Wood Mackenzie’s latest global report on levelized cost of electricity (LCOE) shows that advancing technologies and market dynamics continue to drive divergent prices, with four-hour battery storage now less expensive than open-cycle gas turbines in all 43 markets where both technologies were modeled.
In the Middle East and Africa, where utility-scale solar already leads at US$37/MWh, four-hour storage is forecast to fall a further 33% to US$80/MWh by 2035, displacing gas peaking on cost across every gas market in the region. China remains the global storage cost benchmark at more than 55% below the rest of Asia Pacific average, illustrating how manufacturing scale is redrawing the global cost map.
“This economic shift is decisive and widening,” said Ahmed Jameel Abdullah, principal analyst at Wood Mackenzie. “Gas turbine shortages and rising fuel volatility are driving up peaking costs, while expanding battery manufacturing continues to push storage costs down.”
Abdullah notes a similar transformation has already reshaped baseload economics. Single-axis tracker solar is now the lowest-cost new-build technology in 43 of 48 modeled markets, with onshore wind leading in five. In the most competitive markets, Saudi Arabia and the UAE, solar LCOE is on track to fall below US$20/MWh by 2033.
The Wood Mackenzie reports cover the regions of Europe, North America, Latin America, Asia Pacific and the Middle East and Africa.
North America
Near-term solar costs are under pressure from a wave of tariffs, anti-dumping and countervailing duty actions, and new Section 232 import restrictions, with distributed generation facing the greatest exposure.
Utility-scale solar is partially protected by 168 GW of safe-harboured capacity, though module prices are still expected to rise around 5% annually through 2030. Residential and commercial projects face a more constrained environment, with module prices forecast to increase 6% in 2027 and a further 14% in 2028.
For onshore wind, continuous capex and opex improvements are expected to drive LCOE down 16% by 2060, despite near-term uncertainty from policy changes and potential Section 232 impacts on turbine pricing.
Tax credits continue to provide a competitive advantage for storage, partially counteracting the impact of foreign entity of concern (FEOC) restrictions and supply chain constraints.
A cost spike is anticipated following the phase-out of the investment tax credit (ITC) credits from 2038, but over the long-term new battery chemistries, hardware commoditisation and domestic supply chain expansion are expected to drive storage LCOE down 10% by 2060.
Investment in gas generation capacity is entering a supply deficit cycle through the late 2030s, driven by data center load growth, a dynamic that keeps thermal capital costs elevated and reinforces the long-term economic case for renewables and storage, the consulting firm said.
