The global waiting list for heavy-duty gas turbines has stretched to the end of the decade.
Manufacturers are warning clients that it could take seven or eight years for final delivery.
You can jump the queue for a fee. One customer reportedly paid manufacturer GE Vernova $25m (£19m) to lock in a slot for 2030.
John Ketchum from NextEra Energy says it cost $785 per kilowatt to build his last gas-fired combined cycle unit in 2022. Today it would be $2,400 per kilowatt.
“The cost of gas-fired generation has gone up threefold,” he told the CERAWeek energy forum in Houston.
Rystad Energy said it could rise to $4,000 per kilowatt before choking demand.
The turbine rush is a cocktail of data centres, semiconductor fabs, air conditioners, the electrification of everything and booming orders from Saudi Arabia, which is switching from oil to gas-powered plants.
The shortage is hitting just as old gas fleets in the United States and Europe near obsolescence.
The Institute for Energy Economics and Financial Analysis says the production capacity of big combined-cycle gas turbines (CCGT) worldwide is 30 gigawatts a year.
Orders reached 80 gigawatts last year. They are expected to surpass 100 gigawatts in 2027.
“The time to get your hands on a gas turbine has increased exponentially,” said Ketchum.
Hyperscalers in a hurry are turning to old aircraft turbines to power data centres.
The US company ProEnergy can offer you the converted core of a CF6-80C2 engine from a mothballed Airbus or Boeing jet. It is an expensive bridging solution until the turbine backlog has cleared.
Three companies account for 90pc of the world market for utility-scale gas turbines: Germany’s Siemens Energy, America’s GE Vernova and Japan’s Mitsubishi Heavy Industries. They have expansion plans, but have been burned before by boom-bust cycles.
Scott Strazik, GE Vernova’s chief executive, told shareholders that rapid expansion could prove treacherous if the AI boom falters. Better to enjoy “premium pricing” than to go for volume.
A cosy triopoly? Heaven forfend.
The Koreans and Chinese have only just begun to crack the technology after years of trying.
The metallurgy is extremely sophisticated. These CCGT plants are super-efficient marvels of engineering, but their metal alloys have to withstand temperatures well over 1,500 degrees centigrade.
They also share the same supply chain as aerospace, defence and semiconductors, which are also in a ferment of expansion.
Rystad said the cost of ferro-chrome and specialised alloys such as Inconel 718 has exploded.
There is a shortage of Yttria-stabilised zirconia (YSZ) required for thermal barrier coatings in both gas turbines and jet engines, and yttrium is 90pc controlled by China.
Even if Britain were able to extract much more gas from the North Sea at a globally viable cost – which it cannot because the field is heavily depleted – it would have to pay an arm and a leg to get anybody to build a new fleet of CCGT gas plants.
The existing fleet mostly dates back to the “dash for gas” in the 1990s. These old dogs cannot go forever.
With surreal timing, the Conservative Party has chosen this moment to tell us that it intends to lower electricity bills in the UK by doubling down on gas. It would scrap the next auction of offshore wind before we even know what the bids are.
“If you look at gas, without a carbon tax at the moment, it’s £55 a megawatt hour,” said Claire Coutinho, the shadow energy secretary.
“Ed [Miliband] has said he’s willing to pay up to £117 for offshore wind on a 20-year fixed contract,” she told the BBC.
Coutinho commits the same sin as the green lobby that she often attacks. She mixes apples and oranges. She cherry picks variables and wishes away the “whole system” cost of gas power.
Before I bore you with figures, let me separate the economics of this from the separate Tory retreat from net zero and its historic leadership on climate policy.
The Tony Blair Institute (TBI) said in a report that Labour’s rush to Clean Power by 2030 is overloading the supply chain, driving up costs, running ahead of the grid and has allowed rent-seeking vested interests to block cheaper zonal pricing. I agree entirely.
It leaves us hostage to price-gouging at every renewable auction by utilities who know that Miliband badly needs bidders to turn up. It obsesses over just 11.5pc of UK emissions, neglecting a forest of low-hanging fruit among the other 88.5pc.
Renewable power is competitive until the last mile. “The costs go exponential once you reach 85pc or 90pc,” said energy guru Michael Liebreich. It is better to leave that alone until new technology comes to the rescue.
The TBI says Miliband has lost sight of the critical imperative. The purest way to accelerate the switch from fossil energy to electrification – and keep voters on side while doing it – is to drive down the cost of electricity.
So stop piling levies on electricity bills.
The current policy has clearly failed. The TBI says electricity accounts for just 20.7pc of final energy use in the UK, compared to France (25.1pc), Portugal (26.7pc) China (29.7pc) or Norway (46.5pc).
Even countries in Southeast Asia may soon leapfrog ahead of us.
In my view, there is a reasonable case for amending the Climate Change Act.
It opens the door to militant lawfare by agitators and leads to atrocities such as the subsidised import of wood from virgin forests in Canada in the name of climate policy. It has led to the UK paying BP through the nose to capture CO2 from a gas-power plant in Teesside.
But it is one thing for the Tories to call for a common sense reset. It is another to chase Reform UK into the Trumpian swamps of the culture war. The TBI report makes clear that we are moving into a global economic age of electrons. It would be utterly fatal for the UK to remain stuck in a molecular time-warp.
Coutinho’s “£55 a megawatt hour” is chiefly for fuel: either shipments of liquefied natural gas from Texas or Qatar – or pipeline gas from Norway, both constantly bleeding wealth out of the British economy.
Simon Evans from Carbon Brief said the figure jumps to £120 once you include the capital cost of a new plant and adjust for the year-round price of gas. It reaches £145 with the carbon price.
The Tories vow to suspend the carbon price. They need to explain how that can be squared with post-Brexit trade.
If the UK acts unilaterally, British companies will face a carbon border tax and a red-tape nightmare trying to export goods to the EU.
We do not know the strike price of the latest Allocation Round 7 offshore wind auction. The ceiling was £113 in 2024 money – or £81 under the old 2012 regime – but the final price may be substantially lower.
Donald Trump’s war on offshore wind helps. It frees up scarce global kit and drives refugee companies back into our arms.
There are other system costs for wind. You need to replicate inertia for stability. You have to upgrade the old grid, though you have to do a lot of that, whatever the source of power. You need backup for renewables and blackout insurance against three weeks of Dunkelflaute in mid-winter. You need electricity storage – but the cost of that is falling fast.
Electric vehicles will themselves become a vast battery network to flatten peak hours. Once you mix all the variables, technologies, and costs into the blender, gas-based power is not cheaper today and will be even less competitive in the early 2030s.
The calculus is different for the US. Shale geology is richer. Gas is a third of the price. But new projects are struggling to compete even there.
NextEnergy’s Ketchum, who builds gas plants for a living, says wind and solar will run away with the lion’s share of market expansion over the next five years in the US. “They are cheaper and available right now,” he said.
The TBI has some pointed words for those tempted by fossil nostalgia. “The UK’s direction must be clear. Clean electricity is the future of UK energy – for the climate, for national security and for long-term economic strength,” it said.
“Those arguing otherwise are proposing a path that is more costly, less secure and not grounded in physical realities.”
The Tories would do well to heed the advice if they want to save what remains of their credibility.
