The changes in the gas generation market over the last couple of years are enough to make your head spin. It was a major topic of discussion last week at POWERGEN International in Dallas.
“Gas turbines were dead in 2022,” Siemens Energy North America President Rich Voorberg told the Opening Keynote audience. “We will never get a regulator to approve gas turbines ever again in our state,” he recalls a colleague saying.
At that time, few among us would have anticipated the magnitude of load growth projections we’re seeing now, primarily driven by AI data centers, the onshoring of manufacturing, electrification and more.
But now?
“Frankly, we can’t make enough gas turbines to support this market,” said Voorberg. “What a difference a few years make.”
One way to tell the story is through the long lead times for equipment experienced by natural gas plant developers.
Simple-cycle and combined-cycle GTs are in high demand, and buyers of F-class, advanced-class, and aero-derivative gas turbines have been dealing with lead times not seen since the gas boom of the early 2000s.
There has been an enormous pickup in demand over the last year, and particularly over the past few months, noted Aad den Elzen, Solar Turbines VP of Power Generation and Strategic Growth, at another POWERGEN keynote. Solar Turbines, a Caterpillar company, is the world’s largest manufacturer of industrial gas turbines.
“The lead times even for small turbines are increasing,” den Elzen said. “Basically, we are all depending on the same supply chain. The same suppliers are pushed for more by the power generation and the aerospace industries, but all of us are spending a lot of time and energy to understand the full supply chain until every last bottleneck is opened.”
Some developers are already facing the consequences of not moving early enough.
ENGIE Flexible Generation told Texas regulators this week it would be withdrawing two proposed peaking plant projects. The company had applied for a loan through the Texas Energy Fund, which provides 3% interest loans to build or upgrade gas-fueled power plants. The program was passed by lawmakers after Winter Storm Uri in 2021, which overwhelmed the state’s grid.
ENGIE “most recently met with PUC staff to inform them that it has become evident that equipment procurement constraints, among other factors, will delay the project schedule such that we would be unable to make the statutorily mandated initial loan disbursements by December 2025,” company managing director Eric De Caluwe wrote state regulators this week.
The bottom line: If you’re building a project that involves a gas turbine, the largest manufacturers say you should be talking to your OEMs as long as seven or eight years out.
“You need to get in line, basically,” said Ben Thomas, Mitsubishi Power Director of Hydrogen Production, during last week’s panel.
GE Vernova, another major gas turbine OEM, is making massive investments to better align with the demand. Last month, the company announced it would dump hundreds of millions into U.S. manufacturing facilities to ramp up capacity.
Prior to that, GE Vernova executives said they had signed 9 GW of reservations for gas turbines with customers in a one-month period. The company did not disclose any of the customers it had signed reservations for but noted they include data center developers.
For the nine months that ended September 30, 2024, GE Vernova had 14.1 GW in gas turbine orders, compared with 7.4 GW for the same period in 2023.
“We foresee gas power generation continuing to grow low single digits, which will play an indispensable role in ensuring grid stability and energy security,” the company said in a quarterly report last Fall.
