WoodMac: Batteries Undercut Gas Peakers in 43 Markets
Wood Mackenzie's 8 October analysis finds four-hour batteries cost less than open-cycle gas in every market modeled, Middle East included.
Wood Mackenzie says four-hour battery storage is cheaper than open-cycle gas turbines in all 43 markets where both were modeled. In the Middle East and Africa it puts storage at US$120/MWh in 2026, falling to US$80/MWh by 2035, and says it already undercuts gas peaking in every regional gas market. These are modeled estimates.
The Gulf Barrel Desk · 3 min read- Wood Mackenzie, in an analysis dated 8 October 2026, says four-hour storage is less expensive than open-cycle gas turbines in all 43 markets where both were modeled.
- For the Middle East and Africa, the firm puts four-hour storage at US$120/MWh in 2026, falling 33% to US$80/MWh by 2035, and says it displaces gas peaking on cost in every gas market in the region.
- Wood Mackenzie names gas turbine shortages and rising fuel volatility as the drivers of higher peaking costs; its principal analyst Ahmed Jameel Abdullah calls the shift 'decisive and widening'.
- These are the firm's modeled levelized costs, not market prices, and neither source quantifies any effect on Gulf gas burn or LNG demand.
- Saudi Arabia and the UAE are on track for solar below US$20/MWh by 2033 in the same analysis, which is a separate forecast from the peaker comparison.
Wood Mackenzie says four-hour battery storage is now cheaper than open-cycle gas turbines in every one of the 43 markets where it modeled both, according to its 8 October 2026 release and Utility Dive's report of the same day. For a desk that covers gas, the question is how much of the peak-power market gas can still defend on cost. The figures below are the firm's own modeled estimates. This is analysis, not trading advice.
What the comparison covers
The core claim is a levelized-cost ranking. Wood Mackenzie states that four-hour storage is less expensive than open-cycle gas turbines in all 43 markets where both technologies were modeled. A spokesperson told Utility Dive that for a U.S. project starting commercial operation in 2026, storage is 65% to 75% cheaper than a new open-cycle peaker, with the range depending on state carbon pricing. Neither source publishes the absolute peaker cost, so the ranking cannot be rebuilt independently.
The Middle East and Africa numbers
For the Middle East and Africa, Wood Mackenzie puts four-hour storage at US$120/MWh in 2026 and forecasts a 33% fall to US$80/MWh by 2035. It says storage is already displacing open-cycle gas turbines on cost in every gas market in the region. In the same analysis, Saudi Arabia and the UAE are on track for solar below US$20/MWh by 2033. The release gives no gas-peaker cost for the region to set against these storage figures.
Why peaking costs are rising
Wood Mackenzie's Ahmed Jameel Abdullah attributes the shift to turbine shortages and fuel volatility, saying gas turbine shortages and rising fuel volatility are driving up peaking costs. Utility Dive adds that the firm's April projection has turbine prices reaching $600/kW by the end of 2027, up 195% since 2019, and that GE Vernova, Siemens Energy and Mitsubishi each report backlogs between 35 GW and 116 GW. The firm also expects a gas investment supply deficit cycle in North America through the late 2030s.
What it means for Gulf gas
The finding bears on Gulf gas only through peaking demand, and the sources stop short of sizing it. Neither Wood Mackenzie's release nor Utility Dive's report estimates how much regional gas burn or LNG demand storage could displace, and LNG is not discussed in the body of either. Official data from OPEC, the EIA or the IEA was not used here. Readers should treat the comparison as a modeled cost signal, not a measured shift in fuel use.
What to watch next
Three checks would turn this from a cost ranking into a demand signal: absolute peaker and storage costs behind the 43-market result, actual storage procurement in Saudi Arabia and the UAE, and national oil and gas company or utility data on gas used for peaking. Until those appear, the Middle East and Africa forecast of US$80/MWh storage by 2035 is a projection that carries the usual uncertainty of long-range cost modeling.
- Is four-hour battery storage cheaper than gas peakers?
- Wood Mackenzie says so in its 8 October 2026 analysis: four-hour storage is less expensive than open-cycle gas turbines in all 43 markets where both were modeled. A spokesperson told Utility Dive the U.S. gap is 65% to 75% for a 2026 start date, depending on state carbon pricing. These are modeled levelized costs, not observed prices.
- What does Wood Mackenzie forecast for storage in the Middle East and Africa?
- The firm puts four-hour storage at US$120/MWh in 2026, falling 33% to US$80/MWh by 2035. It says storage is displacing open-cycle gas turbines on cost in every gas market in the region. It does not say how much gas burn or LNG demand that would remove.
- Why are gas peaking costs rising?
- Abdullah of Wood Mackenzie says gas turbine shortages and rising fuel volatility are driving up peaking costs. Utility Dive also cites the firm's April projection of turbine prices reaching $600/kW by the end of 2027, up 195% since 2019, and an expected supply deficit cycle in North American gas investment through the late 2030s.