Gas turbine manufacturers are struggling to keep up with demand from the data center sector.
Natural gas has quickly become a crucial power source to meet the skyrocketing energy demands associated with data center growth across the US.
However, according to a recent report from CTVC, gas turbine manufacturers are struggling to meet the surging demand, with delivery backlogs beginning to stretch past 2029.
Three companies- GE Vernova, Siemens, and Mitsubishi Heavy Industries- currently produce the majority of gas turbines globally. GE Vernova alone has the capacity to manufacture more than 50GW of turbines over the next five years.
However, according to Heatmap, rather than pushing for massive expansion, they have begun to limit investments to protect margins in order to reduce risks of overexposure if the expected growth of data center demand fails to come to fruition.
Fears of overbuilding have been exacerbated even further by the implications of DeepSeek - a Chinese AI model - which exhibited similar results to US-developed models at a fraction of the energy.
As a result, several power producers have begun to step back from gas as a precaution. Most notably, last month Engie canceled two planned gas power plants in Texas. The power producer cited a long timeline and heightened costs as the primary factors behind the decision.
As a result, gas manufacturers are advising developers that they may require more than seven to eight years to secure new turbines, which fall well outside data center development timelines.
The concerns have led some in the sector to begin to question the applicability of natural gas as a bridging fuel to low carbon alternatives, with many beginning to argue that it could be cheaper to go all in on low carbon alternatives. This is leading to increased interest in baseload alternatives such as small modular reactors and hydrogen fuel cells.
Despite this, many data center operators and natural gas producers remain bullish on the role the energy source will play in powering new data center capacity.
Both ExxonMobil and Chevron have announced plans to develop natural gas generation to directly serve the data center market.
In January, Chevron partnered with Engine No. 1 to collaborate with GE Vernova to establish a multi-gigawatt power plant using seven GE Vernova 7HA natural gas turbines. The partnership aims to develop up to 4GW, with an in-service target date at the end of 2027.
The power plant is set to supply AI data center developer Crusoe’s planned "large scale data center campuses" which Crusoe will build at as yet undetermined locations across the US.
Prior to this, in December, Exxon revealed it was planning to develop a 1.5GW natural gas-fired power plant dedicated to the data center sector.
