Battery Storage Now Cheaper Than Open-Cycle Gas Turbines Globally, Wood Mackenzie Report Finds
According to a report published by Wood Mackenzie, four-hour duration battery storage has become less expensive than open-cycle gas turbines on every continent and across all 43 surveyed markets. The findings arrive as rising electricity demand from AI data centers drives up prices and waitlists for natural gas power plants.
Key points
- Four-hour duration batteries are less expensive than open-cycle gas turbines across all 43 markets surveyed by Wood Mackenzie.
- Prices for gas turbines have risen due to high demand from AI data center developers.
- Solar remains the cheapest form of new power in every market in the survey, though North American solar faces price pressures from tariffs.
What happened
Battery storage is now less expensive than open-cycle gas turbines on every continent and in each of the 43 markets surveyed by Wood Mackenzie, according to a new report from the consultancy. Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, described the economic shift as decisive and widening in a press release.
The report indicates that solar is the cheapest form of new power in every market included in the survey. However, solar prices in North America are facing pressure from tariffs and import restrictions, though utility-scale solar is expected to benefit from safe-harbor provisions in the One Big Beautiful Bill.
Context
The report comes as energy prices in the United States and other regions continue to rise, contributing to inflation as data centers push electricity demand higher. AI data center developers have been purchasing gas turbines to meet power needs, driving up prices particularly for open-cycle gas turbines, which utilities use as peaking power plants to manage periods of high demand.
Procurement times for gas turbines have lengthened. Open-cycle turbines take two to four years to procure, while waitlists for closed-cycle turbines extend into the early 2030s.
What is next
Wood Mackenzie forecasts that the cost of electricity from batteries will continue to decline, while electricity generated from gas turbines will grow more expensive in coming decades. In the Middle East and Africa, four-hour batteries are projected to be 33% cheaper by 2035, displacing gas peaking on cost across every gas market in the region, while China's energy storage costs are reported at 55% below its neighbors'.
Why it matters
The shift in relative costs between battery storage and gas turbines could alter how utilities and data center developers plan for peak electricity demand, particularly as gas turbine supply chains face multi-year backlogs and rising prices.
What we know
- Four-hour duration batteries are less expensive than open-cycle gas turbines across the 43 markets surveyed by Wood Mackenzie.
- Solar is the cheapest form of new power in every market surveyed by Wood Mackenzie.
