Batteries Now Cost Less Than Gas Turbines Used at Data Centers

A new report from Wood Mackenzie says four-hour battery storage now costs less than open-cycle natural gas turbines in all 43 markets it surveyed, across every continent. The report compares the cost of the two technologies.

Wood Mackenzie expects battery electricity costs to keep falling in the coming decades, while gas turbine costs will rise. The report comes as data centers increase electricity demand. Developers building AI data centers have bought available gas turbine models, driving up prices. Open-cycle turbines are more readily available than closed-cycle models, but are less efficient and more expensive to operate. Utilities often use them as peaking plants during periods of high demand.

Even open-cycle turbines now take two to four years to procure, according to the report. Waitlists for closed-cycle turbines extend into the early 2030s, adding to price pressure on new gas power plants.

Solar was the cheapest source of new power in every market in the survey. In North America, Wood Mackenzie said tariffs and import restrictions were putting solar prices “under pressure,” though utility-scale projects were expected to fare better. The report said 168 gigawatts of projects were largely protected from near-term price shocks by provisions in the One Big Beautiful Bill for projects completed or under construction before the end of 2027.

Wood Mackenzie projected that four-hour batteries in the Middle East and Africa would be 33% cheaper by 2035, and said they would displace gas peaking on cost across every gas market in the region. It also reported that China’s energy storage costs were 55% below those of its neighbors. “This economic shift is decisive and widening,” said Ahmed Jameel Abdullah, a Wood Mackenzie principal analyst.