What “batteries beat gas peakers” measures

The finding comes from Wood Mackenzie's latest global levelized cost of electricity (LCOE) reports. The public press release says four-hour storage is "now less expensive than open-cycle gas turbines in all 43 markets where both technologies were modeled." The drivers it names run in both directions: gas turbine shortages and fuel volatility pushing peaking costs up, and expanding battery manufacturing pushing storage down. A Wood Mackenzie spokesperson told Utility Dive by email that for a US project coming online in 2026, four-hour storage is 65% to 75% cheaper than a new open-cycle peaker, depending on whether state carbon pricing applies. Utility Dive also noted the firm did not publish exact prices.

The full reports are paid. So to see what a comparison like this has to assume, the useful public reference is Lazard's annual LCOE+ report, which prints its inputs. The figures below are from the June 2025 edition (LCOE version 18.0, storage version 10.0). They are US numbers and a year older than Wood Mackenzie's, so treat them as a guide to the method, not a check on the new result.

Why a peaker looks expensive per megawatt-hour

A peaker exists to run rarely. Lazard's new-build gas peaking case assumes a capacity factor of 10% to 15%, meaning the plant runs the equivalent of roughly five to eight weeks a year at full power. Its fixed costs (about $1,150 to $1,450 per kilowatt to build, plus fixed upkeep) get spread over very few megawatt-hours, which is why its levelized cost lands at $149 to $251 per MWh, at a gas price of $3.45 per million Btu. A combined-cycle plant running far more hours comes in at $48 to $109.

So "per MWh" comparisons always flatter whatever runs more. That is not a trick, just arithmetic, and it is worth keeping in mind whenever a peaker shows up at the expensive end of a chart.

What the battery number assumes

Lazard's utility-scale four-hour case is a 100 MW / 400 MWh standalone system. The key assumptions are printed in its appendix:

One cycle a day, 350 days a year, at 90% depth of discharge, for a 20-year project life. That works out to 126,000 MWh delivered a year. By my arithmetic, that is about 14% of the hours in a year at full power, so in this case the battery and the peaker are being compared at broadly similar utilization.

Charging energy costs money. A battery doesn't make electricity, it buys it. Lazard prices charging at $27 per MWh, a weighted average of wholesale prices across an optimized charging profile, and assumes round-trip efficiency of 86% to 92%. If the power you charge from costs more, the battery's levelized cost goes up. A widely cited 2016 analysis of storage costs found the amount of energy discharged and the cost of the electricity bought were the most influential inputs for most technologies.

On those assumptions, the unsubsidized cost of the four-hour battery is $115 to $254 per MWh, or $83 to $192 with the federal investment tax credit. Notice that in Lazard's 2025 US numbers, the unsubsidized battery range and the new peaker range still overlap. Wood Mackenzie's 2026 result says the battery now wins outright, with turbine shortages and cheaper batteries cited as the reasons. Both can be true; they are different years, regions and models.

The hour a cost ranking can't see

A levelized cost is an average price per unit of energy over the project's life. It says nothing about when the energy is available. A four-hour battery delivers its rating for about four hours and then has to recharge. A peaker runs as long as it has fuel. During a multi-day cold snap or a long evening peak, those are very different machines.

Grid operators already price this difference, and not in the battery's favor at scale. Lazard's report notes that CAISO "significantly reduced ELCC values for 4-hour battery storage systems, driven by significant growth in 4-hour storage capacity," and that PJM's newer method reduces the reliability value of short-duration storage. ELCC is the share of nameplate a grid counts on at peak. The usual explanation: once enough four-hour batteries have shaved the top of the peak, what remains is longer and flatter, so each additional battery covers less of it. (Report 053 walks through how PJM credits a four-hour battery at 59% of nameplate.)

How to read the headline

The fair reading: for the job of shifting energy into the few hours a day when it is most valuable, a new four-hour battery is now the cheaper thing to build in many markets, and the trend is moving that way. What the headline does not establish is that batteries replace peakers megawatt for megawatt for reliability. That depends on duration, accreditation and charging prices, none of which a single $/MWh figure carries.

Also worth noting: Wood Mackenzie's own release says battery turnkey costs in Europe rose about 2% this year, the first increase in three years, as cell prices rebounded around 10% from their 2025 low. The cost curve is falling over the long run, not in a straight line.

I watch this closely because I help design the AI battery-cycling systems for a veteran-owned (HUBZone) energy-storage integrator, run by fellow veterans. Deciding when to charge and how deep to cycle is exactly where these assumptions turn into money. I do not own that company and earn nothing from this link. Full policy here. Nothing in this report involves them or any product they sell.