The crux of the issue is that the gas turbine market is dominated by three companies -- Siemens Energy, GE Vernova, Mitsubishi Heavy Theyve been caught flat footed by an acceleration in orders over the last few years. And they aren’t able (or willing) to quickly boost output

So, what is a gas turbine? Its a 500-ton machine that is just like the jet engine, but to produce electricity instead of flight Natural gas is burned to spin blades at speeds higher than 3,000 rotations a minute to powers a connected generator

(I mean, come on. Look at this thing. It’s a marvel of engineering — decades of trials and errors)

Since the 1960s, the hot gas exiting the process has often been harnessed to generate steam and power a second turbine, creating the combined cycle design that’s more efficient at converting fuel into electricity and has become the standard in large power plants

The technology’s deployment surged in the 1990s with the US power market’s deregulation. Gas turbines were favored for their speed of installation and efficiency, triggering a rush in orders

Yet that boom was short-lived as gas prices climbed and the resulting downturn triggered a wave of industry consolidation that concentrated manufacturing capability with the current three main suppliers And so today there are really only three suppliers of the biggest turbines

That history, along with a few decades of lackluster sales and plateauing power requirements in the US and Europe, meant the suppliers were largely unprepared when electricity consumption accelerated after the pandemic, ushering in the new race for turbines

The three suppliers have tight control over their IP. You cant easily enter the space because you need decades of testing and experience While China is trying to develop their own turbine, theyre still far behind. China depends on equipment from the big three

So why are orders for turbines surging? There are a number of reasons 🇺🇸 US power demand is slated to grow 25% by 2030, a reversal of relatively flat consumption since 2010. This is due in part to the AI boom, and data centers are turning to gas to feed energy needs

🇩🇪 Germany aims to build as many as 20 new gas-fired power plants by 2030 🇯🇵 Japan is considering plans to build new facilities after the government reversed its view that power demand was on a long-term decline 🇸🇦 Saudi Arabia is investing billions to add gas-fired plants

Utilities in richer nations are prepared to pay at least some of the costs to speed up delivery of turbines, or to win priority That will be harder for developing nations that are planning to shift from coal to gas to help reduce emissions while also meeting higher energy needs

(one reason folks like gas is because it has half the emissions when combusted compared to coal)

Anyway, so as rich nations scoop up more gas turbines that risks leaving fewer for emerging nations (which had adopted aggressive gas power strategies) Lets take Vietnam. They want to build at least 22 gas-fired power plants by 2030. This isnt an AI boom thing, its just growth

Turbine manufacturers also are favoring projects in developed nations, or tied to power requirements for major companies, because of the reduced risks of financing shortfalls or complex approvals

This is also driving up the cost of power plants A new combined cycle-gas plant cost about $800/kW in 2021 Now it is as high as $2,800/kW So in developed nations relying on more gas, power prices could also rise even higher

The good news is that suppliers are taking step to lift production capacity GE Vernova announced plans to expand capacity to 70-80 heavy-duty gas turbines a year from 2026, up from 55 turbines Mitsubishi Heavy is urgently seeking to add gas-turbine capacity in the next 2 years

This is how the turbine shortage could play out: Without gas, developing nations may be forced to keep using coal for longer Meanwhile, developed countries may be pushed to more quickly adopt solar and wind farms backed up with expensive batteries

Meanwhile, stocks for turbine suppliers have rallied

Read our article about the turbine shortage here (without a paywall) https://www.bloomberg.com/feat...

@SStapczynski Yes, but are they #MadeInChina?

@bernard_gress They (mostly) aren’t

@SStapczynski Interesting nugget of information I found ‘the gas turbine shortage is a significant nudge toward renewables, especially for agile players like data center operators, but gas will remain a critical bridge for high-density AI workloads until storage and grid tech fully mature.

@SStapczynski We need to go to nuclear power! It has the most ROI. Why is it being gatekept?

@SStapczynski Could've saved you about a dozen posts with this simple equation: Solar + storage = best solution

@SStapczynski So if we run into power shortages and need to ration supply will ChatGPT or the family home get the power?

@SStapczynski @AshwiniVaishnaw @PiyushGoyal @narendramodi India can help the world here. Gas turbines are 1970’s technology and can be easily manufactured by the Indian ecosystem. Plus India needs the whole power generation ecosystem including natural gas and green hydrogen

@SStapczynski Well that just looks like an opportunity for manufactures of gas turbines, which as far as manufacturing goes are a kind of jet engines to expand capacity.

@SStapczynski We run a used energy equipment marketplace at Fuelled and continue to see names buying used to avoid the supply chain delays

@SStapczynski Gas turbine shortage threatening power supply = validates your AI infrastructure thesis from different angle. Data centers need reliable baseload power, but GE/Siemens turbine backlogs now 2+ years means new capacity delayed. This explains why MSFT/hyperscalers building their own

@SStapczynski L'âge d'or des turbines à gaz, sublimes machines et si utiles à l'humanité. Un fil à dérouler 👆

@SStapczynski Good thread - very useful. The AI bottleneck that is hard to overcome

@SStapczynski @LimitingThe Elon bought up all the supply 😆

@SStapczynski That’s why you need solar + batteries

@SStapczynski Your thread is everybody's favorite! #TopUnroll https://threadreaderapp.com/th... 🙏🏼@TewsyTwity for 🥇unroll

@SStapczynski Does the production of wind turbines contribute to the lack of gas turbines?