Energy Evolution

The AI-driven gas turbine renaissance

2025-11-11 · 10:00 UTC ·Energy Evolution ·15 min read

Brief

The podcast frames the recent “renaissance” in gas turbines as a structural market shift driven primarily by two factors: rapid growth of 24/7 AI data‑centre demand and continued expansion of intermittent renewables that require firm, fast‑dispatch backup. Mitsubishi Power’s EMEA CEO explains that combined‑cycle gas turbines now deliver higher efficiencies than before and remain the fastest large‑scale dispatchable resource to bring online with required reliability. That combination, together with surging orders from hyperscalers and utility recapitalization needs, has produced multi‑year lead times (5–7 years) and sharply higher prices.

Manufacturing and supply realities are central. Advanced‑class units (roughly 450 MW OC to 850 MW CC) are largely produced in Japan, with recent assembly added in Saudi Arabia; three OEMs control roughly 80–90% of this market. Mitsubishi says it has standardized product lines (reducing types to speed throughput) and is expanding capacity, but trade barriers, tariffs and a global, multi‑tiered supply chain slow scaling. The company emphasizes non‑material constraints too — a global shortage of skilled engineers and technicians — and warns that the backlog persists through the end of the decade. On the technical side, Mitsubishi reports delivered turbines have been hydrogen‑blend capable since 2021 (30% H2), are moving to 50% blends now, and can reach 100% with modest combustor changes when low‑carbon H2 supply exists; commercial examples include a 50/50 H2 trial in Georgia and a 30% project in Utah paired with 220 MW of electrolysis.

The guest highlights system‑level implications: gas turbines provide inertia and system services that wind/solar do not, making them crucial for grid stability after events like high‑profile blackouts. But the current OEM capacity distribution creates strategic risk: US hyperscaler demand could crowd out coal‑to‑gas transitions in Asia and delay European projects that rely on state aid. There is also an upside/downside scenario: if an “AI bubble” cools demand, lead times and availability could relax, benefiting regions currently queued. For developing countries facing shortages, the recommended approach is incremental, smaller projects to secure early power while longer lead‑time large units are obtained. Overall, the episode ties engineering, supply‑chain strategy and policy (trade and state support) to near‑term decarbonization and energy‑security outcomes.

Why it matters

Energy Evolution podcast interviews Mitsubishi Power's EMEA CEO about a sudden global surge in gas-turbine demand driven by AI and data‑centre growth:

Key details

  • [finding] Current lead times for ordering large gas turbines are ~5–7 years and unit costs have more than doubled in some cases.
  • [impact] AI data‑centre load could rise from ~4% of US electricity in 2023 to as much as 12% by 2028, creating permanent 24/7 ultra‑reliable demand.
  • [scope] Three major OEMs (Japan, US, Germany) now supply ~80–90% of the advanced‑class market; advanced units span ~450 MW (open cycle) to ~850 MW (combined cycle).
  • [tech] Mitsubishi reports turbines shipped since 2021 are ready for 30% hydrogen blends, moving to 50% today and targeting 100% by ~2030 with minor combustor changes; commercial pilots cited (Georgia ~50% H2, Utah ~30% H2 with 220 MW electrolysis).
  • [risk] Regional bottlenecks: US orders could absorb global OEM capacity, Southeast Asia's coal‑to‑gas transitions are delayed by queues, Europe requires state aid/regulatory approvals; supply‑chain concentration (main manufacturing in Japan), trade barriers and talent shortages worsen delays.
Source evidence

title: The AI-driven gas turbine renaissance
author: Energy Evolution
publication: Energy Evolution
published: 2025-11-11T10:00:00
sourceurl: https://traffic.libsyn.com/secure/batterymetals/CI-CON-4737900-EnergyEvolutionRoleofGasRenewables_-_v3.mp3?dest-id=1681160

word_count: 3292

Hello, you're tuned in to the Energy Evolution Podcast where we explore the dynamic and ever-changing landscape of the energy transition. I'm your host, Ekla Vyagupte, and in this episode we're diving into one of the most dramatic market reversals in recent energy history, a stunning comeback of gas turbines. Now around three years ago, many were writing the obituary for gas turbines, but fast forward to today, if you want to order a gas turbine, you're looking at a 5-7-year weight, and cost that have more than doubled in some cases. Well, what's changed? A lot has changed, but two words do help describe this metamorphosis, and that is artificial intelligence or AI. Now, AI, as we know, is completely reshaping global power markets. Data centers powering AI could consume up to 12% of US electricity by 2028. Up from around 4% in 2023, and unlike your typical industrial load, AI requires 24-7 ultra-reliable power, but here is where it gets a little interesting. And even concerning, the US-led turbine boom is having unintended consequences across the globe. Countries in Asia, particularly in Southeast Asia, that were planning to transition from coal to natural gas are now stuck in turbine queues. Meanwhile in Europe, gas turbine orders require state aid, and have been holed in a few years as government struggled with regulatory approval. And now to find out more about the gas turbine boom, we are joined by Dr. Javier Kavada, the president and CEO of EMEA for Mitsubishi Power, which is at the center of this turbine revival. Let's go straight to that conversation. So Javier, welcome to the Energy Evolution podcast. Great to have you here. Thank you, Klevia. It's my pleasure. So, Bob, so it's been a dramatic turnaround, I would say, for gas turbines in the last sort of three to four years, and now we're looking at, I don't know, multiple year waiting list. So, can you sort of walk us through how we got here and why has this market changed so fundamentally? Yeah, thank you. It's all coming, the origin of the big boom that we have in the market today is coming for another system that has been made by people by the society. We have decided that we want more electricity. We need more electricity. With data, storage requires a lot of electricity. Our AI development requires a lot of electricity at the center and the required cooling that requires a lot of energy to be able to be stored perfectly. We are enlarging our wind and solar capacities and those require backup. We need to back them up for the times when there's not enough sun and there's not enough wind. More power generation is gas turbine technology. We have the largest or the biggest advance in engineering with the combined cycle gas turbines that we are able to get to efficiencies never reach before and with the capability of the supply chain and the materials of the supply chain that enables us to deliver them pretty quickly. Not quick enough to match with the demand, but there is no other solutions that can be deployed faster with the level of reliability and security of supply like the gas turbines and that is behind the boom that we are experiencing. Thank you. And obviously this market, just like a lot of the commodity markets, do tend to have a bit of a boom and bust cycle. So are there any pointers that one can learn from previous boom and bust cycle? Definitely. I mean, I personally, I mean, I've been 20 plus years in the energy industry, I've been a couple of cycles. Like this, we all read the books and the history. I can say this is very much unprecedented. That doesn't mean that the cycle is not happening. Yes, of course, there is a big growth every year is beating records until we will reach a peak and it will go down. I mean, there is no doubt on that. We're not stopping the carbonization, the carbonization requires removing heavy CO2 carbon emission sources like coal, like oil fire by gas and by renewables. I can tell you more than 50, 50 percent of the power globally is still coming from coal of an oil together. So is that journey still needs to happen? Then electrification, as we mentioned, EVs, charging stations, removing emissions and of course, the big is not a, it's not an elephant anymore. It's a massive mammoth, it's the AI revolution. We are just in the inception of this technology, where in the very early steps and we see that the humongous thirst and hunger of energy that this development required, as an engineer, we are, I know, and we all expect that the technology for AI, for the storage of data, will become more efficient, will become less energy demanding as it is today. So there will reach one peak at some point. But we also know how long does it take to build infrastructure? We know that this cycle has started, as mentioned, just post-COVID, something like 2022. And we know that because we are fully booked with pure commitments until the end of this decade, until 2030. So will it last forever? For sure not. Will it be a radical stop? Well, the only way to do a radical stop is to stop the carbonisation, stop electrification, and stop the race of AI, which I don't believe that would happen. Okay, interesting. And obviously, as you say, you know, central to this boom has been the sort of AI revolution that is taking place. Absolutely. But we take giants building dedicated sort of gas plants for their data centers. How is it sort of impacting the traditional utility customers and, you know, is your customer base completely changed as a result? I mean, we definitely are the growing of our capabilities or our production capacities. Global, I mean, you would say that there are three big companies, one from Japan, one from America, one from Germany, that we are taking at least over 80 to 90 percent of the market. So then, definitely, I can tell you that we have a new nature or a new type of customers taking over the capacities. So again, this is not an investment that happens for an utility every year. It's an investment power plant is lasting 20 to 30 years of life. So definitely, we know that because of this boom, we are going to increase the operational tension in power plants that probably could have to be retrofitted or upgraded or renewed and will have to wait. So we are looking at how to serve all the needs of the historical partners we have and also to serve the thirst and the hunger and the incredible unprecedented demand that we are having. We are the number one market in what is called advanced class turbines, which are the biggest, the most reliable, the most efficient, which are from 450 megawatts, each unit in open cycle to 850 in combined cycle. We talk about enormous solutions, but your point is correct. We are not able to catch up with the demand, but we also know that the demand will normalize and at the same time we are doing all our efforts to expand ourselves, not us, but all the main players that I mentioned before. So good time to be in this industry. Definitely. We hear the word supply chain used a lot in all industry markets, but be interesting to see what some of the supply chain challenges that various industries are facing. Have you all faced similar? I mean, we are a big technology company as Mitsubishi Power, we rely on a 10 times bigger than our supply chain. So we have our partners in all the value lines of our products. So our products have multiple components of components. We need all of this is very global. So these advanced class turbines I mentioned, their majority have been manufactured for us in Japan. The second place ever that happened was many years ago in the States in the US and few weeks ago we inaugurated the first assembly in the Middle East in Saudi Arabia to serve the local market that of course AI is behind all of that. So just that is a big challenge. We definitely are working on it. It's not an easy mission, but we are pretty confident, a client, that we are being able to sort this out. I have to say some of the hardels obstacles that we need to work for and work against and try to negotiate and find better ways are the trade barriers between countries and continents. I mean, there are things like the European Union with the US or other type of tariffs, etc. that's definitely not helping. So we are fully pushing, supporting and investing our efforts into looking at open trade so that we are not damaging single countries or single regions. And well, we believe that open trade is the best way for development for everybody in the most democratic way. Very interesting, because one of the things we do notice, especially in energy markets, but even in gas turbines is obviously that demand so far seems to be there's a lot more orders going in the US than say Asia and obviously Europe as well as seeing budgeting interest there. But how is the sort of regional dynamics of this market working? Thank you. I can tell it's a wonderful point. The one made now, I can tell you, the US could take the whole capacity of all the main three OEMs and fill us all at this moment. But of course, we would have to turn our back to the customers that we have had and partners we have had for the last 60 years of this technology. We all know Germany, there are discussions between, allow me to say between the EU, between Germany, is it 20 gigawatts, it is 12 gigawatts, it's the 20 gigawatts, it's enormous, enormous Poland is next to Germany around 80 percent of the power in Poland, which is a very much growing economy, is coming from coal fire. So it's just by changing to gas, the emissions would reduce over around 70 percent the emissions. So Japan is doing a lot also, because we are talking about gas turbines that very much are linked to LNG, to natural gas, to Shell gas. Our technology can use hydrogen, can use ammonia, can use other molecules, thinking in countries like Japan with very high tech industries with no access to local fuels. Then that's, so the level of demand is unprecedented, almost ever in every country here, Clavia, so we just, then we need to juggle, we need to juggle, but of course what we are doing as engineers is not juggling, we are planning, we are expanding, we are reducing our late times, we are in a way simply fine or offering instead of having 20 types, we reduce to three types so that you are able to deliver more. We had the IP red blackout earlier this year, which was obviously quite a seismic moment really for the energy market, especially in Europe. So maybe can you explain, you know, how gas turbines, what role they play in sort of a grid? I mean, Clavia, do you know where I am from? I mean, so I'm a pure born in Santander, I was in London when it happened and I was taking a plane to Dubai and that day and I was totally shocked, but of course not, should not be shocked because when you are not keeping this level of security that you require, I mean, gas turbine, Clavia is all about energy security, energy affordability and undecarbonization path. So you are able to reduce your emissions, you are having electricity very quickly immediately, but solar and wind are amazing technologies, we need to install as many gigabit hours of solar and wind as we can, but we always need to remember that they are in better ways, they don't provide systems services, they don't provide inertia and you need to have a backup, you need to have a support system and well, you can have a moment in which your grid is not stable and then there is no way any rotating equipment, any rotating mass like a gas turbine with a big generator, big steel machine is able to provide this and I tell you the hydro power has it, nuclear power has it and gas turbine have it because they all have a rotating generator at the end of the, at the end of the plant and yes, we have very relevant install base in the Averyan Peninsula, which is a heavy industry, so it's a busy power and well, we have seen that after the blackout, the level of utilization of these plants has boosted over the roof, which is showing that there is more security is being built in the system. The first question I go to when this happened was from the UK government sources, they were asking, can this happen in the UK? I mean, if you rely, you need to rely as much as possible on wind and solar but be ready for the moment that they failed you, so you always need to have your safety net. The good news for Europe, for the IVIDIA is that there's plenty of capacity built, so it's a very over capacity grids, so simply that you need to keep it aware and available to ramp up. Thank you. And now sort of, you know, moving to the fact that a lot of your turbines are going to be ready to use different blends, I don't know, hydrogen ammonia, so maybe a little bit on the challenges around that and how is that whole process shaping up for you? They are already ready. I mean, so ready since 2021, all our units being delivered are ready for 30% blended hydrogen, whether with 70% natural gas. Now in this year, we are moving to 50% so 50-50 and by the end of 2030 or before, when the market is requiring it, we can do it 100% and we are testing the hydrogen, combustion, the emissions, etc. And we only commercialize, because again, we have a Japanese DNA, reliability and accuracy are the top mantras, and well, our gas turbines are already for hydrogen already now or can be from 30 or 50% of ready for 100% with a very small modification of one couple of components like the combustor, etc. So when the hydrogen is available as a molecule in volumes, we can do this massively. Now we have already cases, a Clavier, real commercial cases in Georgia, in the United States, we have a plant running at 50-50% already, and McDonald's power plant is called. We have a large project of 220 megawatts of electrolysis with hydrogen and in Utah, that is running at 30%. And one question I had sort of slightly related to what we were talking about earlier, but it's a little bit of talk of an AI bubble. So are you concerned? I tell you, Clavier, I have heard about the bubble. I tell you that if it slows down and the bubble is much smaller, I will sleep a bit better because I can tell you, the same as the industry, that we are number one market said, I believe we are fairly the one with the most efficient and the largest solution. We are discussing projects today in 2025. November, we are discussing projects for 2031 and 2032. I have never seen that. Okay, two years from now, three years from now, four years from now, but six years from now. So I can tell you, if the demand boot cooled down or boot flattened a little bit, well, we will be able to, good news for Europe, Clavier. We will be able to provide a great break time with Germany and Poland and Romania and well, all the eastern part of Europe. Now we are working mostly at the liberability and productability. So in a way, it's how to produce more faster, easier, more modular and to be able to satisfy our customers because I can tell you an investor who wants to build a power plant, this, they want to build it in the coming couple of years and not they don't want to build it in six years from now. Thank you. And maybe sort of close it off one quick question to slightly put you on the spot. But if you had to advise an energy minister of a developing country who is facing this turbine shortage, what would you advise them, especially with relation to the energy strategy? Yeah, I mean, it's definitely worth talking about the developing country and it's always a starting small, you need to start small. So you need to get your first power at the sooner you can. So you need to look for smaller solutions. What I'm talking about, the units we are being totally blown up is about the largest, the most efficient, the best. Well, if you are a developing country needs to develop for the people, need to really give a better future for the people. So again, about the transition, we need incremental improvements. So I cannot imagine how a developing area would want, I want the same machine as Northern Carolina is buying because they are really building on, I mean, get your electricity. So you, with that electricity, you are going to develop other industries which will recover more electricity. It's all a transition and it's a journey. And well, Mitsubishi, we have over 160 years of history helping those who are not in the front of the train. So we're very happy to support. Great. It's been a great conversation before I close, maybe are there any other things that you would like to mention or any bits I forgot to quiz you on? No, I mean, you made excellent questions. I would like to get this industry or this technology is closer to the people. And not because I want to, or we want to brag about them is because we need people and we need talent. I mean, one of the main shortages we have globally is not about steel and bolts and aluminum plates. It's about people, talent is not for lack of talent. It's for we need engineering for the future of humankind. So just this is not for our company, for any company, for any society. You mentioned developing countries, the development of a country, you need doctors, you need teachers and you need engineers. Tough not to agree with that. Thank you, Havier, for your time. I really appreciate it. Thank you, Klavier. It was a pleasure. Okay, listeners, that's all for this episode. Thank you very much for listening and I hope you found it insightful. Now, I'd like to send a shout out to the rest of our energy evolution team, including Karen Willenbrecht, Dan Tester, Camilla Nashert, and Christopher Courts, and also a big thank you to our agency partner, the 199 and the commodity insights digital content team. Also, don't forget to subscribe to energy evolution on your favorite podcast platform. And if you have any ideas for podcast themes or guests, please send us an email at energyevolutionatspglobal.com. Until next time, thank you for tuning in.