Battery storage has become less expensive than open-cycle gas turbines for powering data centers, according to a new report from Wood Mackenzie. The consultancy found that on every continent, four-hour duration batteries were cheaper than gas turbines in the 43 markets they surveyed.
The cost of electricity from batteries is set to continue falling, while the price of gas turbines is expected to increase. This shift comes as energy prices rise and inflation surges, driven in part by AI data center developers snapping up gas turbines.
Open-cycle gas turbines, simpler to manufacture, are now taking two to four years to procure, with waitlists stretching into the early 2030s. This has pushed up the cost of all new natural gas power plants. However, solar remains the cheapest form of new power in every market surveyed, despite facing tariffs and import restrictions.
In the U.S., the market for natural gas will narrow in the coming decade, while in the Middle East and Africa, four-hour batteries will be 33% cheaper by 2035, displacing gas peaking on cost. In China, energy storage costs are 55% below those of its neighbors.
