Wood Mackenzie modeled 43 markets and found four-hour batteries beat open-cycle gas plants on cost in every one, as AI data centers soak up the world's turbines.
Batteries have overtaken a key type of gas power plant on cost. Wood Mackenzie found four-hour batteries cheaper than open-cycle gas turbines in all 43 markets where it compared them. Those turbines are often used as peakers, plants that run only when demand spikes.
Two forces are behind it. Battery prices keep falling as factories scale up, while AI data center developers buying up turbines have pushed gas plant prices higher and stretched waits to two to four years.
Over time, cheaper storage could ease the costliest hours on the grid and the bills that come with them.
The gas plants that switch on during the evening rush are losing their price advantage, everywhere. In a new analysis, energy consultancy Wood Mackenzie found that four-hour batteries now beat open-cycle gas turbines on cost in all 43 markets where it compared the two, on every continent it studied.
That matters for your electricity bill. Power prices in the US and elsewhere keep climbing, partly because AI data centers are pushing demand to record highs. Peaking plants are the expensive end of the grid, and utilities pass those costs on to customers. If cheaper batteries can do the same job, the most costly hours of the day could get less costly over time.
Batteries are cheaper than gas turbines for peak power because one is getting cheaper every year while the other is getting pricier. Battery factories keep scaling up, which pushes storage costs down. Gas turbines, meanwhile, are in short supply and fuel prices swing unpredictably.
Wood Mackenzie measured this using levelized cost of electricity, a standard way to compare power sources that spreads the cost of building and running a plant over every unit of electricity it produces over its lifetime. On that modeled basis, a battery that stores solar power at midday and releases it for four hours in the evening now undercuts a gas plant built only to cover that evening peak.
Ahmed Jameel Abdullah, a principal analyst at Wood Mackenzie, called the shift decisive and said it is widening. He pointed to turbine shortages and fuel volatility pushing peaking costs up, while growing battery manufacturing pulls storage costs down.
The turbine squeeze has a clear cause. AI data center developers have been buying almost any gas turbine they can find to power new server farms, and that demand has driven prices up for everyone.
There are two main types. Closed-cycle plants are more efficient because they reuse waste heat, but waitlists for new units now stretch into the early 2030s. Open-cycle turbines are simpler to build and easier to get, yet even they now take two to four years to order. They are also less efficient and more expensive to run, which is why utilities mostly use them as peakers, plants that fire up only when demand spikes.
So the cheapest gas option for meeting short bursts of demand is also the one feeling the most price pressure. Wood Mackenzie expects electricity from gas turbines to keep getting more expensive in the coming decades, while battery power keeps falling.
The advantage is not equal everywhere, and the gaps are growing.
Europe also shows the trend is not a straight line. Battery storage there got about 2% more expensive in 2026, the first rise in three years, as cell and lithium prices climbed. Wood Mackenzie still expects prices to be 12% lower by 2031.
For households, the effect will be gradual. Utilities make long-term choices about what to build, and cheaper storage gives them a strong reason to pick batteries over new gas peakers. Over time, that could ease pressure on the priciest hours of electricity, the ones that tend to push bills up.
In North America, storage keeps a cost edge partly because federal tax credits offset supply-chain constraints and restrictions on foreign suppliers. Wood Mackenzie also expects gas investment to face a supply shortfall into the late 2030s, driven in part by data center demand and limited turbine availability.
For the tech companies building data centers, the message is that batteries paired with solar are becoming a serious alternative to waiting years for a turbine. Since electricity is one of the biggest costs of running cloud services, that could shape what streaming, storage and AI tools cost to provide in the long run.
Batteries are joining solar at the cheap end of the cost curve. Solar farms using single-axis trackers, panels that tilt to follow the sun through the day, are the lowest-cost new power source in 43 of the 48 markets Wood Mackenzie modeled, with onshore wind cheapest in the other five.
The Middle East and Africa have the world’s cheapest solar, at around $37 per megawatt-hour in 2026, and Saudi Arabia and the UAE are on course to go below $20 by 2033.
In the US, the picture is more complicated. Tariffs and import restrictions are putting pressure on solar prices. Large utility-scale projects should fare better: about 168 gigawatts are largely shielded from near-term price shocks by safe-harbor rules in the One Big Beautiful Bill, which preserved tax credits for projects that start construction or are finished before the end of 2027.
For peak power, yes. Wood Mackenzie found four-hour batteries cost less than open-cycle gas turbines in all 43 markets where it modeled both.
It is a power plant, usually an open-cycle gas turbine, that runs only when electricity demand spikes, such as on hot evenings.
Not overnight. But cheaper storage gives utilities a lower-cost way to cover peak demand, which over time could ease the most expensive hours on the grid.
You're reading the quick version.
Read next
SpaceX plans an $8 billion 800 MHz buy to expand Starlink Mobile
Low-band airwaves bought from Grain Management would help Starlink Mobile reach phones inside buildings, a key step toward taking on AT&T, Verizon and T-Mobile.
The $17 billion deal promises one membership instead of two, but nothing changes until late 2027 at the earliest. Here's what to keep, cancel or watch.
China's index of AI and chip stocks is down 40% from its July high. With Big Tech earnings this week, investors want to know if US AI stocks are next.
Staff in the US, UK, Canada and India have until early December to decide. Here is what is on the table and why Microsoft is doing it now.
The Daily Brief
Every morning, the news that matters from AI, phones, apps and the people shaping tech. Explained in plain English. Free.
One email a day. No spam, unsubscribe anytime. Privacy policy
