Expanded gas turbine production capacity, but persistent order backlog may pose challenges

In the dynamic world of energy, a notable trend has emerged: a surge in gas turbine production. This increase is driven by various factors, including the replacement of outdated infrastructure, the demand for electricity for data centers, and the rising global need for large transformers essential for the energy transition.

Siemens Energy, a key player in this market, has announced plans to expand its gas turbine production capacity. The German multinational corporation plans to invest around 220 million euros to enlarge its transformer plant in Nuremberg by about 16,000 square meters, increasing capacity by approximately 50%. This expansion comes in response to rising global demand for large transformers.

Siemens Energy's strong market in the U.S. is particularly notable. Half of the company's gas services division's orders in the third quarter came from the U.S., mostly for data centers. The company is also adding 61,000 sq ft to a facility that makes blades and vanes for its turbines, with its Florida blades and vanes facility growing from approximately 200 employees two years ago to more than 450 today.

GE Vernova, another major player, is investing $41 million to enhance the manufacturing of its H65 and H84 generators. The company also plans to create 50 new jobs at the facility it's expanding.

Mitsubishi Heavy Industries, another significant player, has announced plans to double its manufacturing capacity of gas turbines over the next two years. However, the company did not respond to a request for comment.

The increased production of gas turbines is not without its challenges. Bobby Noble, an industry expert, mentioned that the need for more skilled and engineering labor complicates the actual timeline. He also noted that increasing production should be sustainable but warned of potential risks due to unguaranteed long-term demand.

Noble did not discount the possibility of a bubble in increasing gas turbine production. He mentioned that coal retirements, increasing capacity needs from conventional customers, and the added complexity of data center capacity growth are factors driving gas turbine demand in 2025. However, he compared the current circumstances to the natural gas bubble in the early 2000s but noted that gas turbine demand in 2025 is driven by different factors.

The increased demand for gas turbines is reflected in the market. The average wait times for gas turbine delivery have recently increased by several years. Despite this, Siemens Energy CEO, Christian Bruch, has stated a high demand for new gas turbines across all frame sizes.

U.S. electricity consumption reached an all-time high in 2024 and is expected to continue rising. This rising demand, coupled with the need for modern infrastructure and the growth of data centers, is driving the surge in gas turbine production. However, the industry must navigate the challenges of increased production while ensuring sustainability and long-term demand.

Expanded gas turbine production capacity, but persistent order backlog may pose challenges