Battery Storage Now Beats Natural Gas Turbines in Cost Across Global Markets

Battery Storage Overtakes Open‑Cycle Gas Turbines

A new analysis by Wood Mackenzie shows that battery storage is now less costly than the open‑cycle natural gas turbines that many data center developers rely on. In every one of the 43 markets examined—spanning all continents—four‑hour duration batteries were found to be cheaper than these gas units. The consultancy projects that the price of electricity generated from batteries will keep falling, while the cost of power from gas turbines is expected to climb in the coming decades.

Impact on Utilities and Data Center Energy Strategies

Energy prices are climbing worldwide, and data centers are pushing electricity demand to record levels. AI‑driven data center developers have been snapping up gas turbines, driving up prices especially for open‑cycle models, which are simpler to build but less efficient and more expensive to run. Utilities often use these turbines as peaking plants to meet spikes in demand, and rising turbine costs can therefore increase expenses for both utilities and their customers. Procurement of open‑cycle turbines now takes two to four years, and closed‑cycle turbines have waitlists extending into the early 2030s, further inflating the price of any new natural gas generation.

Solar Remains the Cheapest New Power Source

Despite the battery breakthrough, solar continues to be the least‑costly form of new electricity generation in every market surveyed. In North America, however, solar faces headwinds from tariffs and import restrictions that put downward pressure on prices. Utility‑scale solar projects are better positioned to weather these pressures. A safe‑harbor provision in the One Big Beautiful Bill shields roughly 168 gigawatts of capacity, preserving tax credits for projects that begin construction or are completed before the end of 2027.

Regional Outlook and Future Projections

The U.S. natural gas market is projected to shrink over the next decade. In the Middle East and Africa, four‑hour batteries are expected to become 33% cheaper by 2035, effectively displacing gas peaking across the region. China’s energy storage costs are already 55% lower than those of its neighboring countries. “This economic shift is decisive and widening,” Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, said in a press release.