Mitsubishi Heavy Industries (MHI) is set to double its gas turbine production capacity within the next two years, a move driven by surging demand, particularly from the artificial intelligence and data center markets. CEO Eisaku Ito, who took the helm earlier this year, announced on August 29 that the company’s initial plan to boost capacity by 30% is no longer sufficient to meet the growing orders. “Fulfilling those orders is our top priority,” Ito stated, underscoring the company’s commitment to scaling up production.
The global demand for gas turbines has been outstripping supply, fueled by the need to replace aging infrastructure and build new natural gas-fired power plants. The Science and Technology Innovation Board Daily reported on September 2 that former CEO Seiji Izumisawa, now chairman of the board, indicated MHI’s readiness to expand production through more efficient supply chain and manufacturing protocols. However, Ito acknowledged the challenges posed by rising manufacturing costs due to increased prices for raw materials, equipment components, and labor.
MHI is not alone in experiencing a surge in gas turbine orders. GE Vernova and Siemens Energy have also reported significant increases. China Merchant Securities noted that GE Vernova’s new orders have nearly tripled year-over-year, with a total order capacity reaching 55 GW and expected to hit 60 GW by the end of this year. Scott Strazik, GE Vernova’s chief executive, highlighted the company’s positive outlook, citing a $5 billion increase in backlog and a rise in gas equipment backlog and slot reservation agreements from 50 to 55 GW.
Siemens Energy has also seen a 17% year-over-year increase in new turbine orders, with a substantial portion attributed to data centers. The company reported 14 GW of turbine orders year-to-date, with 60% targeted for data centers. CEO Christian Bruch emphasized the high demand for electricity in data centers, particularly in the U.S., driving the need for their products.
The surge in demand for gas turbines is part of a broader trend as technology companies explore various avenues to power their energy-intensive operations. Natural gas is seen as a cleaner alternative to coal and more cost-effective than nuclear power, with shorter construction timelines. It is also considered more reliable than intermittent renewables like solar and wind.
Ito acknowledged the cyclical nature of the turbine industry, which can hinder long-term investment, and expressed uncertainty about future demand from data centers. However, he asserted that MHI anticipates strong demand for at least the next decade. “The goal is to be as lean as possible,” Ito said, highlighting the company’s strategic focus.
This news could significantly shape the energy sector’s development, particularly in power generation and infrastructure. The increased demand for gas turbines underscores the ongoing reliance on natural gas as a transitional energy source, even as the world moves towards renewable energy. It also highlights the critical role of data centers and AI in driving energy demand, which could influence future energy policies and investments. The sector’s ability to meet this demand efficiently and sustainably will be crucial in shaping the energy landscape of the coming years.