The Engine Is
the Bottleneck

2031 delivery yearGE Vernova heavy-duty gas turbine · delivery if a new slot is booked today

A U.S. data-center project can run into three separate waits: the wait to connect to the grid, the wait to receive its own generating equipment, and the wait until every supporting system is ready for commercial operation.

The first queue is already long. ERCOT, the Texas grid operator, has more than 438,000 MW of large-load interconnection requests in its pipeline, and 89% of that volume is data centers.¹ SK Securities estimates that a U.S. AI data center can take about five years from applying for grid interconnection to commercial operation.² The LBNL figure often cited alongside it—“more than five years,” with a 2025 median of 61 months—measures interconnection time for generation and storage projects. It is not the same statistic as connecting a load such as a data center.³

That is why developers are building power plants on site. In a forecast DS Investment & Securities cites from BCG and Goldman Sachs, on-site generation rises from 10% of U.S. data-center power in 2026 to 30% by 2030.⁴ Then the second queue begins. Book a new GE Vernova heavy-duty gas-turbine slot today and the delivery year is 2031.⁵ In Korea, Doosan Enerbility has booked 12 cumulative orders for 380 MW-class gas turbines from U.S. customers. The latest seven are scheduled to ship at a pace of one per month starting in May 2029.⁶

Engines come with a shorter queue. SK Securities puts four-stroke lead times at one to two years for high-speed engines and two to three years for medium-speed engines.² Wärtsilä’s 412 MW Ohio engine plant, ordered in April, is targeting commercial operation in early 2028—roughly two years from order to start-up.⁹ Not every way around the grid requires a new engine. On Oct. 1 in Japan, JERA, Dell, and RHAELM signed an MoU to place up to 400 MW of AI infrastructure at JERA’s existing Chiba thermal plant and use plant power behind the meter. They say the structure can come online years ahead of a conventional grid-connected development, with operation targeted around 2028.¹⁰ Putting a data center next to an existing power asset is another answer to the same grid bottleneck.

Getting the engine is not the same as getting power

Faster equipment does not automatically mean an earlier power-on date. The gas pipeline, emissions permits, and electrical systems all have to be ready before commissioning can begin. At Oracle’s Project Jupiter in New Mexico, pipeline completion slipped to February 2027 and an air permit for the fuel-cell system had not been issued, prompting Oracle to notify the developer of force majeure.^{11, 12} Oracle says the project remains on schedule.¹²

PAGE 01 On-site generation is an attempt to bypass the first queue. Engines shorten the second. The third queue remains.

173 m DWTKorea + China merchant-ship contracts · through end-August · DS Investment & Securities · about 90% of the 2007 full-year record

The engine factories were busy with ships before data centers came calling. Merchant-ship contracts at Korean and Chinese yards reached 173 million DWT through end-August—about 90% of the 194 million DWT full-year record set in 2007.¹⁸ DS Investment & Securities estimates that, if the current pace holds, the full-year total could reach 260 million DWT and surpass 2007.¹⁸

When ships sell, engines follow. A large merchant ship typically carries one or two two-stroke propulsion engines plus several four-stroke generator engines for onboard electricity. Clarksons Research puts the global orderbook at 216.43 million CGT at end-August, with China at 67% and Korea at 18%. The Newbuilding Price Index stood at 186.34.¹⁹

Why Chinese shipyards are buying Korean engines

According to DS Investment & Securities, Chinese yards expanded dock capacity quickly, but domestic engine production failed to keep up. Scarce Chinese engine slots were allocated first to state-owned yards, pushing private yards with delivery schedules to meet toward Korean suppliers.¹⁸ In 2025, Korean-engine orders from private Chinese yards topped KRW 900bn, up more than 45% year on year. DS discusses the trend alongside two-stroke propulsion-engine market share. The demand that directly touches four-stroke capacity is the generator-engine package—multiple units per vessel.¹⁸

Of the 15 contracts HD Hyundai Marine Engine won in the first half of this year, 12 came from Chinese shipyards,²⁰and broker analysis published at end-August said China’s share of Hanwha Engine’s order backlog had risen from 33% to 49%.²¹ Marine orders for Korean engine makers are coming not only from Korean shipyards, but also from Chinese yards short of engine slots.

PAGE 03 Korean and Chinese merchant-ship contracts had already reached 173 million DWT by August, and private Chinese yards are also sourcing Korean engines. The part that meets data-center demand is the four-stroke generator engine—several units on each ship.

Wärtsilä manufactures every engine in its portfolio at the Sustainable Technology Hub in Vaasa, Finland. In two announcements, in February and May, the company said it would expand the plant and related supply-chain capacity by 65% versus 2025. Both announcements cited demand from Energy and Marine.²⁵ That is a company-level example of marine and power-generation orders meeting on the same manufacturing base.

Wärtsilä has also described how it allocates that capacity. In a summary of its CEO strategy call published Sept. 29, the company said data centers account for less than half of its Energy equipment backlog. It does not sign slot-reservation agreements with individual customers; instead, it allocates capacity to firm orders based on commercial opportunity, strategic priority, customer relationships, and geographic diversification, while continuing to serve both Energy and Marine customers.²⁶ Data centers have not taken over the factory. Firm orders from two end markets are sharing the production clock.

But “made by the same company” does not, by itself, prove that two products are fighting for the same production hours. There are levels of overlap.

On this test, two-stroke marine propulsion engines and data-center engines overlap only at the company level. The real collision is in four-stroke medium-speed lines that serve both shipboard generation and power plants. Most data-center engine orders, meanwhile, are high-speed gensets from Caterpillar, INNIO, Cummins, and others; those do not share marine-engine lines.²

HD Hyundai · big contracts versus the new plant’s start date

HD Hyundai Heavy Industries signed power-engine contracts in April with U.S.-based Aperion Energy Group for 684 MW (KRW 627.1bn) and in August with Corban Energy for 1,000 MW (KRW 956.0bn).^{29, 30} Together, roughly 1.7 GW of contracted volume is far above the company’s historical annual land-based power sales, described by SK Securities as only 0.2–0.3 GW per year.² But both contracts are spread across several years, and the new Onsan plant in Ulsan that is meant to absorb the growth is not scheduled for completion until May 2028.³¹ The new plant includes assembly and commissioning facilities plus crankshaft machining and block-casting equipment. Reports relaying company comments say the main Ulsan plant will focus on marine engines, while the new plant and the Yeongam site will serve land-based power.^{28, 32} To say contracts are outrunning expansion, annual delivery volumes and annual capacity have to be put on the same timeline.

On the table, AEG alone requires only about 0.23 GW per year—a slice of estimated land-based capacity in those years. Whether a real bottleneck emerges depends on the undisclosed Corban delivery profile and additional orders.

Hanwha Engine · a large project versus annual headroom

Hanwha Engine completed a new four-stroke medium-speed line in Changwon in August with annual capacity of 900 MW, or 180 units at 5 MW each.³³ SK Securities estimates that about 60% of the line will be used for marine applications in 2027, leaving roughly 360 MW of headroom for data centers. Data-center buyers are typically looking for projects in the 250–400 MW range.² Annual headroom and total project capacity are not the same unit of time. The answer changes with how many years the deliveries are spread across.

Almost every major power-equipment supplier is adding capacity. The biggest engine expansions cluster in 2028–29, while the broader gas-turbine market is not expected to “normalize” on lead time until 2031–32. Some individual turbine expansions arrive in 2027–28. That means it is too simple to say engines will loosen first; the better frame is that different parts of the market clear on different clocks.

SK Securities argues that all major gas-turbine makers are effectively running full, and that even with expansion the market does not normalize until 2031–32.² Rystad Energy likewise says gas-turbine and reciprocating-engine orders reached about 100 GW in 2025—30% more than OEMs could actually deliver—and that the gap has not yet closed. The same report, however, warns that oversupply risk is building in the 20–50 MW segment as new entrants pile in.⁵² Meanwhile, major engine expansions begin coming online earlier, in 2028–29. Engine-to-engine competition can intensify before turbine queues clear, changing pricing power sooner. Some competitive supply arrives even earlier: Caterpillar has restarted a 10 MW-class medium-speed gas engine it discontinued in 2022, secured its first order, and plans to ramp to roughly 1.5 GW over 18 months after first shipments in 4Q26.⁵⁰ In other words, the engine bottleneck may start easing before Korean suppliers finish their own expansions. That is why the expiry date of the bottleneck cannot be read from gas-turbine lead times alone; engine-capacity additions have to be tracked in parallel.

SUPPLY SIDE · potential supply response

Supply is starting to respond outside the incumbent OEMs too

SpaceX
In-house turbine components

SpaceX is building a gas-turbine blade-and-vane foundry in Bastrop, Texas. Elon Musk says blade and vane casting is the limiting factor in turbine production and claims in-house casting could cut delivery delays by as much as 18 months · this is a company claim, not verified production capacity.⁵³

Parallax
New small-turbine entrants

Parallax is developing a 10 MW-class data-center turbine using 3D printing to reduce part count · it has raised USD 117m · prototype targeted for end-2026, testing in 2027, first customer deliveries in 2028 · not counted as supply before validation.⁵⁴

SpaceX bringing turbine components in-house and new turbine entrants could shorten the bottleneck’s shelf life · if turbines loosen sooner than expected, some demand that spilled into engines can unwind sooner too · neither is verified production capacity yet.

Why incumbents remember the last cycle

When gas-turbine demand collapsed in 2017–18, manufacturers were caught with expansion underway and responded with large layoffs.⁵⁵ Siemens Energy’s CEO has said the company is managing capacity very carefully to avoid creating an oversupply that could hurt it over the next decade.⁵⁶ Doosan Enerbility faces the same strategic tension: capacity added during a shortage can dilute pricing power once competitors expand too.⁵¹

The demand-side variables

Kyobo Securities reviewed 150 data-center projects that faced local opposition. Among the cases where power was a stated issue, 91% were canceled or halted. That is not a cancellation rate for the U.S. data-center market as a whole.⁴⁹ In 1Q26, 75 U.S. data-center projects worth USD 130bn were halted or delayed amid community opposition.² The IEA notes that data centers fill gradually, making peak-load needs uncertain and creating a risk of over-connection.⁵⁷ On the other side, Caterpillar’s CEO says no customer is slowing order pace yet. In the same answer, however, he stressed that capacity expansion is not based on data centers alone, citing oil and gas—especially gas compression—plus mining and marine demand, and adding that the oil-and-gas backlog is nearly twice the year-earlier level.⁵⁰

The three variables to track are new orders, lead times, and capacity. The next round of earnings and regulatory milestones should tell us which way each is moving.

UPDATE PLAN · Refresh FIG 01-1, 04-3, and 07-1 after GE Vernova’s Oct. 28 3Q results and the Dec. 4 IMO outcome.

This report is research on the supply-demand structure of power-generation and marine engines and gas turbines · it is not a recommendation to buy or sell any security or asset · broker estimates and manufacturer claims are identified as such and are not treated as established fact · reporting periods differ across overseas companies · broker estimates—including the Korea/China order table, four-stroke headroom, service-revenue multiple, carbon-cost calculation, and AEG annual unit schedule—follow the assumptions in those source materials · public information checked through 2026.10.02 20:00 KST.