Batteries now undercut data centers' go-to gas turbines in all 43 surveyed markets

Four-hour battery storage now costs less than the open-cycle gas turbines that have become a go-to power choice for data center developers, according to a new Wood Mackenzie report covered by TechCrunch. The consultancy surveyed 43 markets across every continent and found the same result in each one: batteries came out cheaper.

Wood Mackenzie also expects the gap to widen. It projects that electricity from batteries will keep getting cheaper over the coming decades while electricity from gas turbines grows more expensive.

How data centers inflated turbine prices

The findings land as energy prices climb in the US and elsewhere, feeding inflation just as data centers push electricity demand to record highs. According to TechCrunch, AI data center developers have been buying up whatever turbine models they can find, and that buying spree has driven prices sharply upward.

Open-cycle turbines have absorbed the steepest increases. They are easier to obtain than closed-cycle machines but burn gas less efficiently and cost more to run. Utilities also rely on them as peaking plants, the generation that switches on during demand spikes, so rising turbine prices flow through to utility costs as well.

Gas turbine backlogs stretch for years

Even though open-cycle turbines are simpler to build than closed-cycle ones, they now take two to four years to procure, and waitlists for closed-cycle machines extend into the early 2030s. Both backlogs have pushed up prices for new natural gas plants of every kind, TechCrunch reports.

Not every generating technology shares this problem. Wood Mackenzie found that solar is now the cheapest source of new power in every market it surveyed.

Tariff pressure on solar, with one exception

North America complicates the solar picture. Panel prices there face pressure from tariffs and import restrictions, though the consultancy expects utility-scale solar to hold up better. It counts 168 gigawatts of utility-scale solar as largely shielded from near-term price shocks thanks to safe-harbor provisions in the One Big Beautiful Bill, which preserved tax credits for projects that began construction or will be completed before the end of 2027.

A shrinking role for gas

Wood Mackenzie projects that the US natural gas market will narrow over the coming decade. In the Middle East and Africa, four-hour batteries are expected to be 33 percent cheaper by 2035, cheap enough to displace gas peaking on cost in every gas market in the region. In China, energy storage costs already run 55 percent below those of neighboring markets.

Wood Mackenzie principal analyst Ahmed Jameel Abdullah described the economic shift as decisive and still widening.

Why it matters

Energy has become one of the binding constraints on data center expansion, and this report changes the calculus for anyone planning cloud or AI capacity. If batteries undercut gas peakers in every surveyed market and solar is the cheapest new generation everywhere, the economics favor campuses that pair solar with storage rather than queuing for turbines.

The timeline math matters as much as the cost math. A builder facing a two-to-four-year wait for an open-cycle turbine, or a closed-cycle backlog stretching into the 2030s, has a strong incentive to procure renewables and batteries instead. That could translate into faster capacity additions and cheaper power for the AI workloads driving the demand surge, while the natural gas fleet that data centers helped make scarce increasingly loses the price war for peak power.