Demand for power generation and grid equipment is booming

In the AI revolution, one of the critical constraints is how much additional electricity can be made available to power new data centers. And it is often argued that one of the key constraints on the growth of electricity supply is capacity in the equipment supply industry. The rate at which electricity supply can grow is determined in part by how fast the equipment industry can supply new turbines, transformers, switchgear and circuit breakers.

In this episode Roger Martella, Chief Corporate Officer and Chief Sustainability Officer at GE Vernova, one of the world’s largest suppliers of electrical equipment, joins the show to explain how the company is meeting the challenge of soaring demand. Roger talks to host Ed Crooks and regular contributor Melissa Lott, Partner for Energy at Microsoft, about his route from industrial Pennsylvania to the leadership team at GE, via the Environmental Protection Agency. And he explains why, when the old conglomerate GE broke up, he chose to go with the energy business. The company is driven by a sense of purpose, he says: bringing electricity to the world both raises living standards and supports decarbonization.

Electricity demand growth created by new data centers for AI is one driver for GE Vernova's rapidly growing order book, but not the only one. The company is also responding to other sources of growing demand around the world, including the need to strengthen energy security in Europe and to support economic growth and development in emerging Asia.

In the US, GE Vernova has announced $1.3 billion in investment and 1,800 new manufacturing jobs, to support expanded production of switchgear, circuit breakers and turbines. It plans to increase its turbine manufacturing capacity from 18 gigawatts a year to 30 gigawatts a year by 2030.
Roger rejects the idea that equipment supplies are the main bottleneck restricting electricity supply growth. Other issues, including permitting and grid interconnections, are more fundamental difficulties for project developers. If anyone has built a turbine stand, but doesn’t have a turbine to out on it, he says, he will find a turbine. Ed raises the issue of the industry's cyclicality. The gas turbine market has been through boom and bust in the past, and the uncertainty over the future of AI naturally raises the question of whether we are in another bubble today. Roger’s answer is that the company is looking at the range of needs that are driving electrification, not making a bet solely on AI.

As its production increases, GE Vernova needs to hire more workers. Roger, Ed and Melissa discuss the familiar consensus around skilled trades. Just about everyone agrees that America and other countries need more electricians, plumbers and welders to deloiver the build-out of infrastructure. But skills shortages persist. So what are the solutions that would actually increase the workforce in these sectors to meet demand? Are pay, job security, training and the status of industrial work being addressed in the right ways?

One of the more exciting technologies for meeting electricity demand in the 2030s and beyond is the new generation of nuclear plants using small modular reactors (SMRs). GE Vernova has a new nuclear plant using SMRs under construction at Darlington in Ontario, and is targeting commercial operation by 2030. Ed pushes on the key question: can SMRs move from a promising concept to a repeatable, cost-competitive business? Roger says the first project has to be a proof point. The nuclear business cannot be run as a hobby, he says. The lessons from the first-of-a-kind Darlington plant must be used to drive down costs for subsequent units.

The discussion also covers High-Voltage Direct Current (HVDC) transmission and cutting-edge technologies for grid management, including uses for drones and AI. Roger ends with a message to policymakers: the missing ingredient is policy durability. If the industry is to invest enough to meet long-term needs, it has to have policy frameworks that survive political cycles, court challenges and changes of administration.

This episode of Energy Gang is brought to you by ENGIE, the smarter energy supplier. ENGIE doesn't just provide the power to run your business — they supply the energy to move it forward, with reliable, flexible solutions built for what's next. Learn more at engieresources.com.