"Siemens Energy to Spend $1 Billion to Boost Manufacturing of Electrical-Grid Equipment" (ENR.de)

From the Wall Street Journal, February 3:

Investments include restarting manufacturing of gas turbines, the monster machines needed to supply reliable power for the AI-data-center boom 

Siemens Energy plans to spend $1 billion to boost its manufacturing of grid and power-generation equipment in the U.S. as demand for electricity soars.

The investments include restarting gas-turbine manufacturing, the key to turning natural gas into electricity, at an existing factory in North Carolina. The turbines are needed to supply reliable power for AI data centers but are in short supply because of the stunning and rapid upswing in power demand.

 

Siemens Energy, along with GE Vernova and Mitsubishi Heavy Industries 

 

is among the big gas-turbine makers that are riding the boom to power artificial intelligence. Orders and prices for the monster machines have soared, but executives in the highly cyclical business have expressed some uncertainty over how long the party will last.

 

The plans announced by Siemens Energy suggest that the cautious optimism continues.

 

Its $1 billion investment also includes a new high-voltage switchgear plant and training center near Jackson, Miss., where Siemens Energy already has a factory, and expansions at existing facilities in Alabama, New York, Texas and Florida. More than 1,500 jobs will be created in all, the company said Tuesday.

 

“It is the hottest electricity market in the world at the moment,” said Christian Bruch, chief executive of Siemens Energy, in an interview. About 60% of the company’s investment will go toward grid equipment such as transformers and switchgear, and 40% will be spent on the gas generation side of the business, he said.

 

“If you look at the U.S. market, everybody talks about data centers’ electricity needs, but we should not forget there is a massive amount of investment required, particularly on the grid side, just for strengthening the grid, the normal utilities business and replacement. There is a need to have more local manufacturing.”

 

It is a big turnaround. Manufacturers across the power industry have had little reason to boost output until recently.

 

Electricity demand was mostly stagnant in the two decades before 2020. Now, it is expected to surge 25% between 2023 and 2030, according to consulting firm ICF, largely thanks to data centers and industrial growth. 

 

The Energy Department and Lawrence Berkeley National Lab expect data centers to consume as much as 12% of the country’s electricity by 2028.

 

Bottlenecks across the power industry—from supply-chain snarls to permitting challenges to delays in connecting to the power grid—are causing headaches for companies that are racing to take advantage of the mania over generative AI.

 

The Siemens Energy transformer factory in North Carolina is a prime example of the demand whiplash. The company had previously halted its gas-turbine manufacturing in Charlotte because of a global slump in demand for large fossil-fuel power plants. Instead, the company serviced and repaired the equipment, and continued to build and service steam turbines. Then AI emerged with its high demand for electricity.

 

About three years ago, the entire industry sold a single gas turbine in one year in the U.S., Bruch said. Last year, Siemens Energy sold 100 of varying sizes....

....MUCH MORE 

 

ENR has been on something of a run, up 49% in the last six months and over 25% year-to-date. The six month picture from TradingView: