A new report from Wood Mackenzie reveals that battery storage is now cheaper than open-cycle gas turbines, a type of natural gas power plant commonly used by data center developers. The finding applies across all 43 markets surveyed by the consultancy, spanning every continent. Wood Mackenzie predicts that battery costs will continue to fall, while electricity from gas turbines will become more expensive over the next few decades.
The report comes as energy prices rise globally, driven in part by the surging demand from data centers. AI data center developers have been purchasing gas turbines at a rapid pace, causing prices to spike. Open-cycle turbines, though simpler to manufacture, now take two to four years to procure, with closed-cycle turbines facing even longer waitlists extending into the early 2030s.
Solar power remains the cheapest form of new electricity in every market, though tariffs and import restrictions are putting pressure on solar prices in North America. Utility-scale solar projects, however, are largely shielded from near-term price shocks due to tax credit provisions in the One Big Beautiful Bill, which apply to projects completed by the end of 2027.
Looking ahead, the U.S. natural gas market is expected to narrow over the next 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 already 55% below those of neighboring countries.
Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, described this economic shift as 'decisive and widening' in a press release.