in the region.” In China, energy storage costs are 55% below its neighbors’.
“This economic shift is decisive and widening,” Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, said in a press release.
Source: techcrunch.com
