Battery energy storage has crossed a decisive cost threshold: a new levelized cost of energy (LCOE) report from Wood Mackenzie finds that storage systems now deliver electricity more cheaply than gas-fired peaker plants in all 43 global markets the firm analyzed. The economics of grid balancing have fundamentally changed.<\/p>\n
On a lifecycle basis, battery installations consistently come in below the operating costs of gas-fired peaker plants that run only during demand spikes. Wood Mackenzie analysts also project that conventional gas generation will continue to grow more expensive, as a global shortage of turbine equipment is expected to persist through the end of the 2030s.<\/p>\n
In the United States, however, the pace of storage deployment faces headwinds that have little to do with the underlying technology cost. Procurement restrictions targeting companies linked to Foreign Entities of Concern (FEOC) and domestic supply chain bottlenecks are driving capital costs higher, though Inflation Reduction Act tax credits offer partial relief.<\/p>\n
Even so, Wood Mackenzie’s analysis indicates that these trade and regulatory constraints cannot reverse the direction of travel. Renewables paired with storage remain economically favored in North America despite a higher and separate U.S. capex trajectory \u2014 pointing toward continued growth in cleaner, more flexible battery infrastructure even in a more constrained policy environment.<\/p>\n