Canadian utilities are seeing longer delivery times, higher costs, and tougher procurement logistics as they scramble to line up new gas turbines to help meet rising electricity demand, The Energy Mix has learned.
The supply bottlenecks trace back to manufacturers that already have orders backed up to 2029 or beyond, but are in no hurry to invest in new production lines that may only be in demand for a few more years, according to news reports from the United States and Europe. Key factors in their business planning include the falling cost and increasing prominence of renewable generation, especially solar and wind, as well as mounting uncertainty over future demand growth from data centres.
In a late February exposé, Heatmap News pointed to the widening gap between the rapid demand growth that utility planners are projecting and the deep challenges in getting turbine supply chains up and running.
“Investors are betting on natural gas,” Heatmap wrote. “Where actually deploying new gas power is concerned, however, there’s a big problem: All major gas turbine manufacturers, slammed by massive order growth, now have backlogs for new turbine deliveries stretching out to 2029 or later.”
While the issue has received little or no attention to date in energy news coverage, “this looming mismatch between gas power demand and turbine supply is a real problem for the grid and everyone who depends on it,” Heatmap warned. “Forget visions of an all-of-the-above energy strategy. How about none of the above?”
The exposé cited GE Vernova, the biggest gas turbine manufacturer in the United States, to illustrate the bigger problem. “Rather than potentially overinvest in the face of rising demand and suffer the consequence of falling prices, GE Vernova and its competitors are committed to capital discipline, lengthening their order book, and defending shareholder value. Their reluctance to invest, while justified in some part by the nature and history of the industry, will threaten policymakers’ push for energy abundance―to say nothing about economic growth or innovation.”