Sometimes—but not as a general replacement for a data center’s gas supply. Batteries are increasingly competing with open-cycle gas turbines for short-duration peak service. That does not show they are cheaper than gas turbines providing continuous, firm power. The answer changes with the type of gas plant, battery duration, location, charging cost, and the reliability the data center needs.
What does “cheaper” mean in this comparison?
A battery and a gas turbine do not automatically deliver the same service. A battery stores electricity generated elsewhere, then discharges it for a limited time. A gas plant burns fuel to generate electricity when needed. The comparison depends on whether the buyer is pricing peak demand, backup, flexible generation, or round-the-clock firm supply.
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Open-cycle peakers versus combined-cycle plants
Open-cycle gas turbines are often used to supply power during peaks. Utility-scale batteries can compete for some of this flexible, short-duration service, particularly where local market conditions make stored electricity valuable. Combined-cycle gas turbines (CCGTs), by contrast, are a different type of plant and can serve a different operating role. Evidence that batteries compete with peakers does not establish that they undercut CCGT power for a data center.
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Battery cost versus a complete power system
“Battery cost” might mean the installed cost of storage, the levelized cost of energy discharged from a battery, or the cost of a system that can meet a data center’s load reliably. A four-hour battery’s economics depend on when and at what price it charges, how often it cycles, and whether it earns value from capacity or other grid services. A full data-center comparison may also need to account for backup, interconnection, transmission, fuel, and the ability to cover prolonged shortfalls.
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What do the recent cost estimates show?
The figures below answer different questions. They are model results or benchmarks, not a single controlled comparison of systems providing identical service to a data center.
| Source and scope | Battery or solar-plus-storage figure | Gas figure | What the figures can—and cannot—show |
|---|---|---|---|
| U.S. Energy Information Administration (EIA), Annual Energy Outlook 2026; modeled new resources entering service in 2031; 2025 dollars | Battery storage: about $150/MWh simple average, or about $172/MWh excluding tax credits | Combustion turbines: about $168/MWh capacity-weighted average, or about $208/MWh excluding tax credits | Selected modeled LCOE/LCOS averages can make storage look less costly, but the averages use different methods and the technologies may not provide equivalent services. |
| BloombergNEF (BNEF), global benchmarks for 2025, reported in February 2026 | $78/MWh for a four-hour battery project, down 27% year over year | $102/MWh for CCGT, up 16% year over year | These are global benchmarks for different technologies and operating roles. The headline values alone do not prove a universal battery advantage. |
| S&P Global Market Intelligence, hypothetical 627-MW West Texas data center, March 13, 2026 | Solar plus storage: modeled 20-year cost of $6.2 billion and LCOE of $130/MWh | Dedicated CCGT: modeled 20-year cost of $2.9 billion and LCOE of $61/MWh | Under this scenario’s assumptions, CCGT costs less. It is one modeled case, not a general price for data-center power. |
How to read the EIA comparison
The EIA’s estimates are for modeled U.S. resources, not observed market prices or data-center contract quotes. The agency cautions that direct LCOE/LCOS comparisons can be misleading: these measures do not capture every factor in investment decisions, and reliability and local conditions matter. EIA discusses levelized avoided cost of electricity (LACE) as a companion concept for assessing what a resource contributes to the grid.
The EIA baseline incorporates modeled effects of Environmental Protection Agency rules. It assumes new natural-gas combustion turbines operating at or below a 40% capacity factor use current efficient designs and low-emitting fuel, and describes restrictions on certain new turbines intended to operate above a 40% capacity factor. Policy and operating assumptions therefore affect the result.
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What the data-center case assumes
The S&P Global Market Intelligence case uses a 10-hour lithium-ion battery assumed to be 80% efficient over a 20-year life. Its solar-plus-battery system requires 2,705 MW of solar and a 903-MW battery. The modeled dollar figures use 2028-dollar capital assumptions and Q4 2025 gas assumptions, and are before potentially available production or investment tax credits.
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The case also highlights reliability trade-offs. Maintenance downtime at a gas-only plant can affect data-center uptime. The modeled solar-and-battery system may fail to meet full load during multi-day periods of low insolation or snow. Fuel-price volatility, emissions, sustainability commitments, incentives, and resilience can all change the decision.
Why do batteries compete with some gas peakers?
The International Energy Agency’s 2024 Batteries and Secure Energy Transitions report compares utility-scale four-hour batteries with open-cycle gas turbines. Its scenarios find that lower-end battery projects could compete with some open-cycle turbines in high-natural-gas-price markets by 2025. By 2030, standalone storage competes in more markets and conditions, while gas turbines remain more competitive in low-gas-price markets such as the United States and gas-producing economies.
Those findings depend on assumptions including battery duration, charging price, gas price, and carbon price. The IEA also notes that forecast errors can reduce a battery’s capacity credit—the amount of dependable capacity it can provide. The report is useful context for peak service, but its projections are not a current quote for supplying a particular data center.
What does the Australian evidence say?
CSIRO and the Australian Energy Market Operator’s GenCost 2025–26 final report, released July 15, 2026, says battery costs continue to fall while gas-based generation costs are rising as demand for gas turbines to power U.S. data centers grows. CSIRO says batteries are competing with traditional gas peaking generation and contributing to lower evening peak prices in Australia’s National Electricity Market (NEM). That is evidence about a particular market role and grid—not proof that batteries alone can provide cheaper round-the-clock data-center power.
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CSIRO reported that the average NEM generation price was approximately A$104/MWh in 2025, down from a 2022 peak of A$189/MWh. Market expectations based on electricity futures indicated prices could fall to A$80–90/MWh by 2030. These are Australian NEM generation prices and market expectations, not battery project costs.
Paul Graham, CSIRO Chief Energy Economist and GenCost Project Leader, said: “As battery costs continue to fall and gas technology costs rise, batteries are increasingly becoming the preferred flexible generation technology in the near term.” He also said: “However, GenCost modelling finds gas technologies will still play a limited but important role in helping firm the electricity system, contributing around three to seven per cent of generation by 2050.”
GenCost’s net-zero scenario projects solar PV and onshore wind supplying 93% of Australia’s electricity by 2050, supported by hydro, storage, transmission, and flexible generation. It also projects that all new electricity generation technologies will cost more than $100/MWh by 2050. These are scenario statements, not current costs or forecasts for a specific data center.
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Can batteries lower the cost of serving data-center demand?
They may help utilities manage growing data-center loads without directly replacing a turbine at the facility. A September 2026 Pacific Northwest National Laboratory (PNNL) report describes ways batteries may defer grid investments, shave peaks, reduce exposure to volatile wholesale prices, and support reliability. That is a utility affordability question, not evidence that a battery is cheaper than a turbine for a data center.
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Whether customers benefit depends on factors including the utility’s exposure to wholesale markets, uncertainty in load forecasts, risk of stranded assets, tariff design, and whether peak demand grows faster than the cost of providing service. Who pays for new capacity and grid upgrades matters alongside generation cost.
How to compare options for a real data center
A meaningful evaluation starts by defining the service and comparing systems on the same basis. The following questions identify the major variables:
- Power and duration: What load in megawatts must be served, and for how many hours? Is the battery intended for short peaks or longer outages?
- Operation and charging: How often will storage discharge, when can it recharge, and what will electricity cost at those times?
- Gas plant and fuel: Is the alternative an open-cycle peaker or a CCGT? What gas price and capacity factor are assumed?
- Whole-system boundary: Does the comparison include fuel, backup, interconnection, transmission, and the infrastructure needed to serve the full load?
- Revenue and incentives: Can the project earn value from capacity, energy, or ancillary services? Which tax credits, emissions rules, or carbon costs apply?
- Reliability and place: What local grid constraints and weather risks matter, including multi-day periods with weak solar output? What construction timelines are realistic?
The verdict follows from those answers: battery storage is increasingly a competitor for flexible, short-duration peak service, but the available estimates do not establish that batteries are generally cheaper than gas turbines for supplying data centers with continuous, firm electricity.
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