Summer mailbag

So question number one.

that I've been getting.

Why is there such a long backlog for natural gas turbines? And do their higher prices mean that solar and storage is comparable economically as a form of base load power? Well, you may have seen this.

There was this Pennsylvania Energy and Innovation Summit.

a few weeks ago, and a bunch of companies, including Google and Corweave, Blackstone, Westinghouse, Energy Capital Partners, announced 90 billion of intended data center and data center expansion.

And they also talked about the need for the power infrastructure to support all those data centers.

And a lot of what they announced is intended to be powered by new gas turbines.

The problem is supplies are pretty tight.

Turbine delivery times, at least for combined cycle turbines, rather than the combustion turbines, can read three to seven years.

And just over the last couple of years, their prices have more than doubled from 1200 per kilowatt to around $2,500 a kilowatt.

And some of the CEOs in the sector are also citing a lot of labor shortages and the skilled labor pool required to build these gas turbine project.

And so it's interesting to see just how much of a backlog there is.

Now, for many years, most parts of the United States and other places around the world have been giving grid preference to renewables.

So there hasn't been really that much gas, natural gas infrastructure built.

And we wanted to take a closer look at this.

This chart shows The gas turbine capacity built over the last seven years or so as a percentage of all the gas capacity operating in the state.

So for example, in Texas, only 3% of all the gas capacity they've got have been built since 2019.

And in California, that number is 9%.

In New York and North Carolina, it's around 10%.

So only in Illinois have you seen kind of a meaningful expansion and maybe to a lesser extent in Ohio and Pennsylvania of natural gas capacity recently.

So there is a lot of There hasn't been that much built recently.

Understandably, Siemens and GE and Mitsubishi, which are the three large turbine manufacturers, are taking advantage of higher demand and higher prices, but are not meaningfully expanding their production capacity, at least not yet.

So these delays will be with us for a while.

And as I mentioned, these delays have already pushed up prices.

So I thought it was interesting last week, one of the big Research Institutes on Energy wrote a paper basically saying, we now are in an affordable era where solar plus storage can carry almost the entire load.