Batteries are now cheaper than natural gas turbines used at many data centers

Batteries are now cheaper than natural gas turbines as the data center boom pushes prices up. 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. The consultancy predicts that the cost of electricity from batteries will continue to decline while electrons from gas turbines will only grow more expensive in the coming decades. The report lands as energy prices in the U.S. and elsewhere continue to rise, fueling inflation as data centers push electricity demand to new heights.

Prices for gas turbines have been driven up by AI data center developers, which have been buying any model they can get their hands on. The effects have been more acute for open-cycle gas turbines, which are more readily available but less efficient and more expensive to operate. Those turbines are often used by utilities as peaking power plants, which step in to generate electricity in periods of high demand. As prices for those turbines rise, it can raise costs for utilities, too. Open-cycle turbines are simpler to make than closed-cycle turbines, but even they now take two to four