Gas turbine manufacturers expand capacity, but order backlog could prove stubborn

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Mitsubishi Heavy Industries is set to double its gas turbine manufacturing capacity within two years to meet rising demand and a growing backlog of orders, as reported by Bloomberg. The average delivery wait time for gas turbines has recently stretched to several years. Other manufacturers, such as GE Vernova and Siemens Energy, are also expanding their production capabilities, with GE investing $41 million to enhance its generator manufacturing and Siemens adding 61,000 square feet to its facility for turbine components. Despite these expansions, experts suggest that the increased output may not significantly reduce wait times due to the complexity of manufacturing and labor requirements.

The surge in demand for gas turbines is largely driven by the need to replace aging infrastructure and the rapid growth of data centers. Siemens Energy reported that 65% of its gas turbine orders this fiscal year have come from data centers, highlighting a shift in market dynamics. While there is optimism about the sustainability of increased production, experts caution that long-term demand remains uncertain, drawing parallels to past fluctuations in the natural gas market. Factors such as coal retirements and the growing energy needs of data centers are expected to influence gas turbine demand through 2025.