Four-hour storage undercuts gas peakers on cost in global markets, Wood Mackenzie says

Wood Mackenzie's analysis published Thursday found four-hour battery storage is now cheaper than gas peakers in markets across the globe, Utility Dive reported. In the United States, for a 2026 commercial operation date, four-hour storage is 65% to 75% cheaper than new open-cycle gas turbine peakers, depending on whether state-level carbon pricing applies. A Wood Mackenzie spokesperson told Utility Dive by email. The firm did not publish exact prices.

Wood Mackenzie projected in April that gas turbine prices would reach $600/kW by the end of 2027, a 195% increase since 2019. GE Vernova, Siemens Energy and Mitsubishi, the three major turbine manufacturers, each carry backlogs of 35 GW to 116 GW as they plan capacity expansions. In North America, Wood Mackenzie said gas generation investment is entering “a supply deficit cycle through the late 2030s,” driven by data centre load growth that keeps thermal capital costs elevated.

“Gas turbine shortages and rising fuel volatility are driving up peaking costs, while expanding battery manufacturing continues to push storage costs down,” said Ahmed Jameel Abdullah, a principal analyst at Wood Mackenzie.

The report forecasts four-hour storage costs in the Middle East and Africa falling 33% to $80/MWh by 2035.

Wood Mackenzie says that would displace gas peaking on cost across every gas market in the region. China remains the global storage cost benchmark at more than 55% below the rest of the Asia Pacific average.