Elon Musk recently stated that "turbines will not be sold until 2030," and for this reason, SpaceX and Tesla may need to produce turbine blades and vanes in-house. SpaceX is preparing a factory in Bastrop, Texas to address this issue, and Musk predicts that domestic production could reduce the lead time for gas turbines by up to 18 months.
Need for Gas and Steam Turbines
Reports indicate that data center operators are turning to a combination of industrial boilers and steam turbines instead of using gas turbines. The CEO of Applied Digital, Wes Cummins, stated that gas turbines ordered today may not reach customers until 2032. Gas turbines are designed to withstand high temperatures and heavy loads, requiring specific alloys and manufacturing techniques. In contrast, steam turbines manage relatively lower temperatures and allow for a wider range of alloys to be used.
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Supply Chain and Energy Supply
Both types of turbines are ultimately powered using natural gas. Gas turbines receive fuel directly and generate electricity. However, steam turbines require an intermediate step where gas is burned to boil water, which is then used to spin the turbine. The supply chain for steam turbines and boilers is older and more established, which is why Rentec Boiler Systems has announced that it can produce and deliver a packaged boiler in less than a year.
Babcock & Wilcox is currently seeing significant interest in this new approach and has signed a $2.4 billion agreement with Bess Electronics to supply 1.2 gigawatts of power generation for Applied Digital's AI centers. The company will provide boilers for on-site power plants, with operations expected to be deployed by 2028.
Currently, nuclear and natural gas are among the most important options for powering data centers. It has recently been revealed that Google is securing nuclear energy in Finland and has signed a 22-year agreement with Fortum. The ultimate goal of most data centers is to source 100% of their energy from renewable and/or nuclear sources, while fossil fuels act as a bridge in this transition.
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