Siemens Energy says Iran war is driving gas turbine demand higher

Siemens Energy Says Iran War Has Become Additional Driver of Gas Turbine Demand

Siemens Energy executives said on Thursday that the Iran war has become an additional driver of demand for gas turbines, compounding what was already an extraordinary surge fueled by the artificial intelligence data center boom, according to Reuters.reuters

The comments come at a time when the world’s largest turbine manufacturers are effectively sold out for years, with production queues stretching deep into the next decade. European customers are now paying reservation fees to secure spots in those queues, a practice that has become increasingly standard across the industry.energate-messenger

A Market Already Running Hot

Even before the conflict in the Middle East escalated, Siemens Energy was riding a wave of record demand. The company’s order backlog reached an all-time high of €136 billion last year, driven largely by U.S. data center operators who accounted for roughly 60 percent of gas turbine orders. In its most recent quarterly results in May, the company reported another record, with orders reaching €17.7 billion.energyconnects

The company raised its full-year outlook twice this fiscal year. In April, it lifted its revenue growth forecast to 14 to 16 percent and projected net income of around €4 billion, up from an earlier range of €3 billion to €4 billion. Free cash flow expectations nearly doubled to around €8 billion.siemens-energy

CEO Christian Bruch said in May that the company’s “strong market momentum continues despite geopolitical uncertainty”. Siemens Energy announced a $1 billion investment to expand U.S. manufacturing capacity earlier this year, part of a broader €6 billion global strategy.siemens-energy

Iran Conflict Reshapes Energy Calculus

The U.S.-Israeli military campaign against Iran, now roughly three months old, has effectively closed the Strait of Hormuz and fractured global energy supply chains. European gas prices have risen approximately 40 percent since the conflict began, and the disruption has accelerated interest in securing domestic power generation capacity.bruegel

Gas turbine manufacturers including Siemens Energy, GE Vernova, and Mitsubishi Heavy Industries are advising developers to plan seven to eight years ahead for turbine procurement. The Institute for Energy Economics and Financial Analysis noted in a June report that the conflict has exposed deep vulnerabilities in Europe’s energy supply strategy, with EU liquefied natural gas imports falling 1.2 percent from March through May.ieefa

Capacity Crunch Deepens

The convergence of AI-driven demand and wartime energy insecurity has intensified a global scramble for power equipment. GE Vernova announced plans to invest nearly $600 million in U.S. manufacturing to support production of up to 80 heavy-duty gas turbines per year. Siemens Energy disclosed in its first-quarter earnings that 12 gigawatts of existing reservation agreements were converted to firm orders while another 12 gigawatts of new reservations were added.siemens-energy

Bruch acknowledged in a recent interview that the industry faces “two to three years” of shortfalls as it works to digest the growth, but called it “a good problem to have”.columbia