Wedoany.com Report-Oct 23, Mitsubishi Power Ltd. sees the world ordering 50% more gas turbines annually through 2026, compared with the past three years, driven in part by data center growth.

Globally, there will be 60 gigawatts worth of equipment orders every year from 2024 through 2026, up from an average annual capacity of 40 gigawatts sold between 2021 and 2023, said Takao Tsukui, executive vice president of international sales at Mitsubishi Power, the world’s top supplier of gas turbines.

The speed at which data centers powering artificial intelligence are being rolled out “is much more than what we expected and that’s driving a certain percentage of this growth,” he said in an interview on Tuesday.

Rising equipment orders underscore strong global demand for gas, which, according to the International Energy Agency, is set to hit a record high next year, with Asia being the main driver. Even as the world boosts renewables capacity, the need for storage systems and power grid upgrades means some investors remain interested in gas as a transition fuel, despite it being a heavy emitter.

However, data centers are seen accounting for a “relatively small share of overall electricity demand growth to 2030” and currently account for “1% to 1.3% of total electricity consumption”, the IEA said in its World Energy Outlook 2024 published this month.

While demand for turbines beyond 2026 is unclear, there is “good potential that gas will continue to grow,” Tsukui said. There are challenges in terms of funding projects globally as inflation lingers, especially in Asia, but no projects have been stopped purely due to financing reasons so far, he added.

“I’m super bullish on gas turbines because you haven’t really had an investment cycle for 20 years,” said Per Lekander, founder of the $2.7 billion London-based hedge fund Clean Energy Transition LLP. “In winter, you have poor solar production and higher consumption, so you need something which can produce when the wind doesn’t blow and sun doesn’t shine, and that’s when gas comes in.”