Meanwhile, stocks for turbine suppliers have rallied

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 batteries

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 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

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

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

🇺🇸 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

Many countries are shifting from coal to gas as part of their decarbonization efforts. Solar and wind are now the cheapest sources in most regions, but even paired with batteries they cannot yet provide continuous supply that coal or gas do

So why are orders for turbines surging? There are a number of reasons

Power demand is growing from consumers and industries as households, transportation and manufacturing are electrifying. Emerging nations are using more air conditioning

Plus, the AI boom

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

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

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

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

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

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

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

The facility is ending a 2 month planned maintenance. Likely related to that?