NEW YORK - October 13, 2026 - Four-hour battery storage has crossed a critical economic threshold, becoming cheaper than open-cycle gas turbines across all 43 global markets modeled by Wood Mackenzie, according to the consultancy's latest Levelized Cost of Electricity report. The milestone signals a structural shift in how utilities and developers meet peak power demand-but the United States stands apart, with tariffs and supply chain restrictions threatening to slow deployment.
A Decisive Global Cost Crossover
On October 8, the report made public revealed that all markets studied have now determined that four-hour battery storage systems provide a lower levelized cost than gas turbines. The cost of four-hour storage in the Middle East and Africa is estimated to reach US$120 per megawatt hour (MWh) in 2026, falling by 33% to US$80/MWh by 2035. The average price of four-hour storage units in the Asia-Pacific region is US$134/MWh, but this very low figure has been made possible by the performance of countries such as China, where the price of four-hour storage units is over 55% cheaper than in the region.
The economic crossover is driven by two opposing forces. On one side, expanding battery manufacturing capacity continues to push storage costs down. On the other, gas turbine supply shortages and volatile fuel prices are driving up the cost of gas-based peaking power. "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."
The U.S. Exception: Trade Barriers Bite
Yet North America stands out as a key exception in long-term cost trajectories, heavily influenced by domestic trade policies, supply chain protections, and surging power demand from data centers. Unlike international markets benefiting from low-cost Chinese equipment exports, U.S. clean energy developers face immediate cost headwinds.
The policy landscape has tightened considerably. Starting in 2026, 55% of the cost of materials used for new energy storage projects must come from outside China and other restricted countries, or the projects will not qualify for tax credits. Import tariffs on Chinese batteries increased to 25% in January, up from 7.5%. More drastically, a late-August executive order declared a national emergency that effectively bans Chinese batteries from being used in grid-scale energy storage systems.
"An outright ban was a bit of a surprise, and it does create a bit of concern for domestic players in the U.S.," said Shan Tomouk, energy storage lead at Benchmark Mineral Intelligence.
The impact is already visible. U.S. lithium-ion battery imports tumbled in the first quarter of 2026 as new supply chain restrictions and tariffs took effect. According to BloombergNEF analysis, the ban is likely to slow deployment of grid-connected energy storage projects in the near term, as developers wait for clarity on rules and search for alternative cell sources that will likely be more expensive than Chinese imports. "Worst case, those projects could get canceled," said Isshu Kikuma, an energy storage analyst at BloombergNEF.
Looking Ahead
While a temporary cost increase is anticipated when the Investment Tax Credit phases out in the late 2030s, hardware commoditization, alternative cell chemistries, and localized manufacturing expansion are expected to drive long-term storage LCOE down 10% by 2060 in North America.
As Abdullah of Wood Mackenzie put it, the shift is not merely incremental. "This economic shift is decisive and widening." The question for the U.S. market is whether its trade barriers will slow that widening-or whether domestic manufacturing can scale quickly enough to close the gap.
