4-hour battery storage is cheaper to install than gas turbines all across globe

Four-hour battery storage is now cheaper to install than gas turbines, changing the economics of power generation planning.

A new report from Wood Mackenzie indicates that four-hour battery storage systems are now cheaper to install than gas turbines globally. This finding applies across 43 markets where the cost comparison was modeled. In the Middle East and Africa, four-hour storage costs are projected to decrease by 33% to $80/MWh by 2035, which will displace gas peaking power generation on a cost basis in all regional gas markets. China is identified as the global benchmark for storage costs, with prices more than 55% lower than the average in the rest of the Asia Pacific region, attributed to its large-scale manufacturing capabilities. The report also notes that single-axis tracker solar power is the most economical new-build technology in 43 out of 48 markets. Rising fuel volatility and gas turbine shortages are contributing to increased peaking costs, while expanding battery manufacturing continues to drive down storage expenses.

The global cost landscape for electricity generation is undergoing a significant transformation, with four-hour battery storage emerging as a more cost-effective installation option than gas turbines across numerous markets. This trend is particularly pronounced in regions like the Middle East and Africa, where declining storage costs are poised to displace gas peaking power. The report highlights the impact of manufacturing scale, with China leading the way in driving down storage expenses due to its integrated supply chains and high-volume production, creating a significant cost advantage over other Asia Pacific markets. This shift signifies a move away from traditional fossil fuel-based peaking solutions towards cleaner, more economically viable energy storage technologies.

This economic realignment is reshaping the energy sector by challenging the long-term viability of new gas peaking capacity. The decreasing costs of battery storage, combined with the established cost-competitiveness of solar and wind power, are creating a compelling case for renewable energy and storage integration. As a result, power system planning is increasingly favoring these technologies, potentially leading to reduced investment in new gas infrastructure. The report suggests that this trend is not limited to specific regions but represents a global phenomenon driven by technological advancements and market dynamics.