Four-Hour Battery Storage Beats Gas on Cost Globally, Says Report

Four-hour battery energy storage systems (BESS) are now cheaper than open-cycle gas turbines (OCGTs) across all 43 markets where both technologies were modelled, according to Wood Mackenzie’s latest levelised cost of electricity (LCOE) report.

The report attributes the shift to gas turbine shortages and fuel price volatility, which are raising gas peaking costs, while expanding battery manufacturing is driving storage costs down.

In the Middle East and Africa, four-hour battery storage costs are estimated at USD 120/MWh in 2026 and are projected to decline by 33 percent to USD 80/MWh by 2035. The report said that storage is becoming more cost-competitive than gas peaking across every gas market in the region.

Utility-scale solar remains the lowest-cost power generation technology in the Middle East and Africa, with single-axis tracker solar averaging USD 37/MWh in 2026. Its levelized cost is forecast to fall to USD 24/MWh by 2035. Solar costs in Saudi Arabia and the UAE are expected to drop below USD 20/MWh by 2033.

China continues to set the global benchmark for grid-scale battery storage costs, with its levelized cost of storage more than 55 percent below the Asia Pacific regional average of USD 134/MWh. Manufacturing scale and integrated domestic supply chains are driving the cost advantage. Wood Mackenzie expects the Asia Pacific average to decline to USD 92/MWh by 2036 as competitively priced Chinese equipment influences regional markets.

The report also found that single-axis tracker solar is the lowest-cost new-build generation technology in 43 of the 48 markets modelled, while onshore wind leads in the remaining five.

Across Latin America, solar PV with single-axis tracking remains the cheapest generation option in 2026. Solar costs are projected to decline by 38 percent by 2060, while average onshore wind LCOE is expected to fall from USD 73/MWh to USD 58/MWh by 2030.

In Europe, solar PV remains the most cost-competitive generation technology. However, battery storage turnkey capital expenditure increased by about 2 percent in 2026, marking its first annual rise in three years, as battery cell prices rebounded by around 10 percent from their 2025 lows.

In North America, tariffs, trade restrictions and supply-chain constraints are putting pressure on solar costs. Meanwhile, growing electricity demand from data centres and constraints on gas-generation equipment supply are keeping thermal power investment costs elevated.

Wood Mackenzie said that  falling storage costs and competitive renewable energy resources are increasingly challenging the economic case for new gas peaking capacity. The report identifies battery storage as an increasingly important technology for integrating solar and wind generation and supporting power system planning.