Batteries Are Now Cheaper than Natural Gas Turbines Used at Many Data Centers
Wood Mackenzie said expanding battery manufacturing and higher turbine costs are widening the gap, with 4-hour storage 65% to 75% cheaper in the United States.
- On Thursday, Wood Mackenzie released an analysis showing four-hour battery storage is now cheaper than open-cycle gas peakers in 43 global markets, marking a significant shift in electricity generation competition.
- Turbine shortages and rising fuel volatility drive up peaking costs, while expanding battery manufacturing pushes storage costs down. Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, said, "This economic shift is decisive and widening."
- China remains the global storage cost benchmark at more than 55% below the Asia Pacific average. In the United States, four-hour battery storage is 65% to 75% cheaper than new open-cycle gas turbine peakers.
- Manufacturers face backlogs ranging from 35 GW to 116 GW as growing data center electricity demand strains gas-generation supply chains, keeping capital costs elevated and reinforcing the case for renewables and storage.
- By 2060, new battery chemistries and domestic supply chain expansion are projected to drive storage costs down 10%. This technological progression reflects an inevitable transition where electric solutions increasingly displace combustion-based power generation.
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The specific electricity cost of four-hour battery energy storage is already lower than that of new gas-fired peaking power plants in almost every market around the world, Utility Dive reports based on an analysis.
4-hour storage cheaper than gas peakers across global markets: WoodMac
In North America, data centers are boosting the long-term investment case for energy storage and renewables as gas turbine backlogs and rising fuel volatility drive up peaking costs, according to a Thursday note from Wood Mackenzie.
Four-hour storage is already cheaper than open-cycle gas turbines in the 43 markets analysed, although tariffs threaten short-term advances in the United States, according to a Wood Mackenzie report.
Battery Storage Costs Drop, Outpacing Gas Turbines Globally
Four-hour battery energy storage systems have become cheaper than gas turbines in all assessed markets, driven by lower battery costs and rising gas prices. Utility-scale solar continues to be the most cost-effective power generation globally, with projections indicating further declines in renewable energy costs. This trend reshapes electricity economics across regions.
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