Battery storage costs drop below gas turbines globally but U.S. faces tariffs

Look at your next commercial power bill because the underlying economics of the electrical grid are shifting in a major way. Wood Mackenzie, a global energy research firm, just released its latest Levelized Cost of Electricity report showing a massive turning point for power generation. Four-hour battery storage has crossed a critical threshold and now falls below the cost of open-cycle gas turbines across all 43 global markets modeled. Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie, said, "This economic shift is decisive and widening." Gas turbine shortages and rising fuel volatility are driving up peaking costs, while expanding battery manufacturing continues to push storage costs down. But North America stands out as a key exception. While international markets benefit from low-cost Chinese equipment exports, North American clean energy developers face immediate cost headwinds. Near-term solar costs across the United States and Canada remain elevated under a wave of tariffs, anti-dumping actions, and Section 232 import restrictions. Residential and commercial solar module prices are forecast to jump 6% in 2027 and an additional 14% in 2028. For energy storage, federal tax credits under the Inflation Reduction Act continue to provide a critical competitive advantage, helping offset strict domestic supply bottlenecks. Simultaneously, massive load growth from artificial intelligence and data center development is forcing utilities to re-evaluate capacity planning. Thermal capital costs remain elevated due to a supply deficit cycle in gas generation equipment through the late 2030s. The combination of falling storage costs and world-class renewable resources is closing off the economic case for new gas peaking capacity globally, even if local developers must navigate heavy trade walls. For your business, this means utility planning and commercial power rates will remain volatile as the grid absorbs heavy new loads from tech infrastructure. At least the Batteries are finally getting cheaper.