Four-hour batteries now undercut open-cycle gas turbines worldwide

Batteries have become cheaper to run than the gas turbines relied on by many data centers for peak power, according to a new Wood Mackenzie report. In every market surveyed, four-hour duration batteries beat open-cycle gas turbines on cost. The finding comes as energy prices trend higher and data centers demand more power for AI workloads.

Open-cycle gas turbines are often used as peaking plants because they can respond quickly to spikes in electricity demand. But they’re expensive to operate and, in many places, hard to source with long waitlists for new units. By contrast, four-hour battery storage has fallen in price while performance has improved, making batteries a more attractive option for smoothing demand and backing up critical workloads.

The report also notes solar remains the cheapest form of new power in every market WoodMac studied, though its price is not immune to tariffs and import restrictions. In the U.S., solar capacity remains protected by safe-harbor provisions for projects begun before a deadline tied to tax credits, which slightly cushions near-term economics for big solar farms.

Ahmed Jameel Abdullah, a principal analyst at Wood Mackenzie, described the shift as “decisive and widening,” underscoring a broader move away from gas peakers toward storage and solar in data-center power plans. These dynamics matter for operators, utilities, and the prices end users pay for cloud services because electricity is a major cost driver for big data centers.

Across regions, the cost trajectory differs. In the Middle East and Africa, four-hour batteries are projected to be 33% cheaper than gas peakers by 2035, potentially displacing gas on cost across those markets. In China, energy storage is already notably cheaper than neighbors, suggesting regional diversity in how quickly storage displaces traditional gas peakers.

This matters to everyday users because data centers underpin many online services, from streaming to cloud storage. If storage-backed power reduces costs, it can help stabilize or even lower prices for services that rely on servers. It also nudges the energy mix toward cleaner sources as batteries pair with solar more often.

What happens next? WoodMac expects continued declines in battery costs and ongoing backlogs for gas turbines, with solar and storage playing larger roles in new data-center builds. Operators may increasingly favor storage-first strategies for peak shaving and resilience, while utilities consider how grids balance supply and demand. The technology and policy picture will shape how fast storage displaces gas peakers in different regions.