Four-hour energy storage systems now cost less than gas peaker plants across global markets, according to Wood Mackenzie analysis.

Four-hour battery storage is now more economical than gas peaker plants in markets worldwide, according to Wood Mackenzie analysis released Thursday.

In North America, investment in gas generation capacity faces "a supply deficit cycle through the late 2030s," driven by data centre load growth. This dynamic sustains elevated thermal capital costs and reinforces the long-term economic case for renewables and storage. Gas turbine prices are projected to reach $600/kW by end-2027, a 195% increase since 2019. The three major manufacturers—GE Vernova, Siemens Energy, and Mitsubishi—each maintain backlogs of 35 GW to 116 GW as they plan capacity expansions.

In the United States for a 2026 commercial operation date, 4-hour battery storage costs 65% to 75% less than new open-cycle gas turbine peakers, depending on state-level carbon pricing. "This economic shift is decisive and widening," said Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie. "Gas turbine shortages and rising fuel volatility are driving up peaking costs, while expanding battery manufacturing continues to push storage costs down."

The same dynamics are reshaping baseload generation. Single-axis tracker solar is now the lowest-cost new-build technology in 43 of 48 modeled markets, with onshore wind leading in five. In the most competitive markets—Saudi Arabia and the UAE—solar levelized cost of electricity is on track to fall below $20/MWh by 2033.

In the Middle East and Africa, four-hour storage is forecast to decline 33% to $80/MWh by 2035, "displacing gas peaking on cost across every gas market in the region." China remains the global storage cost benchmark, more than 55% below the Asia Pacific average, "illustrating how manufacturing scale is redrawing the global cost map."

North American solar costs face near-term headwinds from tariffs, anti-dumping and countervailing duty actions, and new import restrictions. Distributed solar faces the most significant price increases; utility-scale solar is partially protected by 168 GW of safe-harbored capacity, though module prices are still expected to rise around 5% annually through 2030. Residential and commercial projects face more constrained conditions, with module prices forecast to increase 6% in 2027 and a further 14% in 2028.

Onshore wind costs are expected to decline 16% by 2060 through continuous capex and opex improvements, despite near-term uncertainty from policy changes and potential Section 232 impacts on turbine pricing.

Energy storage tax credits "continue to provide a competitive advantage" by "partially counteracting the impact of foreign entity of concern restrictions and supply chain constraints." A cost spike is anticipated after the investment tax credit phase-out in 2038. Over the long term, new battery chemistries, hardware commoditisation, and domestic supply chain expansion are expected to drive storage costs down 10% by 2060.