Dive Brief:
- Gas turbine prices are projected to rise to $600/kW by the end of 2027, a 195% increase since 2019, with orders expected to peak this year, according to an April 1 report from Wood Mackenzie.
- Despite the original equipment manufacturers, or OEMs, racing to expand manufacturing to meet demand, “specialized labor shortages, component bottlenecks in hot-section manufacturing, and ongoing trade-related cost pressures” have compounded the issue, Wood Mackenzie said.
- Restricted shipping through the Strait of Hormuz is also likely to impact the price and availability of components needed for gas turbine manufacturing, Bobby Noble, senior program manager of gas turbine research and development at the Electric Power Research Institute, told Utility Dive in an interview. “So it will be interesting to see in the next couple months how quickly some of those increased potential costs will start playing into the estimates that are being given.”
Dive Insight:
“While there may be manufacturing facilities here in the U.S. or in Europe or in Asia that can locally produce gas turbines and other components — the raw materials, the ceramic coating material and other things — there's only going to be so much supply available right now before we need to look at where those components or materials can be sourced from, and see if there’s an adverse effect due to the current global situation,” Noble said.
“Of course, anything that has to be shipped, those costs will likely rise,” he added.
Wood Mackenzie anticipates that gas turbine demand will “peak in 2026 as developers attempt to secure equipment for 63 GW of gas capacity additions from 2026 to 2030” and as “data center electricity consumption [increases] 96% between 2026 and 2031.”
In conjunction with rising prices, average wait times for gas turbine delivery have recently increased by several years. A large turbine ordered now would likely take about five years to deliver; a small turbine would take between 18 and 36 months, according to Noble.
Even as the order backlog grows, developers continue to pursue large gas projects.
On March 27, Entergy Louisiana announced that it had reached a deal with Meta to power the hyperscaler’s Hyperion data center project with seven new gas-fueled, combined-cycle power plants totaling 5.2 GW of capacity.
“We’ve taken proactive steps to maintain reliability and cost stability for our customers — including long term agreements with major equipment manufacturers with pricing determined at the time we entered the queue, diversified sourcing strategies and early procurement of key equipment for upcoming projects,” Entergy said in an email to Utility Dive. “Our planning helps mitigate market volatility and support the execution of our planned generation buildout.”
Entergy said the company remains “confident in our ability to meet our customers’ needs despite the broader industry wide supply constraints.”
Wood Mackenzie’s report identifies hot-section component manufacturing, particularly single-crystal blade production, as the “industry's critical bottleneck, as these precision processes can only be performed at scale by a handful of global suppliers.”
Noble said this particular bottleneck has contributed to increases in orders for small turbines.
“There's a very limited number of places in the world where you can have extremely large components forged,” he said. “That definitely poses challenges for the larger gas turbines, and that's one of the reasons why you're seeing, with the smaller gas turbines, not quite the same lead times as the larger units.”
When looking at orders from last year, EPRI found that 70% of the gas turbine units ordered were under 100 MW, Noble said. Turbines under 20 MW were 26% of the units ordered, while advanced-class turbines — with output capacity between 200 MW and more than 500 MW — were 22% of the units ordered.
