Gas Turbine Shortage Amid Data Center Boom [Tech Talk]

Turbines Used as Backup Power Plants in Data Centers
Highly Volatile Renewables, Commercialization Still Distant for SMRs

On October 13, Doosan Enerbility announced that it had signed a deal to supply two industrial gas turbines with a capacity of 380 megawatts (MW) each to an American company. This marks the first time a domestically produced gas turbine has been exported to the United States. Although the customer has not been disclosed, it is known to be a major big tech company. Recently, as artificial intelligence (AI) data centers have rapidly expanded, there has been a shortage of gas turbines. At one point, big tech companies sought new power sources to replace gas turbines in their data centers, but it appears they have ultimately returned to using gas turbines.

Global Gas Turbine Shortage ... Five-Year Wait After Ordering

The industrial gas turbine sector is dominated by advanced machine engineering countries. While these turbines are typically used as power sources for combined heat and power plants, demand has recently surged at AI data centers. Only a handful of countries, such as the United States, United Kingdom, Germany, and Japan, possess this technology, and a small number of companies-General Electric (GE), Siemens, Rolls-Royce, and Mitsubishi-have dominated the global market for decades.

Doosan Enerbility's self-developed 380MW class gas turbine model. Photo by Yonhap News

The reason Doosan Enerbility, a relatively latecomer, was able to export gas turbines to the United States, known as the "birthplace of gas turbines," lies in the current supply shortage. According to a report released on October 7 (local time) by the Institute for Energy Economics and Financial Analysis (IEEFA), a U.S. nonprofit energy market research organization, global gas turbine orders since last year have reached 80 gigawatts (GW). This figure is more than double the combined annual production capacity of GE, Mitsubishi, and Siemens, which stands at 30GW. There are also projections that annual orders will surpass 100GW by 2027.

Currently, if a customer places an order for a single gas turbine, it will be delivered in 2030, five years later. IEEFA reported, "Customers are competing to place advance orders for GE gas turbines to be delivered in 2030, paying a reservation fee of $25 million (about 36 billion won)."

Perfect Fit for Data Center Backup Power

The surge in gas turbine demand is driven by several factors: the expansion of combined heat and power plants in emerging Southeast Asian countries such as the Philippines and Vietnam, and increased investment in data centers in advanced economies. In particular, IT powerhouses like the United States and United Kingdom are seeing the construction of massive AI data centers that consume more than 1GW of electricity.

In fact, gas turbines have long served as the "heart" of data centers. Typically, data centers consume tens to hundreds of megawatts of electricity and are supplied with power via connections to nearby power plants and transmission grids. However, power plants are at risk of shutdown due to unavoidable circumstances. For this reason, all data centers build their own "backup power plants" using gas turbines.

Data center backup power plant supplied by Cummins, a US manufacturer of gas turbines and diesel generators. Cummins website

Gas turbines are easy to start up and shut down, and most importantly, they have a short preheating time. In other words, they can reach maximum output relatively quickly. If a data center loses power, gas turbines are the ideal equipment for restoring electricity as quickly as possible.

Highly Volatile Renewables, Commercialization Challenges for SMRs

Big tech companies once explored alternative power sources to replace gas turbines. In Europe, where renewable energy is highly developed, some data centers have been powered by solar and wind energy. However, solar and wind power have the drawback of variable output depending on weather conditions. To mitigate this volatility in power supply, separate facilities such as energy storage systems (ESS) are required, which increases costs.

Pressure vessel, a core component of Small Modular Reactor (SMR). Photo by Sheffield Postmaster

Small Modular Reactors (SMRs) are also being considered as future backup power facilities for data centers, but commercialization remains a distant goal. Today, numerous startups and established companies are working to develop SMRs, but currently, only two units are operating in Russia and one in China, and even these remain in the demonstration phase.

The slow pace of SMR commercialization is largely due to decades of underinvestment. Greg De Temmerman, a researcher at a French energy think tank, commented, "Since the early 21st century, investment in nuclear power has been much lower than for other energy technologies. Even the most recent increases in investment have been driven mainly by nuclear fusion. Nuclear power is a typical capital-intensive industry, but currently, it is more expensive than renewables. That is the fundamental problem that needs to be solved for (SMRs)."