They kind of fix it in the sequel by saying that the matrix is using human brainpower to balance the operation of some kind of fusion power plant, and without the massive number of humans embedded in the matrix the machines can't keep their fusion generators working. It makes slightly more sense than batteries.

Also in defense of the Wachowskis i've heard they wanted to do "the machines are using humans to do computing" but they were shot down by executive meddling.