Battery storage has become cheaper than open-cycle natural gas power plants, which are frequently favoured by data centre developers, according to a new report from Wood Mackenzie. The consultancy's survey across 43 markets on every continent found that four-hour duration batteries were less expensive than open-cycle gas turbines.
Wood Mackenzie forecasts that electricity costs from batteries will continue to decrease, while those from gas turbines are expected to increase in the coming decades. This shift occurs as energy prices rise and data centres drive up electricity demand.
The report notes that AI data centre developers have been purchasing available gas turbine models, contributing to price increases. Open-cycle gas turbines, while more readily available, are less efficient and more costly to operate, and their procurement now takes two to four years.