AI - The AI Supply Chain - Part 3 - Data Center Turbines

Powering AI - The Role of Gas Turbines in the Energy Supply Chain

In the previous post, we explored the explosive growth of data centers driven by the rise of AI, and the corresponding surge in energy demands. Operators and stakeholders across the AI ecosystem recognize the urgency of scaling power infrastructure, not just to meet current needs, but to do so in a cost-effective and sustainable way.

Three key areas of innovation are being explored:

Nuclear Energy – especially the use of Small Modular Reactors (SMRs).
Renewables – like solar and wind, paired with long-duration thermal energy storage.
Gas Power – currently the most viable bridge solution.

While SMRs and thermal battery systems show great promise, they are still maturing and unlikely to become primary power sources for hyperscale data centers in the immediate future. In the near term, natural gas power is poised to fill the gap.

Natural gas is generally considered a cleaner alternative to coal. It produces significantly less CO₂ and other pollutants, offers higher fuel-to-electricity efficiency, and emits fewer harmful byproducts. The U.S. is well-positioned to benefit from this shift thanks to its extensive natural gas infrastructure, making it a cost-effective choice.

However, the global landscape is more nuanced. Countries like China, rapidly expanding their AI capabilities, continue to rely heavily on coal, which accounts for over 55%+ of their energy mix. Several factors drive this dependency: long lead times to scale nuclear power, the same lead time on the development of developing longer energy storage for renewables, decentralized energy decisions made at the provincial level, and concerns over energy security, such as the “Malacca Dilemma” associated with reliance on energy imports. As a result, China is expected to remain one of the world's largest contributors to global emissions in the near term due to the widespread usage of coal power.

Immediate Energy Focus - Gas Turbines in the Power Supply Chain

This article now shifts focus to a critical component of gas-powered data center AI supply chain: the turbine.

Gas turbines are the equipment that convert natural gas into usable electricity. Many hyperscale data center operators are now investing in on-site gas power plants, installing dedicated turbines directly adjacent to their facilities. This not only ensures reliable energy supply but also allows for closer control over energy efficiency and resilience.

In the next section, we’ll break down how turbine technology works, explore leading manufacturers, and examine how this trend is shaping the future of AI infrastructure.

How a Gas Turbine Works

A gas turbine is a type of internal combustion engine that converts the chemical energy in fuel into mechanical energy, which can then be converted into electricity. It operates in three main stages:

Air Intake and Compression - Ambient air is drawn into the turbine and compressed by a series of rotating blades. This compression significantly increases the air pressure, which is critical for efficient combustion.
Combustion
1. The compressed air is mixed with natural gas (or another fuel as an emergency backup) and ignited in the combustion chamber.
2. This process produces a high-temperature, high-pressure stream of expanding gases.
Power Generation (Expansion and Turbine Rotation) - The expanding gases rush through a turbine section, causing it to spin. This mechanical energy drives a generator to produce electricity.

The Combined-Cycle Power Plant

Combined-cycle plants maximize efficiency by capturing and reusing waste heat. After a gas turbine generates electricity, its hot exhaust is directed to a Heat Recovery Steam Generator (HRSG). The HRSG uses this exhaust heat to produce steam, which then powers a secondary steam turbine, generating additional electricity that would otherwise be lost through the exhaust stack.

Leading Gas Turbine Vendors Powering Data Centers

Three dominant manufacturers lead the global gas turbine market, known for producing high-quality, high-efficiency turbines that serve both industrial and data center-scale power needs:

GE Vernova (Greenville, SC)

GE Vernova is a global leader in gas turbine technology, offering a wide range of turbines that scale from mobile and modular units like the TM2500 to high-performance industrial giants like the 7HA and 9HA series. These larger models deliver output in the hundreds of megawatts, making them suitable for utility-scale and hyperscaler data center campuses.

Mitsubishi Heavy Industries (MHI)

Through its energy-focused subsidiary Mitsubishi Power, MHI offers a comprehensive lineup of gas turbines, including the compact M25 series and the powerful M701 series. Like GE’s HA models, these turbines can produce hundreds of megawatts and are frequently deployed in combined-cycle configurations for maximum efficiency.

Siemens Energy

Siemens Energy is another global powerhouse in the gas turbine industry. Its portfolio spans from the compact A05 series to the large-scale, high-efficiency 9000HL series, capable of supporting extensive industrial and power grid demands.

Notable Emerging Players: China

In addition to these global leaders, several Chinese companies are gaining momentum in the gas turbine market, particularly for domestic infrastructure:

Nanjing Turbine & Electric Machinery (Group) Co., Ltd.
Shanghai Electric Group Co., Ltd.
Dongfang Electric Corporation Limited

Gas Turbine Manufacturers: Fiscal Discipline and Supply Chain Challenges

In response to the sharp rise in demand for gas turbines, top manufacturers have announced that they will scale production only to a certain limit and avoid expanding beyond that threshold. This is dragging gas turbine lead times out 7 to 8 years. This deliberate production cap reflects fiscal discipline, allowing turbine manufacturers to avoid overcommitting as disruptive energy alternatives, such as nuclear power, renewables paired with thermal batteries, and energy-efficient AI models like China’s DeepSeek, begin to challenge the long-term dominance of gas-powered solutions.

A critical supply chain constraint lies in the production of compressor and, turbine blades, which require precision manufacturing using specialized metals such as nickel-based superalloys. This underscores the strategic importance of rare earth elements and industrial metals. Although the U.S. holds significant nickel reserves, domestic mining remains underutilized due to regulatory and environmental challenges.

This deliberate production cap not only manages long-term risk but also creates scarcity, enabling turbine vendors to charge a premium and prioritize preferred buyers. Despite the gas turbine delivery delays, many data centers will continue to rely on gas turbines as their primary energy supply over the next few years. Utilities supporting these facilities are also expected to maintain and expand their gas turbine capacity to meet growing demand. A recent example: a joint venture between Engine No. 1, Chevron, and Crusoe AI successfully jumped to the top of GE Vernova’s turbine procurement queue. They secured multiple gas turbines to power dedicated data center infrastructure across the U.S., illustrating how strategic alignment and capital investment can influence access to limited turbine supply.