TOKYO: Mitsubishi Heavy Industries Ltd (MHI) aims to double its gas turbine capacity in the next two years, as demand for the equipment rises globally due to replacement and data centre needs.
The Japanese manufacturer is seeing orders multiply due in part to turbines installed decades ago nearing the end of life, chief executive officer Eisaku Ito said in an interview.
“We were working toward boosting production capacity by 30%, but that’s not enough to meet growing demand,” Ito said. “Fulfilling those orders is our top priority.”
The decision comes at a time when demand for gas turbines has increased globally, due to the proliferation of data centres, new manufacturing and continued electrification.
Natural gas is seen as a stable alternative to wind and solar power, one that’s also cleaner than burning coal, and more readily available than nuclear energy.
Other manufacturers, like GE Vernova Inc, are also seeing an increase in orders for turbines.
The planned capacity boost could allow “faster-than-consensus growth for the segment,” said Ian Ma, senior industrials analyst at Bloomberg Intelligence.
“The capacity expansion could help run down the 5.3 trillion yen order backlog at MHI’s energy unit, and provide room to take in more orders.”
The company is working to expand output by improving the efficiency of its production chain, Ito said, even as the cost of making turbines has nearly doubled in the past few years due to expensive materials, supplies and staffing.
Boom-and-bust cycles in turbine demand make long-term investments a risky bet, with varying forecasts on the speed and size of future demand from data centres.
MHI’s spending will remain judicious, Ito said. “The goal is to be as lean as possible,” even though demand should remain strong over the next decade, he added.
MHI, which manufacturers everything from forklifts to heavy payload rockets, is one of the biggest turbine makers in the world.
Ito took over as the head of the firm earlier in April. — Bloomberg