Bullets:
Aero Engine Corporation of China designed a revolutionary, giant natural gas turbine. At 110 megawatts, it is the largest turbine so far built in China.
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Only a handful of companies across the world build natural gas turbines, and order backlogs are hitting records amid soaring demand for new electricity.
Electrical utilities and power producers currently have a five-year wait on new orders, and place large non-refundable deposits with manufacturers just to get in line to buy.
Aero Engine Corp has been under sanction for over five years, so North American and most European buyers cannot place orders for these turbines. But demand across the world is skyrocketing, and Aero Engine will easily find markets.
This is a transcript, for the YouTube video here:
Report:
Good morning. I live in China full time, and my electric bill is about $7 a month. I live in Kunming, where the weather is comfortable, pretty much all the time. Previously I was in Qingdao, which gets cold, and in Shanghai which gets hot and cold, and there I was paying about $14 or so. No matter where you are, then, power bills aren’t much of a thought. That fact is a significant driver of Chinese industrial productivity, by the way, as factories in China just cost much less to power and run, compared to factories in Europe especially:
All that in mind, when Chinese firms announce breakthroughs in the power sector, it’s not just for the domestic markets they have in mind. The Aero Engine Corporation of China is actually a manufacturer of aircraft engines, and the company recently introduced a revolutionary giant gas turbine. It is the most powerful China-built turbine, and media here point out that this is a 100% made-in-China project, and that only a small group of countries are capable of producing large gas turbines. The Taihang-110 program has generated over a hundred patents so far, in design, materials, manufacturing, testing, and rollout. This is a primer on how gas turbines work, and they do have strong applications in the aviation sector.
The demand for natural gas turbines is at record highs, and so are the order backlogs for companies that build them. And it’s from that perspective that we should view developments like these. AeroEngine Corporation will be able to sell these new giant turbines as fast as they can build them. Their primary market may in fact be here in Mainland China, and I’ll let you know if my electric bill goes from $7 to $6.50. But its market is much more likely to be everywhere else, and to utilities and power producers who are waiting in a long line to buy turbines from other manufacturers.
The natural gas boom and demands for electricity to power AI data centers mean that turbine manufacturers can’t produce nearly fast enough to keep up. Siemens is one of only companies that build them, and they’re ramping up output but still are way behind. In the next five years, 46 gigawatts of natural gas power will come online, which is a big jump over the previous five-year period. And turbine manufacturers haven’t yet met the demand from prior years anyway: As of today, there’s a five-year wait for new orders coming in.
The three biggest suppliers to the industry are GE Vernova, Siemens again, and Mitsubishi. Backlogs are at record levels for all of them. At GE, their backlog is $20 billion today, up from just $6 billion two years ago. A quarter of that backlog is in North America, and Asia makes up a big chunk of the rest. Siemens’ backlog is 131 billion euro. At Mitsubishi, they had planned to add capacity to increase production by 30%, but that wasn’t nearly enough, so they hope to double it over the next two years.
Buyers are making non-refundable deposits, called Reservation Fees, just for the privilege of placing an order and waiting in that line that lasts five years. Those fees are outside of the Production Slot Agreements, which is the formal production and delivery contract.
Naturally utilities and power producers are looking for suppliers anywhere they can. And that’s probably what Aero Engine Corp has figured out. Assuming they can have these turbines rolling out of their factories some day before 1 January of 2030 and assuming they can do so at a price that’s competitive with what Siemens and GE are asking for, the buyers are already out there. And remember that the demand for these turbines is global.
Aero Engine Corp was placed on the OFAC sanctions list during the first Trump Administration, so utilities in North America aren’t allowed to buy these new turbines, but lots of other places can. Countries in the Middle East have natural gas coming out of the ground every time they punch a hole, and electricity demand there is soaring, and so we should expect that to be a huge market for these new turbines. And there’s almost no point in asking anymore how any of that new business will be done—it won’t be in US dollars.
To emphasize again how we need to read news stories like these here, in this case for low-cost power generation. It won’t move the needle very much for Chinese households or industrial users, because we’re already paying the lowest prices in the world. Instead it’s great news for the Chinese company that figured out how to build the things, great news for power producers outside United States, and bad news for GE and Siemens and Mitsubishi.
Resources and links:
Mitsubishi Will Double Gas Turbine Production as Demand Grows
https://www.powermag.com/mitsubishi-will-double-gas-turbine-production-as-demand-grows/
IEA, Electricity 2025
https://iea.blob.core.windows.net/assets/0f028d5f-26b1-47ca-ad2a-5ca3103d070a/Electricity2025.pdf
Gas Power’s Boom Sparks a Turbine Supply Crunch
https://www.powermag.com/gas-powers-boom-sparks-a-turbine-supply-crunch/
Office of Foreign Assets Control, Sanctions List
https://sanctionssearch.ofac.treas.gov/Details.aspx?id=30902
North America’s Natural Gas Turbine Market Fired Up as Multi-Year Backlog Seen Persisting
https://www.aecc.cn/aecc/en/index.html
China unveils most powerful home-grown heavy-duty gas turbine for commercial use
https://english.news.cn/20250908/9b19a1b5d88f490aa92cc12739f016e7/c.html
110 MW: China rolls out giant gas turbine to power 3.6 million homes yearly
https://interestingengineering.com/energy/china-rolls-out-giant-gas-turbine
Electricity demand is surging across the Middle East and North Africa, driven by cooling and desalination needs
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