Analysis:AI power rush sends data centres hunting for used turbines and jet engines

Utilities, developers, and companies seeking to power AI data centres are scrambling for second-hand gas turbines, refurbished machines, and converted jet engines as new equipment delivery times extend into the next decade. Despite concerns over artificial intelligence technology and a recent stock sell-off, demand for energy-intensive data centres is surging, causing a critical shortage of power infrastructure and equipment, including turbines.

According to Aurora Tenorio, senior analyst at Wood Mackenzie, conversations in the US turbine market are heavily focused on the 2030 to 2031 timeframe, prompting some firms to seek out second-hand and refurbished equipment. Ana Amicarella, CEO of EthosEnergy, noted that the market is "very, very hot right now" with escalating prices. However, Enverus Intelligence Research associate Noor Qureshi believes the market may only partially alleviate the power supply squeeze due to its limited excess supply.

Turbines are just one of many obstacles, with air permits, grid access, and other factors contributing to delays. The secondary turbine market's contribution to the global $25 billion industry remains uncertain, but its emergence highlights the significant impact of the data centre boom across industries. AI infrastructure firm Crusoe, for example, ordered 13 aeroderivative gas turbines from US-based ProEnergy in April, describing it as a strategic move to scale quickly.

Data centres and their operators have become major customers of gas turbines, a market that previously catered primarily to traditional utilities. Worldwide orders now exceed 100 gigawatts (GW), far surpassing the estimated global production capacity of 60 GW to 70 GW. Jefferies analysts estimate that US data centres alone account for nearly 17 GW of demand this year, with the figure potentially tripling by 2028.

While global gas turbine manufacturing capacity is expanding, reaching around 87 GW in 2028, it will still fall short of the 129 GW expected turbine power demand.

Siemens Energy, GE Vernova, and Mitsubishi Heavy Industries, the dominant players in the market, acknowledge that the AI boom has driven orders beyond their production capacity. In the US, gas turbine delivery now averages six years. Second-hand, refurbished, or repurposed equipment has its own challenges, such as unclear maintenance histories, limited remaining life, and weaker long-term servicing. Converted jet engines also raise concerns about their suitability for continuous power generation.

Despite these challenges, waiting times measured in years make the secondary market an attractive option. Refurbished units can sell for about $1.3 million per MW, while used units fetch $1.5 million to $1.7 million per MW. This is significantly lower than new turbines, which cost $2 million to $2.5 million per MW. Cost savings can be even more pronounced for smaller units.

For instance, two 14.5-MW turbines from Solar Turbines, a Caterpillar unit, recently sold for $12.5 million, or around $430,000 per MW, compared to $35 million for new ones, which would take five years to deliver.