Global data centre power demand drives hunt for used turbines

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Highlights

Global gas turbine orders have surpassed 100 gigawatts, well above the 60–70 gigawatt annual production capacity, forcing buyers into the tight secondary market.
In the U.S., typical delivery times for new gas turbines now reach six years, and prices for well-maintained used units stand at $1.5–$1.7 million per megawatt versus $2–$2.5 million for new equipment.
U.S. data centre power demand is projected by Jefferies to exceed 17 gigawatts in 2024 and potentially more than triple by 2028, intensifying equipment shortages and fueling price increases.

Turbine shortages reshape data centre sourcing

As reported by Reuters, the rush to build power capacity for AI data centres is forcing buyers to look beyond new equipment and into a tight secondary market for used, refurbished and repurposed turbines. Industry participants say long backlogs for new gas turbines are making mothballed machines and aeroderivative units based on retired jet engines more attractive, even though those alternatives come with operational and maintenance risks.

Wood Mackenzie senior analyst Aurora Tenorio says delivery discussions in the U.S. turbine market are firmly focused on the 2030 to 2031 window. More than a dozen brokers, service firms and suppliers say that timetable is pushing some companies to search for second-hand units rather than wait for new manufacturing slots to open up.

Ana Amicarella, chief executive of equipment services provider EthosEnergy, says the secondary market is currently very active. Still, Enverus Intelligence Research associate Noor Qureshi says it can only partly ease the supply squeeze because excess equipment is limited and other constraints, including air permits and grid access, are also delaying projects.

The imbalance between demand and manufacturing capacity remains severe. Wood Mackenzie says worldwide gas turbine orders now exceed 100 gigawatts, above estimated global production capacity of 60 gigawatts to 70 gigawatts, while Jefferies estimates U.S. data centres alone account for nearly 17 gigawatts of demand this year and that the figure can more than triple by 2028.

Costs and lead times ripple across the power sector

Major manufacturers including Siemens Energy, GE Vernova and Mitsubishi Heavy Industries say the AI boom is pushing orders beyond their production capacity. In the U.S., Tenorio says average delivery times for a gas turbine now reach six years, helping explain why developers are willing to consider older equipment despite uncertain maintenance histories, shorter remaining life and weaker long-term servicing support.

Price differences are also shaping buyer behaviour. According to Origin Partners managing partner Zach Machuca, well-maintained used turbines can sell for about $1.5 million to $1.7 million per megawatt, while refurbished units can cost about $1.3 million per megawatt. Aurora Energy Research estimates new turbines cost about $2 million to $2.5 million per megawatt.

Developers under pressure to secure power quickly are also turning to smaller turbines when larger models are unavailable. Scott Schreeg, director of sales at supplier SVI Bremco, says some sites deploy more than 100 small units and even combine different models and brands at a single location.

The squeeze is affecting utilities and alternative equipment suppliers as well. The Tennessee Valley Authority says prices for all types of equipment, whether new, used or refurbished, have risen significantly over the past two years, while the National Rural Electric Cooperative Association says its members are facing unprecedented lead times and surging prices. Finland's Wartsila says it has booked around 3 gigawatts of orders from U.S. data centres since spring last year for gas-engine power units, underscoring how scarcity in turbines is opening adjacent markets.

In our earlier article on mounting hurdles for U.S. AI data center expansion, we highlighted how rising financing costs, construction delays, and grid limitations are making many planned projects look less credible. We also noted that shifting investor sentiment and cost overruns are increasing pressure on developers to secure dependable power and deliver projects on time.

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