Batteries Just Undercut Gas Turbines in All 43 Markets Wood Mackenzie Checked

For two years the AI buildout has run on a simple assumption: whoever bolts the most generating capacity onto the grid fastest wins. Here is the number that just bent that logic. Four-hour battery systems now cost less to install than open-cycle gas turbines in all 43 markets where Wood Mackenzie modelled both (TechCrunch).

That is not a someday forecast. It is the headline finding of Wood Mackenzie’s latest global levelised-cost-of-electricity report, published this week and covering markets on every continent. In the Middle East and Africa, four-hour storage runs about US$120 per megawatt-hour today and is on track to fall 33% to US$80 by 2035 (The Energyst). Gas peaking is moving the other way.

And the kicker is who caused it. The same hyperscalers racing to power AI are the ones who made gas turbines scarce and expensive in the first place.

The thesis: the cheapest way to cover a demand spike is no longer a turbine you can’t get for three years — it’s a battery you can order today.

🧠 Why This Matters

Peaker plants are the grid’s fire extinguisher. When demand jumps — a heatwave, a new data center coming online — utilities fire up open-cycle gas turbines to fill the gap. Those turbines have been the default for decades because they were cheap to build and quick to switch on.

Both of those advantages just evaporated. AI data center developers have spent the past two years buying up gas turbines in bulk, and basic supply-and-demand did the rest: open-cycle units got hit hardest on price. Lead times stretched to two to four years for open-cycle turbines, with closed-cycle waitlists now reaching into the early 2030s (TechCrunch).

So a developer weighing how to cover peak load faces a turbine that costs more and arrives in 2029, versus a battery that is cheaper and ships now. When your competitor is standing up compute every quarter, “available in three years” is the same as “no.”

📊 Deep Dive

Wood Mackenzie modelled the full stack of new-build options across dozens of markets. The pattern is consistent and the gap is widening:

Four-hour storage vs. gas peakers: batteries undercut open-cycle gas turbines in all 43 markets where both were compared (ESS News).
Storage trajectory (Middle East & Africa): US$120/MWh in 2026, falling 33% to US$80 by 2035.
Solar undercuts everything else: single-axis tracker solar is the lowest-cost new-build option in 43 of 48 modelled markets; onshore wind leads in the other five.
Solar pricing (Middle East & Africa): about US$37/MWh today, dropping to US$24 by 2035, with Saudi Arabia and the UAE expected below US$20 by 2033.
Regional benchmark: China’s storage benchmark sits more than 55% below the rest of Asia Pacific’s average — the report notes it as the cheapest storage market in the region.

“This economic shift is decisive and widening. Gas turbine shortages and rising fuel volatility are driving up peaking costs,” said Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie.

The qualitative picture matters as much as the dollar figures: Wood Mackenzie expects battery electricity costs to keep dropping while gas-turbine power gets more expensive for decades, as backlogs and fuel-price swings pile onto every new gas plant.

⚠️ The Catch

A four-hour battery is not a power plant. It discharges for four hours and then it is done — brilliant for shaving a demand peak, useless for the always-on baseload a 24/7 data center actually needs. Nobody is running a gigawatt of GPUs on storage alone. The honest read is that batteries are beating gas at the peaking job, not replacing firm generation outright.

Costs aren’t a straight line down, either. In Europe, battery turnkey capex ticked up about 2% — the first rise in three years — and lithium prices are expected to roughly double in 2029 (The Energyst). The regional spread is enormous: in Asia Pacific, the priciest solar market already runs over 200% more expensive than the cheapest. “Cheaper everywhere” hides a lot of variation in how much cheaper.

🎯 What Happens Next

Watch procurement, not press releases. The turbine backlog doesn’t clear overnight, which means the economics the report describes get locked into projects breaking ground over the next 18 months. In the US, roughly 168GW of utility-scale solar capacity has been safe-harboured to protect its tax credits — a signal developers are moving fast to bank today’s economics before incentives shift.

The near-term tell: how many of the AI power deals announced from here pair storage-plus-solar with grid or gas, rather than betting on turbines that may not arrive until the next decade. If the cost curves hold, the hybrid build becomes the default, not the hedge.

🧩 Bigger Picture

For a decade, the knock on renewables was intermittency — great until the sun sets. Cheap four-hour storage is the quiet answer to that objection, and it’s arriving exactly as AI makes electricity the industry’s scarcest input. The twist is almost poetic: the compute boom drove gas turbines out of reach and, in doing so, handed the cost crown to the batteries and panels it spent years being skeptical of.

“It is about storage and solar together redefining what the economics of a power system look like,” Abdullah said.

That is the part worth sitting with. This isn’t a subsidy story or a climate-pledge story. It’s an install-cost story, decided on spreadsheets by people whose only goal is cheap, available power for machines that never sleep.

The grid’s next decade won’t be won by whoever builds the biggest plant. It’ll be won by whoever can actually get hardware delivered — and right now the battery is the thing in stock.

Sources

❓ Quick answers

Are batteries really cheaper than gas turbines now?

Yes. Wood Mackenzie's October 2026 LCOE report found four-hour battery storage costs less to install than open-cycle gas turbines in all 43 markets where both were compared (TechCrunch).

How much does four-hour battery storage cost per megawatt-hour?

In the Middle East and Africa it runs about US$120/MWh in 2026, forecast to fall 33% to US$80/MWh by 2035, per Wood Mackenzie's 2026 report (The Energyst).

Why does this matter for AI data centers?

AI developers bought up gas turbines, pushing open-cycle lead times to 2-4 years and prices up, so batteries are now both cheaper and available sooner, per the October 2026 Wood Mackenzie report.