Battery storage costs undercut gas turbines for data center power

The cost gap is expected to widen as battery technology prices continue their downward trajectory, while natural gas generation faces upward pressure. Developers scrambling to secure power for artificial intelligence infrastructure have aggressively purchased open-cycle gas turbines, driving up procurement costs and extending lead times for equipment. These turbines, traditionally used as peaking plants to handle high demand, are increasingly struggling to compete with the declining price of storage solutions.

While solar energy remains the cheapest new power source globally, the North American market faces complexities due to trade tariffs and import restrictions. Despite these hurdles, 168 gigawatts of utility-scale solar capacity remains insulated from immediate shocks through 2027, thanks to existing tax credit provisions. Meanwhile, the regional outlook for storage is stark: by 2035, four-hour batteries are projected to be 33% cheaper than gas peaking plants in the Middle East and Africa, with China already reporting energy storage costs 55% lower than surrounding nations. Ahmed Jameel Abdullah, a principal analyst at Wood Mackenzie, notes that this economic pivot is both decisive and rapidly expanding.