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LATITUDE MEDIA COVERING THE NEW FRONTIERS OF THE ENERGY TRANSITION I'm Shail Khan. I lead early-stage investments at Energy Impact Partners. Welcome to Catalyst. So we are in the let a thousand flowers bloom phase of the natural gas generator cycle, or maybe the let a thousand flowers sign POs phase, at least. The major turbine OEMs, G.E. Vranova, Mitsubishi, and Siemens, all remain sold out years into the future. Pricing is holding up, even increasing in some cases from already historic highs. And the rise of behind-the-meter capacity, which is predicated pretty much entirely on getting online faster, has created this window for a bunch of non-traditional solutions to attempt to cram through. It's a super interesting dynamic, so I brought back on Tony Broff, who is the president at Dora Partners and Company, to talk through it. Tony was on the pod. Before talking turbines back in June 2025, which is essentially 100 years ago in this context. He's coming up next. 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From breakthrough startups to global industry leaders, their team brings the expertise, relationships, and track record to accelerate your momentum. Learn more at antennagroup.com. The power plant for the modern grid isn't a building. It's a network. Energy Hub's DERMS platform connects batteries, EVs, thermostats, and commercial and industrial sites into virtual power plants that over 230 utilities dispatch as reliable grid capacity day in, day out. VPPs employ in 60 to 100 days at 40 to 60% less cost than traditional infrastructure, and they perform like conventional generation from day one. Learn about the flexibility platform for the modern grid at energyhub.com. Tony, welcome back. Thank you. I'm happy to be back. All right. So you and I last chatted here, like, over a year ago, between a year and a year and a year ago, there's this emergent but real phenomenon of, you know, the major gas turbine suppliers are all backlogged, and they're sold out through, at that point, it was probably, I don't know, late 2020s or maybe 2030. What are we going to do? So I want to start with an update on that, and then I want to talk about what is happening, given the fact that they, I mean, given the fact that the answer to that is they're even more sold out, and there's even more demand, particularly behind the meters. There's a bunch of other stuff that has emerged in the meantime. But let's start with the big players, GE, Mitsubishi, and Siemens. Where are we now in the turbine backlog? Well, I mean, I look at it from two perspectives. One is order activity, and the other is declared backlog. As you may remember, I think last time I spoke, I predicted we'd have somewhere around 101 gigawatts of order activity in 2026. Right now, I'm tracking the numbers closer to 132 is my projection right now, and I forecast the market with a baseline and an upside and a downside scenario, and we're pretty much running right on the upside scenario that I had predicted, which is around 126. So somewhere between 126 and 132 gigawatts, I expect, will be ordered in 2026. Now, of course, orders turn into back on, which is more direct to your question. And I've been tracking the data, and it looks like GE Vernova's running at about 53 gigawatts of firm orders, but they've got, believe it or not, another approximate 63 gigawatts of slot reservations. So they're the only ones in the market that kind of track firm orders separate from reservations, whether it's money been transferred. And so the number is big. They're well over 100. They're almost at up 120 gigawatts of slot reservations plus firm orders. So it's a pretty substantial number, significantly more than their other two competitors. In fact, they're at about the point of what Siemens Energy and Mitsubishi are added together. So Siemens Energy is around 70 gigawatts of backlog, and Mitsubishi is around 35 gigawatts. That's the best of my reckoning. But there's others that have, I would say, fairly substantial backlogs as well. Yeah, I want to talk about some of those others as well. But before we do, what about timelines? If I go make a slot, if I go place a slot reservation right now for one of the big three, when am I going to get delivery? You're looking at 2030, 2031, 2032. I mean, I have spoken to some OEMs who have told me that some of their product lines are sold out for the next five years. Flat out, sold out. Can't take another order for the next five years on certain product lines. So I think 2030, 2031, and even into 2032, sold out. That's when deliveries are expected. How much are they expanding capacity and when? Yeah, I've actually, I looked a little bit about that ahead of our call, and certainly capacity additions are coming into play. As I think I said the last time we spoke, that I thought that the OEMs would be very responsible in their capital investments, and they wouldn't overbuild. I think that's probably still true. I think they're still weary of a potential AI bubble burst. Well, but that doesn't mean they haven't been investing in and making significant capacity additions. Between now and 2030, I think GE is projected to increase their capacity from about 20 gigawatts to 30 gigawatts. It's a big number. Mitsubishi Power's almost doubling their capacity. Siemens is going from about 16 to 23 gigawatts of capacity per year. But, even some of the smaller players, albeit significant players, are significantly increasing their capacity. Baker Hughes is basically doubling their capacity. Solar Turbine, almost doubling their capacity. Doosan is increasing. Of course, they're new to the marketplace. And then we have some of the other players that we'll talk about later that I think are either increasing capacity or are entering the space and adding capacity to the marketplace. Would it be accurate to say, though, that, I mean, you gave the numbers like GE up in the 20 to 30 gigawatt range, Mitsubishi and Siemens went down in that 10-ish, 10-20 gigawatt range. I mean, is anybody else approaching double-digit gigawatt capacity? Is it still a market where there's like three big players and then a long tail, or is anybody else creeping up on that top tier? No, you're absolutely right. If you look at it from that perspective, between GE, Brnova, Mitsubishi Power, and Siemens Energy, they're all projecting to have capacity by 2030, between 23 and 30 gigawatts per year. Everybody else is five gigawatts or less. Okay, right. So it's still the big three. And then this gets to what's going on in the market, which is even if you take those 2030 numbers, right? So there's three big players, each between 20 and 30 gigawatts. So let's just say 25 on average. That'd be 75 gigawatts total of capacity, amongst the three big players. And worth noting that that is all turbine capacity that goes to the behind-the-meter data center stuff, goes to the grid, and is global, right? That's their global capacity. That's correct. So there's demand all over the place. So then you can contrast that with the numbers that people are throwing around just for data centers, even just in the US, where it approaches those numbers by the end of the decade, if you were to believe the forecasts of how much it's going to build. And you can understand why, you know, that we're in this situation now where basically everybody else in all sorts of different technology categories who uses gas to produce power is trying to expand capacity and enter this market, right? Like the presumption is if the data center boom continues apace, those three players will not nearly be able to meet the need of the market by the end of the decade. I think that's true. I mean, right now I'm tracking data centers alone. By 2030, we'll have a capacity demand of about 160. 150 and 160 gigawatts but they're you know the the hole is being filled by so many different sources uh and we'll talk more about that i assume shale but it it's very strange how it's being filled and uh there there's a lot of interesting dynamics behind behind all of it that i i think is to me is very intriguing and in some cases just not common sense well yeah that's that's what i mostly want to talk about right so this all this is all precursor which is to say that the the big players are sold out they're expanding capacity but not expanding capacity as fast as the market seems to be growing at the moment we talked last time about why that's the logical thing for them to do um and so here comes a whole host of other solutions that want to fill that void let's talk through them i think it's useful to try to categorize them a little bit so that we can put them in buckets so let me attempt to do that and then you can give me your thoughts and you can tell me if the categories that i'm coming up with are wrong but first let's say um it's the smaller players who are nonetheless established and mature and are trying to enter this market so you mentioned solar turbines and folks like that i'm thinking also here of folks like cummins or generac you know folks who've been selling generators but not at that large a scale for a very long time what do you see amongst that crowd i mean that's the that's the thing that intrigues me the most to be honest with you if you look at the amount the number of units under three megawatts that are being purchased for data center activity the numbers are rather incredible uh the sizes i mean there are there are sites that have between five and eight hundred small receipts per site plan i mean the numbers are mind-boggling and from a logistics perspective an absolute nightmare so when i get asked the question you know if they if the bubble pops or if the demand for information assets starts to diminish um for a variety of potential reasons of global recession um data center failures what have you um regulatory issues government or political issues those suppliers those orders for those smallest those all those receipts and those units under three megawatts those orders are going to go away quick there will either be cancellations or they will simply stop ordering those kinds of volumes because it just makes no sense can i attempt to represent the counter-argument there um for why that stuff could make sense in the no matter what the market situation is i'm curious to get your take on it i think it's a couple of things um one is particularly if you're going behind the meter and and trying to use bridge power um where for a period of time you don't have a grid connection and you're just relying almost entirely on your your behind-the-meter generation uh you know i've heard the argument that it is easier if you have a bunch of small modular units you can get your n plus one n plus two reliability more easily that way than if you are you know you have to add in 50 megawatt chunks or whatever it might be if you're buying a big turbine um so i'm curious what you think about that specifically in the bridge power or off-grid theoretically type application well i think that argument is absolutely crazy correct given the current state of the marketplace and the long lead times for for gas turbines and uh and and a potential other larger sources of of energy for for those data centers but what as i said i think when the market eventually diminishes in one way or another those will be the first things that will stop being acquired because we won't have as much behind the meter anymore you mean because this like bridge power off-grid thing goes away well that and it's just the very the very huge logistics nightmare of of hooking all of these you know five six hundred devices up and all having them in sync and operating behind the meter it's a logistics nightmare not including just maintaining all those individual assets i mean it's just a very big headache to manage those many generation assets on any one site okay so and that that's what you think of as being that sort of that category of cummins and generac and so on yeah um and and i guess you said you know sub three megawatts for folks who are not super steeped in this market we should contrast that like what's the size of a typical turbine that you might buy to put behind the meter for example from one of the big three yeah most of the gas turbines that are being purchased right now are around seven megawatts up all the way up to over 100 megawatts um we we know the biggest orders the ones that uh elon musk made you know were those 300 plus megawatt units generally you don't see as many of those but generally the the data centers are are getting gas turbines that are between between seven megawatts and 100 megawatts which is a big range right and seven doesn't sound that different from three but a hundred does obviously yeah that's true that's true if you start to look at it in terms of popular sizes the the biggest popular the biggest popular sizes we're seeing are the 14 to 17 megawatt range uh we're seeing a lot of order activity for those that would be siemens uh energies sgt 400 uh baker hughes's nova lt 16 um i think they're oh and of course uh solar has a titan 130 very popular um those those are attracting a lot of attention then you jump to the next size range which is the 25 to 35 megawatt range those are mostly aero derivatives the uh lm 2500s and the uh uh rolls roy not the rosaries but the uh the siemens sgt a35s things of that nature uh pratt win or um the uh mhi fta uh those are very popular in that size range and then we're starting to see order activity in that 40 plus megawatt range uh for engines like the lm 6000 uh pe 6000 lm 9000 things of that nature for data centers connecting to the grid quickly means two things building 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today their team is working across the most consequential areas of the energy economy from data centers and grid modernization to nuclear geothermal storage critical materials and next generation technologies antenna helps ambitious companies become the names everyone in the market knows trusts and wants to work with they build reputation elevate executives drive demand and turn momentum into market leadership if your company is ready to lead its market antenna is ready to help you get there visit antenna group.com when you harness the power of millions of ders in a vpp and put artificial intelligence behind the dispatch the outcomes exceed conventional generation energy hubs derms platform has been trained on years of real dispatch data from over 2.6 million ders so utilities can plan with confidence that means consistent load reduction across a four-hour event window even during the widest most uncertain peak periods utilities target shape and verify capacity down to the meter unlock flexible capacity that costs 40 to 60 percent less to deploy than traditional infrastructure in a fraction of the time it takes you to break ground on a peaker plant learn more at energyhub.com okay so that's that's the sort of uh resips and income and suppliers but pivoting into this market let's talk about i think there's three other categories that are interesting at least um one is just like de novo turbine manufacturers companies who want to be oems of turbines but they have some typically some novel manufacturing process or some novel design uh and they're going straight after g mitsubishi siemens so example some examples of these that i'll give you and then you can you can give me thoughts on the category of super sonic which is you know sort of taking all the work that they've done to make their super sonic engine and converting it into a new turbine. Parallax is a company that just came out of stealth a few weeks ago, having raised quite a lot of money to build a totally green sheet turbine. There's also a group of companies that I think are doing like supercritical CO2 cycles. And then there are even more, right? There are a bunch of startups that are like, we're building a turbine from scratch. How do you think about that? I would put them in two different categories, Rochelle. The Bloom and the Parallax, I find interesting. I worked for a person a long time ago when I was at General Electric who referred to a gas turbine as a symphony in metal. And it really is a very, very complicated device. And we have seen that Bloom basically lost their largest turbine in the world. And they're now building a new turbine. And they're now building their largest turbine in the world. And I have doubts as to when Parallax's 10-megawatt unit will turn into a real gas turbine. It's very, very difficult to design a gas turbine from the ground up, having never done it before, and then be successful. It could be a 10 to 20-year activity, in all honesty. I have my doubts about those two players and their potential for success. Maybe they'll surprise me, but I think there's a lot of risk there. Now, when it comes to supercritical CO2, I think that's actually a different scenario. And I think it's a very real potential alternative solution to gas turbines. Because now you're looking at basically using steam turbine technology almost, whatever you need to complete the supercritical CO2 cycle for producing electricity. And I think the technology leap for doing that is significantly lower than it is for designing a gas turbine from ground zero. So I think that's a very real potential solution. Now, in terms of having an impact on the market, I think it's a very real potential solution. I think it's a very real potential solution. Now, in terms of having an impact on the market, I think it will have a small impact. But I think that if you're in that, if you're trying to enter that space, I think there's potential for you to be successful. Okay, next category. You mentioned aeroderivatives. There's a sister part of the aeroderivatives market that is pretty interesting, which is people who are not just building aeroderivative engines from scratch, but rather building used jet aircraft and then retrofitting them and turning them into stationary power generation. I think the biggest player, the most well-known in this place, in this market is called FTI. You can explain who they are and what they're doing. But yeah, give me your perspective on the retrofit and a jet engine to use for stationary power. Yeah. And there are multiple new players who are entering that space. FTI is one. There's another company called Nova Power. And I know of at least one to three of them. And I think that's a really good question. And I think that's a really others that are doing this now, or they're just not publicly announced yet. And that whole idea of converting an aerospace engine to an industrial engine, it's actually a very viable opportunity. I think that those players are going to be successful. The most difficult part of, there's only, I'd say, two major challenges. One of them is what you're going to do with the, you know, eliminating the big fan at the front of the engine that's designed to produce thrust. And now you want to produce rotating torque instead. And then the combustion system and how you're going to address that because nobody wants to actually use liquid fuel, which those engines were originally designed to operate from. So I think once you solve those two technical challenges, these are very viable options that I think are going to be very, very successful. Now, who are these people? These are companies that have access to lease assets or can purchase flying assets that will potentially, you know, be kind of going to become made available because they're no longer viable for supporting the aerospace industry, the flying customers. But there's tens of thousands of potential gas turbines that are going to be made available over the coming five to 10 years. So I think that's a very viable solution. Now, there's another category that you alluded to, and that was pro-energy. Pro-energy is a little bit different from those other that we just described because they're basically buying an aerospace engine and only using the external carcass of the gas turbine. And only using the external carcass of the gas turbine. So they're going to be buying an aerospace engine and only using the external carcass of the gas turbine. So that's a very viable solution. Now, virtually every component on the inside of the gas turbine, they've designed from ground up using re-engineering processes to manufacture their own components for the whole internal elements of the gas turbine. And they are clearly having some degree of success with that. So I would put those in, I call it the same family, but different categories of that, the family for aerospace to industrial. Okay. And then last category, which is really an amalgam of a bunch of other stuff, because it's tough to make it just one thing, but it's like novel, more novel, like more different from what we've seen historically. So things you could put in this category, mainspring energy, which is linear generators, fuel cells like Bloom, which has obviously had a big moment of late and other novel gas to power technologies, I guess. How do you think about them? And I guess you could separate them into two categories. Well, I do think there are some, there's certainly some viability to those offerings, but when I run into a similar concern, the same concern that I have for those receipts that I talked about before. Just that the units are small, basically. Yeah. I mean, let me give you an example on the mainspring solution, the linear generator. They're taking 10. Of these linear generators and combining them into a string of 10 for two and a half megawatts. If you look at the space that those that that set is intended to, to require to use, it's like 6000 square feet of ground space for that two and a half megawatts. Well, you could put 30 to 100 megawatts of gas turbines on that same. If I'm going to install behind the meter gas to power technology at one kind or another in at my data center, you know, later this decade, let's say, what should I be expecting to pay? Yeah, I mean, I get that question all the time. So let me give you an example, an example, you know, because a lot of units in that, I'll call it that 20 to 35 megawatt range, those are going anywhere between 1900 and $2,500 per kilowatt. I mean, it wasn't that long ago that the price for those units was down around four or $500 a kilowatt. Now, I think that this whole market activity is actually presenting an opportunity, a long term opportunity for the gas turbine OEMs, because if you look back historically, gas turbine OEMs made most of their money on the aftermarket, and they struggled to make money on the aftermarket. They struggled to make profit on their new unit activity. So it was, you know, build it, sell it, and make most of my money in the aftermarket. Well, we already know that the largest gas turbine OEMs now, they're making more profit on new units than they are on the aftermarket for the first time in the history of the industry. Now, why I say this is a kind of historic situation is because this increased profit. The pricing that we're seeing today, I think is going to come down over time. So if you're seeing prices in the 1900 to $2,200 per kilowatt, eventually, I think those prices are going to settle down around $900 a kilowatt. That's still double what an OEM in that megawatt range was expecting to get five years ago. I think that's actually good for the industry. UNIT ACTIVITY IS GOING TO BE A LONG-TERM viable opportunity for making money and creating opportunity for themselves and these other, I call it offshoot players. Okay. So I guess final question for you. What do you think this market looks like in 2030? So we've still got the three big players. They, in aggregate, can produce 75 gigawatts a year, plus or minus. And then you've got this long list that we've just run through of a whole bunch of other players who, as you said, none are like cresting over five gigawatts. So how does that market work? I think that's why the OEMs are being careful with their capacity additions, because I predict that the market will start to diminish. Probably 2028 and after, you'll start to see the overall market to come down. But I mean, I frequently get asked, you know, what my long-term forecast looks like. And it is a negative trend. But even in my worst case scenario, the 10 years from now, the megawatt order activity is still more than it was in 2023. So I think that the health of the gas turbine industry is going to be very good for the long term, at least for the next 10 plus years. But will there be a reduction? I think there has to be. I mean, renewables are still very strong entering the marketplace. Solar, solar, photovoltaic, the capacity additions every year are an order of magnitude higher than gas turbine additions per year. So we can't ignore the fact that renewables are still the lowest cost source of electricity globally, not just in Asia, not just in Europe, but here in the United States as well. The lowest cost source of electricity is in the United States. The lowest cost source of electricity is in the United States as well. The lowest cost source of electricity. So we can't ignore it. And I think that will eventually result in a diminishing level or trend, I should say, in gas turbine order activity. That doesn't mean it's not going to be a viable market, but I think it will diminish. All right, Tony, this was fun once again. Thank you. Appreciate your time. Great. Thank you very much. Tony Broff is the president at Dora Partners and Company. This show is a production of Latitude Media. You can head over to LatitudeMedia.com. for links to today's topics. This episode is produced by Max Savage-Levinson. Mixing and theme song by Sean Marquand. Anne Bailey edits the video version of the show. Stephen Lacey is our executive editor. All of our episodes are on YouTube. You can subscribe to Latitude Media for episodes of this show and Open Circuit. You can find the audio version of the show anywhere you get your audio podcasts. I'm Shail Khan, and this is Catalyst. you