Bullets:
Data centers for Artificial Intelligence are hitting severe constraints, as energy grids are already under heavy strain and new power sources cannot be quickly brought online.
The United States is aggressively expanding natural gas production to meet new energy demands for these AI data centers.
But large order backlogs for gas turbines are years long, and turbine manufacturers are struggling to increase production. New turbine orders for Mitsubishi, GE Vernova, and Siemens can not be delivered for at least four years.
Over two-thirds of AI projects that have been announced, do not yet have a gas turbine manufacturer under contract.
Chinese companies building standardized, more compact designs are winning orders to supply new data center builds, and can deliver in eighteen months.
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Report:
Good morning.
Jereh Oilfield Services is a Chinese engineering company that also builds gas turbines. Jereh is scooping up orders to build gas turbines for AI data centers in the United States.
This is the most important part, here, that Jereh will deliver the turbines by the end of next year, 2027. This is the second deal with that customer, and the fifth order from the United States in the past four months. The advantage for Jereh’s system is that they’re standardized, and can be transported and assembled quickly.
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The construction boom for these data centers has a lot of constraints, and those result in a lot of projects that are announced, but later canceled. Energy is maybe the biggest challenge; electric grids in the United States and Europe are already under heavy strain, electricity prices are rising, and we haven’t even seen yet the big boom in power demand from data centers. That demand is expected to triple worldwide in the next 10 years:
Countries with a lot of natural gas, like the United States, are aggressively expanding gas power capacity. And we see here that in the US, the share of new natural gas capacity that is going to data centers went from 5 gigawatts in 2024, to 100 gigawatts planned for 2025.
That dark orange is “on-site for data centers”, and that is a new feature of this industry, too: the new gas plants for AI aren’t going to feed the grid, then on to data centers. The AI companies are building the new power capacity at the same location as the data centers themselves. None of that new power will go to households or local businesses.
So the US has a lot of new gas projects coming online, and that means high demand for gas turbines to make the electricity. That industry is dominated by three manufacturers, Mitsubishi, Siemens, and GE Vernova. And that makes for a big problem, because those manufacturers have order backlogs that go out for years.
Mitsubishi wants to double their capacity, because besides the new demand from AI data centers, they have a bunch of old equipment that needs to be replaced. And Mitsubishi is struggling to increase production by just 30%, because of labor shortages in the US, where the order lead times are over three years, right now.
GE Vernova has the same problem—buyers who placed orders for GE equipment won’t take delivery until 2029. This year the company is accepting “reservations”—those are non-refundable deposits—for turbines that may be delivered in 2030. Over at Siemens, same thing. Large turbine orders are backlogged until 2029-2030.
That all gives us a context for these data, where two-thirds of gas power projects don’t have a vendor under contract for the gas turbines. And it doesn’t take much imagination to realize that Chinese companies that can deliver gas turbines before 2030 are going to be win a lot more of those contracts.
Be Good.
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Resources and links:
GE Vernova expects to end 2025 with an 80-GW gas turbine backlog that stretches into 2029
https://www.utilitydive.com/news/ge-vernova-gas-turbine-investor/807662/
Mitsubishi Power strains to meet gas turbine demand amid US labor crunch
https://asia.nikkei.com/business/energy/mitsubishi-power-strains-to-meet-gas-turbine-demand-amid-us-labor-crunch
Mitsubishi Heavy to Double Turbine Capacity as Demand Soars
https://www.bloomberg.com/news/articles/2025-08-31/mitsubishi-heavy-to-double-gas-turbine-capacity-as-demand-soars
Gas turbine manufacturers expand capacity, but order backlog could prove stubborn
https://www.utilitydive.com/news/mitsubishi-gas-turbine-manufacturing-capacity-expansion-supply-demand/759371/
Betting big on data centers, U.S. now leads world for new gas power development
https://globalenergymonitor.org/report/betting-big-on-data-centers-u-s-now-leads-world-for-new-gas-power-development/
China’s Jereh Rises After Landing USD341 Million Gas Turbine Generator Order for US Data Centers
https://www.yicaiglobal.com/news/chinas-jereh-rises-after-landing-usd341-million-gas-turbine-generator-order-for-us-data-center
Gas Turbine Market Size
https://straitsresearch.com/report/gas-turbine-market
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