Battery storage is now cheaper than a type of natural gas power plant favored by many data center developers, according to a new report from Wood Mackenzie. On every continent and in each of the 43 markets that Wood Mackenzie surveyed, four-hour duration batteries were less expensive than open-cycle gas turbines.

Key Findings

  • The consultancy predicts that the cost of electricity from batteries will continue to decline.
  • In contrast, the costs associated with gas turbines are expected to rise in the coming decades.

The report arrives as energy prices in the U.S. and elsewhere continue to rise, contributing to inflation as data centers push electricity demand to new heights. Prices for gas turbines have surged due to AI data center developers, who have been purchasing any available model.

Impact on Utilities

The effects have been particularly acute for open-cycle gas turbines, which are more readily available but less efficient and more expensive to operate. These turbines are often utilized by utilities as peaking power plants, generating electricity during periods of high demand. As prices for these turbines increase, it can also elevate costs for utilities.