Four-hour battery storage is now cheaper than open-cycle gas turbines in each of the 43 markets where Wood Mackenzie assessed both options, the consultancy said in its latest levelized cost of electricity analysis.
The comparison is centred on peaking capacity, used to meet periods of intense demand and grid strain. Wood Mackenzie examined whether short-duration batteries could take the place of power plants that serve this role.
Ahmed Jameel Abdullah, a principal analyst at Wood Mackenzie, said: 'This economic shift is decisive and widening.'
Battery storage costs dropped 93% from 2010 to 2024, reaching USD 192/kWh. Four-hour lithium-ion systems are now the usual configuration for utility-scale procurement and planning.
The installed capital costs are close. A combustion turbine has fully installed CAPEX of $1,500/kW, while a grid-connected 4-hour Battery Energy Storage System (BESS) has a cost of $1,521/kW. Wood Mackenzie nevertheless concluded that four-hour battery storage costs less than open-cycle turbines across every market in its 43-market assessment.
The Middle East and Africa points to the direction of travel. Utility-scale solar already has the lowest cost there, at $37/MWh. The cost of four-hour storage in the region is projected to decline by another 33% to $80/MWh by 2035.
Wood Mackenzie forecasts that four-hour storage will beat gas peaking on cost in every gas market in the Middle East and Africa. China is the global benchmark for storage costs, at more than 55% below the average for the rest of Asia Pacific.
The change comes as renewable generation has strengthened its position in new power investment. In 2024, renewables were the lowest-cost option for new electricity generation on a levelised cost of electricity (LCOE) basis. Some 91% of newly commissioned utility-scale capacity delivered electricity more cheaply than the lowest-cost newly installed fossil fuel alternative.
New utility-scale onshore wind projects had a global weighted average LCOE of USD 0.034 per kilowatt hour (kWh) in 2024. New solar photovoltaic (PV) projects had a global weighted average LCOE of USD 0.043/kWh.
Renewables made up 85.6% of new power capacity in 2025, a year in which the world added a record amount of renewable capacity. Additions reached 692 GW, up 15.5% year on year. Solar PV supplied 511 GW, or about 75% of renewable additions.
Renewables generated more electricity than coal in 2025, the first time this had happened in the modern power system. They represent 49% of installed global power capacity.
India reached half of its installed power capacity from non-fossil sources five years before its 2030 target.
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