Full Breakdown
AI Data Center Power Plans Stumble Over Gas Turbine Shortage
8/24/2026, 2:16:51 AM
Turbine Supply Lag Threatens AI Power Expansion
The PJM Interconnection’s capacity auction on July 14 cleared at the $325 per megawatt-day price cap, procuring 138,318 MW of unforced capacity but leaving the grid 6,831 MW below its reliability requirement and adding only 525 MW of new generation. U.S. data-center power demand is projected to rise from 31 GW in 2025 to 66 GW by 2027, about 8.5 % of total summer peak demand. Major gas-turbine manufacturers are booked out for years: GE Vernova’s production schedule, confirmed on its July 22 earnings call, shows a new heavy-duty turbine ordered today will not be delivered until 2031.
Surge in AI Power Needs vs Turbine Production Capacity
Goldman Sachs estimates U.S. data-center capacity additions will accelerate from 8.5 GW in 2024 to 13.6 GW in 2026 and 36.3 GW in 2027. The three leading OEMs reported combined backlogs of 220 GW in Q2, but only a fraction represents firm orders: GE Vernova’s 116 GW backlog comprises 53 GW firm equipment and 63 GW paid-option reservations; Siemens Energy’s 69 GW backlog is entirely firm; Mitsubishi Heavy Industries logged 35 GW of large-frame turbines. Wood Mackenzie places worldwide turbine manufacturing capacity at 60-70 GW per year against roughly 110 GW of orders, meaning annual output cannot meet the 36.3 GW AI-driven demand spike.
Key Numbers
- PJM auction shortfall: 6,831 MW.
- New generation cleared: 525 MW.
- Data-center demand 2027: 36.3 GW.
- GE Vernova backlog: 116 GW (53 GW firm, 63 GW reservations).
- Siemens Energy backlog: 69 GW (firm).
- Mitsubishi Heavy Industries large-frame backlog: 35 GW.
- Global turbine manufacturing capacity: 60-70 GW/yr.
- Projected turbine price by end-2027: $600/kW.
- Average lead time for a new combined-cycle plant: ?5 years.
Official Statements & Responses
- Scott Strazik, CEO of GE Vernova, said the company is taking reservations for 2031 delivery and expects to be “more than halfway contracted” for that year by the end of 2026.
- Christian Bruch, CEO of Siemens Energy, noted an addressable market that could reach 120 GW per year, roughly half in the United States.
- Jeanne Jones, CFO of Exelon, stated the company now “weeds out speculative projects,” emphasizing tighter scrutiny of data-center load forecasts.
Conflicting Reports & Gaps
Sources differ on how each OEM defines “backlog.” GE Vernova’s 116 GW figure mixes firm equipment (53 GW) with paid-option reservations (63 GW); Siemens reports a pure firm backlog of 69 GW; Mitsubishi’s 35 GW count excludes aeroderivative and mid-size turbines. These divergent accounting methods make it difficult to aggregate a single, comparable industry-wide backlog number. While Goldman Sachs projects 36.3 GW of data-center demand for 2027, Wood Mackenzie’s capacity estimate of 20 GW annual turbine output suggests a persistent supply-demand gap that cannot be resolved within the next three-year horizon.
What’s Next
PJM has proposed a one-time Reliability Backstop Procurement targeting roughly 14.9 GW of new capacity, with bilateral contracts beginning in September and a pay-as-bid auction slated for the following March. The Texas audit is expected to run several months, with its scope and timing to be presented at a forthcoming Public Utility Commission meeting.
