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Sometimes, for short-duration flexibility or peak service—but the evidence does not show that batteries are generally cheaper than gas turbines for supplying a data center around the clock. Costs depend on what kind of turbine is being compared, how long the battery must discharge, local fuel and charging prices, and whether the comparison includes backup and reliability needs.
Why the answer depends on the job
“Gas turbine” can mean an open-cycle unit used to meet peaks or a combined-cycle plant designed to generate electricity more efficiently over longer periods. A battery can shift electricity across time and respond quickly, but its stored energy is finite. These are not automatically equivalent resources.
Nor does “battery cost” always mean the same thing. It may refer to installed equipment, the modeled cost of discharged electricity, or a complete system able to keep a data center supplied through outages and extended periods of weak generation. A four-hour battery may be useful for a peak but cannot, by itself, guarantee continuous supply indefinitely.
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CSIRO’s July 2026 GenCost 2025–26 release says batteries are competing with traditional gas peaking generation and helping lower evening peak prices in Australia’s National Electricity Market. That finding concerns flexible generation in that market; it does not establish that batteries alone can supply a data center’s round-the-clock load more cheaply.
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What the cost estimates show
| Comparison | Reported estimate | What it does—and does not—show |
|---|---|---|
| U.S. resources entering service in 2031 | Battery storage: about $150/MWh simple average, or $172/MWh excluding tax credits. Combustion turbines: about $168/MWh capacity-weighted average, or $208/MWh excluding tax credits. 2025 dollars. | U.S. Energy Information Administration modeled regional LCOE/LCOS estimates, not observed market prices or data-center contract quotes. The averages use different weighting bases, and the technologies may not provide equivalent services. |
| Global benchmark projects in 2025 | BloombergNEF reported $78/MWh for a four-hour battery project, down 27% year over year, and $102/MWh for combined-cycle gas turbines, up 16%. | Global benchmarks for different technologies and operating roles; the two headline figures alone do not prove a general battery cost advantage. |
| Hypothetical 627-MW West Texas data center | Combined-cycle gas: modeled 20-year cost of $2.9 billion and LCOE of $61/MWh. Solar plus storage: $6.2 billion and $130/MWh. | S&P Global Market Intelligence’s March 2026 scenario, before potentially available production or investment tax credits. Its assumptions include 2028-dollar capital costs and Q4 2025 gas prices; it is one modeled case, not a universal result. |
The table’s figures use different geographies, years, system boundaries, and assumptions. They should not be read as a single controlled comparison of two systems delivering identical data-center service.
When batteries can compete with gas peakers
For peak shaving and other short-duration flexibility, a battery may compete with an open-cycle gas turbine, particularly where gas is expensive and the battery can charge at a favorable price. 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-cost batteries could compete with some turbines in high-gas-price markets by 2025, and that standalone storage could compete in more markets and conditions by 2030. Gas turbines remain more competitive in low-gas-price settings, including the United States and gas-producing economies.
That is scenario analysis, not a current quote for a data center. The result depends on assumptions such as battery duration, charging price, gas price, and carbon price. Forecast errors can also reduce the capacity credit a battery receives: a resource that is not available when a system needs it is worth less for reliability than its nameplate rating might suggest.
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BloombergNEF’s February 2026 report offers another global benchmark: its 2025 four-hour battery-project cost fell as pack prices declined, manufacturers competed, and system designs improved. It also reported that demand for gas turbines to serve data-center development kept pressure on gas-turbine costs. These trends help explain why batteries are increasingly considered for flexible service, but they do not settle the cost of firm power at a particular facility.
Why a dedicated data-center comparison can favor gas
The West Texas case in the table illustrates a different question: what it might cost to supply a large data center with a dedicated combined-cycle gas plant versus solar plus storage. In that model, the solar-and-battery option uses 2,705 MW of solar and a 903-MW lithium-ion battery designed for 10 hours of storage and assumed to be 80% efficient over a 20-year life. Its higher modeled cost reflects a system intended to serve a large, steady load—not simply a battery dispatched for a few peak hours.
The modeled gas option also has trade-offs. A gas-only plant’s maintenance downtime can affect data-center uptime, and fuel prices can change. The modeled solar-and-battery system, in turn, may not meet full load through multi-day periods of low sunlight or snow. Emissions, sustainability commitments, available incentives, and resilience requirements can alter which system is preferable even when one has a lower modeled LCOE.
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How to read the U.S. EIA figures
The U.S. Energy Information Administration’s Annual Energy Outlook 2026 estimates costs for new resources entering service in 2031. Its baseline incorporates modeled effects of EPA rules and assumes new natural-gas combustion turbines operating at or below a 40% capacity factor use current efficient designs and low-emitting fuel. The report also describes restrictions affecting certain new turbines intended to operate above a 40% capacity factor. The modeled policy and operating conditions matter to the cost comparison.
EIA cautions that direct LCOE/LCOS comparisons can mislead: LCOE does not capture every factor in investment decisions, and reliability and local conditions matter. It discusses LACE, or levelized avoided cost of electricity, as a companion measure of the value a resource provides to the grid. A low modeled cost per megawatt-hour does not by itself show that a resource supplies the right power at the right time or meets a data center’s reliability requirements.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the Australian figures mean
CSIRO’s GenCost 2025–26 release reports an average Australian National Electricity Market generation price of approximately A$104/MWh in 2025, down from a peak of A$189/MWh in 2022. It says electricity-futures market expectations indicated prices could fall to A$80–90/MWh by 2030. Those are Australian market generation prices and expectations—not battery project costs or a forecast for data-center electricity contracts.
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CSIRO Chief Energy Economist and GenCost Project Leader Paul Graham 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.” The latter is a scenario projection for Australia, not a prediction that gas will supply that share of data-center power everywhere.
CSIRO’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. Its statement that all new electricity generation technologies are projected to cost more than $100/MWh by 2050 is also a scenario result, not a current cost estimate.
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For a specific data center, compare systems designed to deliver the same service and reliability. Check these inputs before treating one cost estimate as decisive:
- Power and duration: Specify the required megawatts and how many hours the battery must sustain them. A short peak-shaving duty is not equivalent to continuous firm supply.
- Operating pattern: Estimate dispatch hours, cycling frequency, and the price at which the battery can charge. Battery economics change when low-cost charging is unavailable or the system must discharge often.
- Plant and fuel assumptions: Identify whether the gas option is open-cycle or combined-cycle, its capacity factor, and the assumed gas price. These choices change both cost and operating role.
- Whole-system boundary: Include fuel, backup, interconnection, transmission, and any infrastructure required to deliver power—not only the generation asset’s headline cost.
- Revenue and grid value: Establish whether the project can earn value from energy, capacity, or ancillary services, and whether those services are actually available under local market rules.
- Reliability conditions: Account for maintenance, outages, forecast error, and multi-day weather conditions that can limit solar generation or battery charging.
- Policy and location: Apply local emissions rules, tax credits or other incentives, carbon costs, construction timelines, and grid constraints consistently to each option.
How batteries can affect utility costs
Battery economics can matter to a data center even when the facility does not own a dedicated battery plant. Pacific Northwest National Laboratory’s September 2026 report discusses ways storage may help utilities manage data-center load growth by deferring grid investments, shaving peaks, reducing exposure to volatile wholesale prices, and supporting reliability. It addresses utility affordability and cost allocation, not proof that a battery system is cheaper than a turbine at an individual data center. Rate impacts also depend on wholesale-market exposure, uncertainty in load forecasts, stranded-asset risk, tariff design, and whether peak demand grows faster than the cost of service.
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