The Gas Turbine Shortage Just Became AI’s Biggest Constraint
Order a heavy-duty gas turbine from GE Vernova today and it won’t arrive until 2031. That’s the company’s actual production schedule, confirmed on its July 22 earnings call, and it’s the fact sitting underneath every AI data center power plan announced in the last two years. It comes up far less often than the announcements do. Goldman Sachs put hard numbers on the demand side in May. U.S. data…
The shortage of gas turbines is now the primary constraint for artificial intelligence (AI) data centers. A heavy-duty gas turbine from GE Vernova will not arrive until 2031, as confirmed in the company's July 22 earnings call. This fact has become a significant concern for AI data center power plans announced in the past two years.
According to Goldman Sachs, U.S. data center power demand will rise from 31 gigawatts (GW) in 2025 to 41 GW this year and 66 GW in 2027. Year-over-year capacity additions will increase from 8.5 GW last year to 13.6 GW in 2026 and 36.3 GW in 2027. By then, data centers will account for 8.5% of total U.S. peak summer demand, up from 4.1% currently.
GE Vernova's backlog of gas power equipment and slot reservation agreements stands at 116 GW as of the second quarter. The company expects at least 125 GW under contract by December. Its production plan aims for 20 GW annually this quarter, 24 GW by 2028, and 30 GW by 2030.
Siemens Energy's gas turbine backlog reached 69 GW after booking 15 GW and shipping six units during its fiscal third quarter. Lead times for these turbines run three years or more. Mitsubishi Heavy Industries reported a 35 GW large-frame backlog, with orders slated for delivery between 2028 and 2030.
The three headline numbers, when combined, amount to 220 GW. However, this figure is an overstatement as not all these orders are for the same equipment. Of GE Vernova's 116 GW backlog, only 53 GW is firm equipment, while the remaining 63 GW consists of slot reservations. Siemens' 69 GW includes both firm backlog and reservations, while Mitsubishi's 35 GW pertains only to large-frame turbines.
Global orders in the second quarter reached a record 38 GW, up 71% year on year, with the U.S. accounting for half. However, worldwide manufacturing capacity stands at 60-70 GW annually, compared to around 110 GW of orders. The largest gas turbine industry cannot fulfill even one year of the 36.3 GW of orders under contract.
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- The Gas Turbine Shortage Just Became AI’s Biggest Constraint finance.yahoo.com
