Turbine Trouble: Why Power Projects Are Facing Delays
In 2023, the Texas legislature set up the Texas Energy Fund to finance dispatchable firm generation within and outside ERCOT. Most of the funding went to gas-fired projects that could provide firm generation to the grid. The state’s plans faced a setback in January, when one of the biggest developers, Engie, withdrew, citing constraints to procure equipment. This is one example of a larger supply chain bottleneck playing out in the energy sector.
Energy demand on the U.S. grid is outpacing generation capacity, with the AI-driven data center boom, electrification of heating, manufacturing growth and electric vehicle adoption fueling the demand growth.
“Generation resources are lagging behind the increasing demand,” CFC Senior Energy Industry Analyst Alisha Pinto said. “Aging infrastructure and retiring plants compound the challenge.”
In 2024, 98 MW of combined cycle gas turbines were added to the U.S. grid. Developers plan to add 1.6 GW in 2025 and 18.7 GW by 2028, according to S&P Global. With 4.3 GW already under construction, the interconnection queue for natural gas projects has surged 160% year-over-year. In the Southeast region, gas makes up 40% of the queue for 2025 with 35 GW, while in MISO, gas accounts for 31 GW and about 8% of the interconnection queue.
Gas turbine supply chains are also under pressure. U.S. orders exceeded 14 GW in 2024—the highest since 2001. Demand is shifting toward simple cycle “peaker” turbines and larger units (more than 200 MW), causing production and delivery delays. Lead times have stretched from three to four years to six to seven years, depending on manufacturer and model.
Three original equipment manufacturers (OEMs)—GE Vernova, Mitsubishi Power and Siemens Energy—dominate the global market and operate East Coast manufacturing hubs. Despite full capacity, OEMs are cautious about expanding due to past boom-bust cycles and a shortage of skilled labor. Over the Labor Day weekend, Mitsubishi Power announced plans to double global production capacity within three years, which may ease some pressure.
“Small turbines, though less efficient and more costly per unit, are gaining traction as data centers seek behind-the-meter and backup generation,” Pinto said. “This shift could relieve demand for large turbines but may strain the small turbine market.”
Along with delays, projects are experiencing a rise in costs. In 2024, S&P estimated that project costs are now about $2,000/kW. It is not just the turbines that have experienced increasing prices but also components such as transformers, switchgear and labor. The U.S. does not domestically manufacture most of the components, instead relying on imports from other countries. With new tariffs on imports, prices and availability could be constrained in the future.
“Electric cooperatives planning gas-based generation should monitor these supply chain challenges,” Pinto said. “Delays and cost overruns are likely. Cooperatives can mitigate risks by building strong vendor relationships and incorporating time and budget buffers into project plans.”
