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Data Centers fueling gas turbine sales [1]

['J Andrew Besner']

Date: 2024-07-24 18:53:10+00:00

There have been tough years for the natural gas generation business. So much so thar the big three gas turbine manufacturers are more committed to renewable energy and non-gas-based products and services than gas turbine power.

But a savior may have emerged thanks to the Artificial Intelligence (AI) market’s need for huge numbers of power-guzzling data centers. Gas turbine and energy OEMs are gearing up to serve this market. Rich Voorberg, President of Siemens Energy in North America, says his company has expanded its Charlotte facility to cope with the explosive growth in demand so the electrical grid can handle the influx of renewables coming online.

The exponential growth of data centers is due to the proliferation of artificial intelligence tools and applications, and electrification of industry. AI demands colossal amounts of processing power. This is being answered by specialized processors known as Graphical Processing Units (GPUs) that consume more power than traditional CPUs. Data centers can pack more GPUs and higher-powered CPUs into tinier and tinier spaces. The average size of data center racks has risen from 2 to 3 kW per rack to about 15 kW per rack. Those on the cutting edge have racks of 50 kW and a few are above 100 kW. That amount of power increase far exceeds the capabilities of most utilities.

A report on the AI boom by Tudor, Pickering, Holt & Co., an investment bank, found that U.S. data centers will need another 31 GW of electricity by 2030. If provided by gas turbine power plants, this equates to an additional 8.5 billion cubic feet per day (CFD) of natural gas.

Vlad Galabov, head of the analyst firm Omdia’s data center, expects AI software will top $100 billion in annual revenue by the end of 2024. Generative AI services such as ChatGPT are experiencing the highest growth. One million servers will be deployed by the end of 2024 for GenAI, he estimates. Fueled by AI demand, the installed power capacity of data centers is predicted to double between 2014 and 2030,” said Galabov. “By that time, it will reach nearly 170 GW, of which nearly half will be for AI.”

Other industry experts agree with these predictions. Kinder Morgan said in a recent earnings report that, “the future looks very bright for our Natural Gas Pipelines business segment,” and it expects substantial growth in demand in the US with LNG exports doubling over the next few years. U.S. regulators forecasting flat U.S. electricity demand for decades now predict a major rise in peak power demand. As much as 2,600 GW of generation and storage capacity projects are already in the U.S. grid interconnection queue.

While a lot of this is solar and battery storage, the current system can’t cope with demand. Hence, many are looking at natural gas generation – whether mobile trailer, onsite combined heat and power (CHP) or peaking plants. Most of the big metro areas in places like DC, Silicon Valley and elsewhere are starved for power.

Data center power consumption will expand from around 2% of U.S. electricity today to 7.5% by 2030. That poses a big challenge – the grid just doesn’t have it. “The available power capacity in the top five data center markets between now and 2027 is only 4 GW,” said Ali Fenn, President of data center firm Lancium.

“As much as 50 GW may be needed within a few years, which is almost as much as is currently consumed by the entirety of the Mid Atlantic and New England states.” Any available and planned power is earmarked for residential and industrial uses. Even where there is a willingness to bring on more generation capacity, timelines work against data center expansion. It can take many years for new projects to move through planning, approval, permitting and construction. Hence, data centers are demanding more power for their facilities that simply isn’t there in many regions.

Expect a boom, therefore, in all forms of gas generation. The coming year should see far more new gas turbine projects under development, reversing a slow downward trend. Trailer-mounted turbines from Solar Turbines, APR Energy, Dynamis Power Solutions, Relevant Power and the big three will be in heavy demand. They can be delivered onsite, emplaced up and running in a few weeks to deliver from 5MW to almost 50MW.

Bottom line: the low emissions targets set in recent years, and the priority given to sustainability, will be trumped by insatiable demand for more power. That power must come from many sources: wind, solar, batteries, hydrogen, geothermal, nuclear – and natural gas.

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[1] Url: https://gasturbineworld.com/data-centers-fueling-gas-turbine-sales/

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