Introduction

The economics of data center power are shifting as battery storage becomes more cost-competitive than traditional fossil fuel generation. A new Wood Mackenzie analysis reveals that four-hour duration batteries now undercut open-cycle natural gas turbines across nearly every global market, challenging a long-standing preference for gas-fired peaking plants in data center infrastructure.

What Happened

Wood Mackenzie surveyed 43 markets across six continents and found that four-hour duration batteries are less expensive than open-cycle gas turbines in every single region. The consultancy predicts that electricity costs from batteries will continue declining while electrons from gas turbines will grow more expensive over coming decades. This shift comes as energy prices rise and data centers push electricity demand to new heights, with AI developers driving up demand for gas turbines and creating procurement backlogs extending into the early 2030s.

Why This Matters

For data center operators, this economic shift means potentially lower operational costs and reduced exposure to volatile gas prices. Open-cycle turbines, long favored for their simplicity, now face two-to-four-year procurement timelines and rising costs due to intense competition from AI developers. Battery storage offers shorter deployment cycles, lower operating expenses, and alignment with net-zero goals. The report also notes that solar remains the cheapest form of new power in every surveyed market, further compressing the economic case for gas-dependent infrastructure.

Key Takeaways

  • Battery storage undercuts open-cycle gas turbines across 43 surveyed markets
  • Gas turbine procurement now stretches into the early 2030s, driving up costs
  • AI data center demand is accelerating the shift toward cheaper storage solutions
  • Solar remains the most cost-competitive new power source in every region
  • Middle East and Africa could see 33% battery cost advantages over gas peaking by 2035

Conclusion

The era of gas as the default backup for data centers faces its most significant economic challenge yet. As battery prices fall and wait times for new gas infrastructure stretch into decades, storage emerges as the pragmatic choice for both cost and speed. With solar already the cheapest new power worldwide, the energy landscape for digital infrastructure is tilting decisively toward renewables and storage.