Catalyst with Shayle Kann - The gas turbine crunch

Episode Date: December 26, 2025

Demand for turbines is growing fast, but so are lead times — causing serious headaches for developers and even cancellations. In Texas, one of six cancelled projects cited “equipment procurement constraints” as the reasons for its withdrawal.  Lead times are stretching to four years and sometimes more. Costs are climbing. So what’s behind the bottleneck? In this episode, Shayle talks to Anthony Brough, founder and CEO of Dora Partners, a consulting firm focused on the turbine market. Shayle and Anthony cover topics like:  Why previous boom-bust cycles in turbine manufacturing have left the industry skittish — and why Anthony says leaders are approaching this new peak with “guarded optimism” The competing demands on the turbine supply chain, including from power, oil and gas, and aerospace industries How lead times have ballooned to four years and, in some cases, even longer Factors affecting the market beyond load growth, like renewables, storage, affordable gas, and coal retirements How investment in tech innovation has raised turbine efficiency  How the industry is preparing for hydrogen — if hydrogen scales up Resources: Latitude Media: Engie’s pulled project highlights the worsening economics of gas Latitude Media: High costs, delays prompt withdrawal of five more Texas gas plants Power Magazine: Gas Power's Boom Sparks a Turbine Supply Crunch Marketplace: Will we have enough natural gas turbines to power AI data centers? CTVC: 🌎 Gas turbine gridlock #236 Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor. Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com. Catalyst is brought to you by Bloom Energy. AI data centers can’t wait years for grid power—and with Bloom Energy’s fuel cells, they don’t have to. Bloom Energy delivers affordable, always-on, ultra-reliable onsite power, built for chipmakers, hyperscalers, and data center leaders looking to power their operations at AI speed. Learn more by visiting BloomEnergy.com. Catalyst is supported by Third Way. Third Way’s new PACE study surveyed over 200 clean energy professionals to pinpoint the non-cost barriers delaying clean energy deployment today and offers practical solutions to help get projects over the finish line. Read Third Way's full report, and learn more about their PACE initiative, at www.thirdway.org/pace.

Hey, everybody, this is Shale. Happy holidays. This week, we are re-releasing a podcast that we recorded earlier this year on the gas turbine crunch. I will say that since that episode has been released, the crunch has gotten even crunchier, and the big turbine OEMs are just as sold out as they were before, perhaps even more so. And you've seen lots and lots of more announcements of purchases and long lead times for all sorts of different kinds of gas turbines. We're getting broader and broader. Arrow derivatives are becoming a thing. Boom, Supersonic has pivoted a little bit from building supersonic jet engines to jet engines that can be repurposed for data centers. So it's just as important as it was months ago. And I thought it was a really good conversation because people don't really understand and appreciate how the gas turbine supply chain works. With no further ado, here's our episode from earlier this year. Latitude Media covering the new frontiers of the energy transition. I'm Shail Khan, and This is Catalyst.

What's your outlook on timelines? Do you think that the lead times just get longer and longer and longer? Are we at the peak there? It's going to get worse. Do we know? A good question. I actually don't think they're going to get much worse. I think all of the OEMs are working like crazy to try and shorten up their lead times

or at least make sure they don't get worse. Coming up, it's due time we talk about the gas turbine market. When utilities need flexible capacity they can count on, they turn. to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at

energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy, and building the clean economy. Tune in as we unpack how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR. An award-winning PR firm focused on climate and energy tech, renewables, and sustainability.

Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like fish tank PR. To learn more about Fish Tank's approach, visit fish tankpr.com. That's F-I-S-C-H-F-T-T-T-T-R. I'm Shail Khan. I invest in early stage technologies at energy impact partners. Welcome. So it's a good time to be in the gas turbine business. Between the relaxation of emissions constraints and the rapid load growth that we've discussed innumerable times on this podcast

before, perhaps the biggest winners are the companies like Mitsubishi, Siemens and GE Vernova who make turbines. Of course, one result of that is that they're pretty well sold out, and they have a lot of pricing power. So it's an interesting moment where momentum is clearly flowing toward natural gas power generation, but it's also actually pretty difficult to build any more of it, especially in the near term. Anyway, it's a really interesting market and one we haven't really talked about here. So let's fix that. To rectify the situation, I brought on Tony Brough. Tony is the president of Dora Partners, which is an energy and gas consultancy specializing in what's going on with the gas turbine industry. Here's Tony.

Tony, welcome. Thank you. Glad to be here. I want to start by you giving me a little bit of a recent history lesson on the gas turbine market. How has it been developing over the past? I don't know, you tell me what the relevant time frame is, but a couple of decades. That's a good question. I mean, there's been a lot of dynamic change over the last few decades. I mean, it used to be in the 70s and 80s.

There were pretty much just two major OEMs, you know, General Electric. and even Westinghouse at the time, now owned by Siemens. But really, the number of OEMs have gravitated towards three major OEMs, MHA MINOWS-M-H-I-Mitsubishi Heavy Industries, Siemens, and General Electric, or now it's G.E. Vernova. There are other strong players in the market. For example, solar gas turbines, a division of Caterpillar, is a significant player in the small gas turbine market.

So how has it changed? So how has it changed? It's really evolved, not just in terms of the OEMs, but also there's been, you know, several, I'll call them bubble periods. You know, there was a big bubble period in 1998, 1999 through 2001, and then the market basically fell off a cliff. And it slowly built back up to a really good set of years back in 2012. And then it kind of fell off again. And now we're kind of at another peak, but I would call today's, speak more of a real market-driven, realistic set of scenarios that's driving the market today. That's interesting that you say that. I mean, because I knew it was characterized historically by these sort of boom-and-bust cycles. And I think we've seen this in other sectors in the electricity market as well. We've talked before on this podcast about Transformers, for example, where you have these very long lead times. And one of the reasons that there are still such long lead times is that transformer manufacturers have gotten burned in the past by building out more capacity.

and being oversupplied into a market that turned out to bust. And I had a sense that there's kind of a similar dynamic in the turbine world. But it sounds like you're saying this one seems like it's different. What drove those bubbles that then burst in recent history in the market? Was it over-exuberance about new gas generation build that just didn't come to fruition or something else? No, actually there's actually several different dynamics, and that's a really good question. If you go back to that first big bubble back in 98 through 2001, that was really being driven by an artificial demand created by Enron.

I mean, they clearly were sending artificial signals to the marketplace that were driving up the cost of electricity significantly in several regions of the country, California, Texas, and other areas. And that was also right around the same time that deregulation. was coming into play. So those two factors created a lot of panic in the marketplace. And keep in mind, large utilities in the 60s and 70s, everything was regulated. So they were pretty much just, they only built when they could get the public utility

regulators to approve investment. But as deregulation came into play, deregulation came into play, everybody was very, just basically learning, okay, how do we make money now that there's regulated, deregulated, and semi-regulated markets to deal with across the country and even to a degree in areas outside the country in Europe and Asia, for example. So, and then the Enron thing just created a significant, I would say, artificial signal to the marketplace. So those two factors really drove a bubble in the market and a little bit of it was unreal.

I would say at least half of the volume was artificial. Maybe to put a finer point on that then, because this ties to both the deregulation and Enron, which obviously are tied to each other, but is what was happening there a lot of speculative development of what would be merchant gas projects that never came to fruition?

I want to draw that distinction because what's interesting about today's moment is that like, you know, you, I don't know, I don't think there is a lot of new merchant gas being developed. Mostly what's happening is it's at the utilities saying we need it for, because we need more capacity, or it's data centers and they'll be the long-term offtake on the project. So you're actually not like subject to the merchant risk. You are subject to the, will this data center ever get built risk, which is kind of a different thing.

Well, that's true. But most of that activity was not merchant. Well, there were IPPs. There were a lot of IPPs and independent power producers that were speculating without a doubt. But, you know, there were a lot of orders that were canceled even by large regulated and semi-regulated utilities like Southern Electric. You know, they had a huge set of orders, and a lot of that stuff had to get either canceled or bought and then resold on the marketplace. It was a real disaster for. for everybody when the bubble burst.

So we'll get into the market today in a little bit more detail, but do you think that there is, given that history, given that there is some boom and busts and some cycles that the market has gone through, does that lead to a more conservative approach from, as you said, basically the three big OEMs that control, what, 70% of the market or something like that, to expand capacity? Or do you think that they share the view that you expressed, which is actually this one's real, I'm not too worried about being overextended if I

expand capacity now, I'm sold out through whatever it is, 2029, 2030, and so I should just build as much as I possibly can. Like, where do you think they are on the spectrum? Yeah. Well, I think there's guarded optimism. Very guarded optimism. I mean, certainly all of the OEMs

are investing in the future for new production capabilities, particularly Siemens and General Electric, or GE Verno, I should say. The other thing to keep in mind is about half of the gas turbines that's ordered in the marketplace aren't even for the electric power utility market. They're for the oil and gas market. And so all of the supply chain that's feeding those three OEMs and others are also competing for supply chain resources

going into the oil and gas market. And some of those OEMs are also delivering into the oil and gas market. So there's a lot of interesting dynamics going on, and it's important to look beyond just the power generation or the utility sector when you think about what's happening in the marketplace. Yeah, can you say more about that? I think that's one thing people don't always appreciate it on the outside. What is that supply chain look like in what are the big categories of sort of end markets that these products get sold into? Right. Well, that's a great question. I have, basically, I described the supply chain for the gas turbine industry in four different levels. I call level zero is raw materials. So, you know, you talked about transformers. Well, copper is clearly a big raw material when it comes to transformers. But for gas turbines, it's the superalloys, nickel-based alloys, chromium, all those other expensive key ingredients. titanium, all those things that are involved in the raw materials for gas turbines.

That's what I call level zero. Level one is actually manufacturing the raw pieces of product. For example, blades and veins and things of that nature that are being cast or forged. Level two is where they're actually manufacturing the gas turbine from all those components that were developed on level one. So that's where the OEMs are producing a, you know, what I call flange-to-flange gas turbine. And then level three, which is the fourth level,

is where it all gets put together into a final package and delivered to an operator's site, installed, commission, after-market activities, all that sort of thing. So all of those. And then when you keep in mind, levels zero and level one are also being impacted by the aerospace industry. You know, there's something like 40,000 aircraft in backlog right now in the world. Well, guess what? All of the same level zero material suppliers and all the level one forgers and casting shops,

and things of that nature in what I call level one, they're all supporting the aerospace industry at the same time. So you can't look in isolation at the electric power utility market for gas turbines in isolation because you have to consider what's happening in the aerospace industry and what's happening in the power and the oil and gas industry because, as I said, 50% of the industrial gas turbines that are, delivered in any given year approximately, aren't even for the electric power utility sector, they're for the oil and gas sector.

And in terms of the market dynamics today, I guess, obviously we have this booming demand for gas turbines in the electric sector, whether on-grid or off-grid, some people are doing gas turbines for bridge power, for data centers, or whatever, but let's call that all in the electric sector, ultimately. I agree. Is the demand, I mean, oil and gas prices are low right now? Does that mean that there's low investment on that side? And so most of the demand is shifting to electric power generation, or is that not sort of how the cycle works on the oil and gas side? Well, you know, that's a great question, Shail. The good news is for those that are involved in oil and gas industry is by and large, most of the large oil and gas players have long-term thinking in mind. So they're making five, seven, and ten year strategy developments for strategy.

Now, well, in any one year they might reduce their order activity because the oil and gas prices are down. Absolutely, that's correct. But in the long run, oil and gas companies basically stick to a strategy that, an investment strategy, that keeps them investing. And typically what we see are what I call seven-year cycles in the oil and gas industry. It'll go up, peak at about year seven, and then come back down, slowly come back down, and then go back up again on another seven-year cycle. And it's all driven by upstream activity for development of oil and gas, midstream for transmission, and then downstream where you have a lot of LNG,

refinery activity, all that sort of stuff. and all those things are somewhat independent of each other. So it does level out the market for the oil and gas industry a little bit, which means that the investment stays. And when you look at the midstream oil and gas market, most of the players midstream, they're making their money not on the price of oil and gas, but on transmission of oil and gas. So they're very much, I don't like to use the word immune,

but the sensitivity to the price of oil and gas is really low. They're still going to make money because everybody's still using the oil and gas, albeit maybe at a lower price, but their taxing fee for moving the oil and the gas through the pipelines is still pretty robust and they're making their money. So they're investing. Virtual power plants are becoming a reliable way for utilities to manage capacity. But enrolling devices is just the start. What really matters is confidence, knowing those

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Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made.

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Fish Tank can help. Check out Fish TankPR.com. That's F-I-S-C-H-Fish-Tankpr.com. I want to talk about, I guess, two primary things with gas turbines in the market, particularly for electricity generation, which is where I spend a lot of time right now. One is timeline and the other is price, right? And so, you know, we hear a lot right now in the news about both of those things. On the timeline side, you know, we hear about folks like G.E.

Renova being sold out through 2029 with an order book behind that that sort of, you know, they can sell as much as they can build, at least at the moment, it seems. And then on price, you know, I don't have visibility into the actual market pricing, but one interesting data point that you might have seen recently was, I think it was John Ketchum or somebody from Nextera said, you know, a decade ago, I could have. have built a new natural gas project for like 750 bucks a kilowatt. I think I'm going to get the numbers close, but not exactly right. And today it would cost me $2,500 a kilowatt. I don't know how much of that is the turbine itself. But I'm interested in the relationship between how long it takes

to get new turbines and how expensive they are becoming. Yeah, good question. And that $750 was for a combined cycle plan. And I think the $2,500 is a bit aggressive. But it's definitely up around 30 to 35 percent over the last five years. The price is definitely up. I track all of that very closely. And is it purely a supply demand thing? Yes and no. Again, raw materials at level zero,

raw materials are up everywhere. Even before all of the tariffs come into place, you were seeing demand on aluminum, nickel-based alloys, titanium, all of these things are all interrelated. Again, I'm coming back to the aerospace industry. When you've got the aerospace industry, you know, ordering 40,000 aircraft, that's at least 80,000 gas turbines. So, you know, and they're all drinking from the same supply chain,

so for the most part. So, no, it's not just supply and demand. It's also being driven from, well, it's, of course, supply and demand. and demand is related to the cost of raw materials. So I don't want to discount that. But certainly raw materials is a big part of it. And if you look at some of the U.S. government's tracking of producer price indices on all of these different elements,

you'll see a pretty significant bump in the last three years that is very indicative of what you and I are just talking about. What's your outlook on timelines? Do you think that the lead times just get longer and longer and longer? for a while? Where are we in the cycle of like the lead times have been getting longer? Are we at the peak there? Is it going to turn back the other direction? Is it going to get worse? Do we know? The good question. I actually don't think they're going to get much worse. I think all of the OEMs are, in fact, I know all the OEMs are working like crazy to try and

shorten up their lead times or at least make sure they don't get worse. And part of the reason why is that customers are eventually just going to get weary and say, okay, we're just going to put things off because they're, you know, as it is, they're putting down 15, 20, 25% non-refundable deposits. I mean, all of those things are very painful for customers. And these OEMs have been living through these things, these busts and booms before. And they don't want to upset their customers too much. So they're all working hard to at least flatten out the timeline and if not improve it. And I'm seeing signs of that across the board. Today's timelines

are in the, or sorry, lead times are in the like four to five year range. Do I have that about right? I would say between 36 and 48 months. I suppose there are some OEMs that are claiming up to 60 months, but I would say on average it's around the 48 month period.

Got it. The other thing I'm curious about is size, right? There's obviously, you know, it's not a monolithic market. Even within power generation, there's different products that serve different use cases and at different scales. And I think the scale question is sort of an interesting one because the question is sort of is what's getting built or what is being designed to get built?

Large scale generation, gigawatt scale type of stuff. Is the fact that data center is driving a lot of this, changing the desired scale of the end customer and what does that mean for the products in the supply chain? Good question. Well, I actually look at the market drivers. I think there's at least five major market drivers. And in each one of those market drivers, small, less than 20 megawatt gas turbines, turbines 20 to 100 megawatts, are seeing a different set of dynamics. And then what I call jumbo-sized units, which are 150, 250 megawatts and above those I call jumbo units.

They're all being affected differently driven by the different market drivers. and I say there's at least five market drivers in the marketplace. One is grid-scale battery storage. Number two, coal-plant retirements. Number three, grid-scale renewable energy expansion. Number four, the rapid development of data centers and artificial intelligence exploitation or expansion. And then just the availability of natural gas and its affordability,

is I'd say the fifth driver. And if you look at each one of those different drivers, those three sized units are all being affected differently. And if you want, I could actually walk through each of the different drivers and then explain how each one of those three different markets are being affected. Yeah, I mean, it's interesting as you describe that, right? Some of those drivers, I would think, would be a suppressant on demand. So the growth of grid-scale energy storage, right?

Grid-scale energy storage is sort of a gas paker replacement. product on the grid, right, predominantly. So I would presume that suppresses the market to some degree, but maybe are you saying it results in smaller units being developed on the grid? Or what's the dynamic by there? You're a great lead in Shelby. Actually, you would think, just generically, you'd think off your head, oh, well, grid-scale battery storage,

that's got to drive down the demand-forcast turbines. Actually, in some cases, the answer is exactly right, but not in all cases. So, I mean, if you actually look at the market and what's happened with grid scale, I would say large jumbo-sized units, absolutely they are being, it's a negative, it's a negative dynamic.

If you look at gas turbines, say, 40 to 100 megawatts, actually it's an opportunity because there are several of the developers are counting on gas turbines to recharge or develop what I call hybrid systems that use gas as a, when it's cost is low, to spin up the gas turbine and recharge their grid scale battery storage. So they're not just relying on renewable energy to recharge their batteries. So, and then when you look at the real small gas turbines, generally they're not being quite as affected by the grid scale battery storage segment. But clearly, as you correctly pointed out, or you felt intuitively, yeah, large power plants, jumbo units, it's a negative.

But for gas turbines, 40 to 100 megawatts, it's actually a little bit of a positive influence. Mm-hmm. And then I imagine, right, coal plant retirements, big projects coming off line, presumably get replaced with big assets, at least if you're trying to do one for one. So I assume that is all things equal a positive signal for larger scale, turpents. Yeah. For coal plant retirements, it's really for all three segments. The less than 20 megawatts, the 40 to 100, and the large jumbo, it's a positive influence, but mostly for the large jumbo units. But interestingly enough, you see a lot of mobile power and peaking units being installed as support for the grid where coal plant retirements are occurring.

Well, you see that in the context of some of your other drivers, right? I know of some projects that are coal plant is retiring. We're going to replace it with like a big solar plus battery installation, and then we probably need some smaller scale peaking gas to supplement that. Yeah. It's like that kind of thing. Well, yeah, if you look at grid scale renewable energy, I mean, the amount of grid scale activity is going up just explosively. It's expected to double in the next five years, and the cost of a levelized cost

of electricity for solar power is way, way down. But so that has a negative impact on the large utility or jumbo-sized gas turbines. But definitely it has a positive influence on mobile units, peaking gas turbines, just because when the sun goes down and the wind stops blowing, you know, you've got to have backup power. And those units, I would say from about 15 megawatts up to 100 megawatts are actually very good investments for, I call it, renewable offset.

And when you mentioned the mobile thing, I mean, those types of installations, you don't necessarily, you're not looking for mobile generators. I think of the mobile generators as being a good fit for either like an off-grid type application. You see a lot of this in the oil and gas world or for bridge power type situations where you're looking to, this is what you see now, where, look, we need power now

because we're building a data center, and the grid connection is going to take three to five years. So we need a bridge, but we don't need it forever. Am I wrong to think that that's where the mobile power segment ends up? Well, you're not wrong, but you're not 100% right either. Because clearly, when it comes to data centers and artificial intelligence, mobile power, and even permanent on-site power, is as a backup and supporting the demand for data centers

is a very strong influence on both mobile power and permanent on-site units. But believe it or not, there's a lot of utilities who will buy mobile units. They'll locate them in what they call a grid-sensitive area, and over the course of five to 10 years, they'll improve their infrastructure, and then they'll move those mobile units

to another sensitive grid-sensitive area. And so the mobile power has just been a fantastic opportunity for basically three companies, solar gas turbines, the Division of Caterpillar, G. Vernova for their mobile units and for MHA Aero Power for their mobile units. Those three players have done extremely well with mobile-powered units for a variety of reasons,

even in oil and gas, but for the reasons that you and I have just discussed in the last 10 minutes, absolutely. And I don't see that market going away at all. Yeah, if anything, it's getting supercharged by additional use cases, as we've discussed. Absolutely. Which gets to that sort of...

Yeah, you're 100% on time. Yeah, which gets to that sort of... The one that seems to be the biggest net-new thing that's happening right now, but is a huge deal is all the gas turbines being developed for data centers, whether mobile or stationary, right? But you see like, you know, there's that partnership between Chevron and engine number one where they've secured gigawatts worth of GEOVernova turbines. They're going to go use those to develop a bunch of data centers. And then I'm not sure whether those are actually intended to be permanent or just bridge power.

But like, that's one example amongst many. And it seems to me is the factor that's kind of. tipping this market over the edge from just being a generally tight market to like a historically tight market. Yeah. Well, you're making a good point. I mean, if you look at data centers, there's like 11,000 data centers serving the digital commerce and artificial intelligence community already around the world. And because many of them have been around, the average electrical loads around four megawatts. But there's like 1,400. new data centers

playing in the United States alone. And over a thousand of those are all large scale they're going to need a lot more than four megawatts. I mean, some of those data centers, their electrical load is more than the community around them. Yeah, there's a...

I mean, it's just incredible. There's like an electric co-op, I think it's Susquehanna co-op or something like that in Virginia. That, like, I remember seeing some some filing, some regulatory filing, where they were projecting their load growth to more than double

based on purely a couple of data centers that are coming into the territory. Yeah. In fact, you just touched on a good point. That whole region around Virginia, Washington, D.C., that whole area, there's more data centers in that area than anywhere else in the world. Right. It's just

a mech of data centers. But these dynamics are really interesting around data centers. And I don't think it's going away. I think it's, you see people using artificial intelligence more. Digital commerce is just booming and it's not going away. To me, two things can be true at the same time. I think it can be true that this is the demand from the gas turbine OEM perspective. The demand is real. The market will buy an enormous volume of new gas turbines to serve these markets. And that's also true,

by the way, of like utilities who are trying to manage interconnection requests and so on. Like, it can be true that that is real and also that we are in a speculative bubble on the development side, because there will not be. I mean, as you correctly said, there are a thousand large-scale data centers in development in United States, and I will state categorically, I don't think there will be a thousand new hyperscale data centers in the United States anytime soon. I don't think there's actually that much demand for it. So like both things are true. There's all these, there are cowboys out there trying to take advantage of the moment. So the challenge, of course, then if you are on the supply side, whether it's a utility or you're a gas turbine OEM,

is how do I make sure that the buyers I'm signing up with are real? And that gets to your point of like these big non-refundable deposits. If you have all the market power, that's sort of how you take advantage of it. So it seems like they're doing the right thing in that regard, at least. Yeah. Well, and the other dynamic to keep in mind, shell, not only that is it's not just one of these market drivers that's making things happen. It's all five of these market drivers that I've mentioned, including the price of natural gas, which is very affordable in the United States.

So when you combine all of these what I call market drivers, it creates in a situation where these OEMs are relatively comfortable building out a supply chain strategy to support the market because they're not just relying on one dynamic. back when I was executive at one of these large OEMs 20 years ago, we were basically counting on only one of those market drivers to happen and one of them didn't happen. And so it hurt our strategy. But now you have a situation where you have three to five key market drivers that are all paying the market. And so it creates a little bit of, I would call risk comfort for the OEMs

because they know it's not just one thing they're counting on to make the market move. Okay, final question for you, I guess, is on the technology side, is there any significant, I mean, these are pretty mature technologies. Is there any significant innovation that either we have seen recently or that you expect to see in the next few years? Like, will the market change as a result of technological innovation, or is this just to rinse and repeat and stamp them out as much as we can kind of a situation? Yeah, good question.

I would touch on two areas. First off, all of the OEMs have spent an enormous amount of money trying to get, and they've been very successful, in slowly increasing the efficiency of their combined cycle plants. I mean, it used to be combined cycle plants. Average efficiency was about 55%. And they slowly crept it up to 60. And then they kind of hit a dead spot, and they couldn't figure out how to get above 60. And then they started developing their, I'll call it, a very holistic strategy to the power plant.

So it wasn't just the gas turbine. It was the HRSG. It was a whole, all sorts of different technical factors that they were, levers that they were pulling to try and squeeze more efficiency out of their power plants. And they crept it up to 60. Then they got to 60 and a half, 61, 60.3. I mean, they're starting to push 62% efficiency and more. And I don't think they're going to quit because if you look at the levelized cost of electricity, and that's a big factor that these utilities are using and assessing which OEM they're going to use,

fuel is a big, big element in the levelized cost of electricity. So the more efficient and the more efficient, the more efficient, the more efficient, the more effective that the OEM is in convincing that customer that they have a more efficient unit and even guaranteeing it, the better for them. They'll be more competitive. So efficiency is, it's not coming up by leaps and bounds, but it's a gradual increase over time that's been quite remarkably to be honest with you. You've got to hand it to all three of the major OEMs that they've been able to make some very significant improvements in efficiency, albeit. very difficult. The second big area of the technology development is converting their combustion

systems over to using hydrogen. Now, I put all of that into a big set of quotes because while they're all working on hydrogen and they can, and they've all demonstrated to a degree some capability of operating in hydrogen, the biggest problem is, where are they going to get it? The amount of hydrogen that you need to run one of these large jumbo-sized units, it's just an enormous amount of gas, and where are you going to get it from? So while they're all spending a lot of money and their engineers are working very diligently and doing some fantastic development, I have some doubts as to whether the market will actually see a significant increase in purchases of gas turbines that actually are using hydrogen.

But clearly they're all working on it. Yeah, it's a, you know, the bet is if we build it, they will come. If we build hydrogen-ready gas turbines, then the market will show up for them, and the hydrogen will be there. And, of course, it's a dynamic market for hydrogen at the moment. So we'll find out whether that plays out well for them. But good point on efficiency. It's like a steady grind, but it adds up a lot over time.

Yeah. Tony, this was awesome. Really appreciate the time. Thanks so much for joining. Thank you. Tony Brough is the president of Dora Partners in Energy and Gas Consultancy. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics.

Latitude is supported by Prelude Ventures. Prelude backs visionaries, accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more at preludeventures.com. This episode is produced by Daniel Waldorf, mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shail Khan, and this is Catalyst.