CITIC Construction Investment: Continually Recommend the Global Power Shortage Industry Chain

CITIC Securities Research Report states that starting in 2026, North America’s AI electricity demand will surpass conventional load growth for the first time, becoming the most influential factor affecting North American electricity demand. We expect total gas turbine deliveries in North America from 2026 to 2028 to be 60-66 GW, which is far from the 152 GW of AI electricity demand during the same period. Global gas turbine orders in 2026 still have upward momentum, potentially exceeding 100 GW. Industry production scheduling by the end of 2026 will extend to 2030. Considering that gas turbine demand has historically shown cyclical and sharp fluctuations, overseas expansion of blades, castings, and forgings is relatively weak. Domestic supply chains are actively expanding production and accelerating the certification of overseas products, which may lead to both volume and profit growth. Meanwhile, domestic independent gas turbine manufacturers, integrated turbine suppliers, and suppliers of converted diesel to gas and ship conversions all have the potential to export overseas.

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North American Power Shortage Continues, Gas Turbine Industry Outlook Expected to Last Until 2030

Starting in 2026, North America’s AI electricity demand will surpass conventional load growth for the first time, becoming the most influential factor affecting North American electricity demand. We project North American AI electricity demand for 2025-2028 to be 19, 32, 49, and 71 GW respectively. From 2026 onward, AI electricity demand will surpass conventional load growth, becoming the key driver of North American power needs.

The gap between future three-year gas turbine deliveries and power demand remains significant: North America’s CSP grid connection is slow, and current grid-connected capacity is far below demand. Data centers are entering the era of self-supply power stations, with gas turbines serving as the base load energy source for these self-generation facilities. Based on current orders, we expect total gas turbine deliveries in North America from 2026 to 2028 to be 60-66 GW, which is still far from the 152 GW of AI electricity demand during the same period.

2. Supply Chain and Industry Chain Outlook:

• 2026 Orders Have Sufficient Upward Momentum: Reviewing historical cycles of gas turbine orders, 2025 orders have not yet reached the previous high during the internet boom cycle. Given the certainty and sustainability of current AI demand, we believe global gas turbine orders in 2026 will still have upward momentum, potentially exceeding 100 GW. Industry production planning by the end of 2026 will extend into 2030.

• Urgent Industry Expansion Needs: Since Q4 2025, leading gas turbine companies have implemented expansion plans. The surge in orders this year continues to drive Mitsubishi and Siemens to prepare new capacities, with upstream component demand still growing.

• Profitability Center Expected to Rise Under Supply-Demand Tensions: Since 2024, gas turbine prices have increased by 10-20%. The profit margins of OEM new orders continue to rise, and profits in tight supply chain segments are expected to increase accordingly.

• Overseas Supply Chain Expansion Is Conservative; Domestic Expansion Will Be the Biggest Winner: Considering the cyclical and volatile nature of gas turbine demand, overseas expansion of blades, castings, and forgings is relatively weak. Domestic supply chains are actively expanding and accelerating the certification of overseas products, which may lead to both volume and profit growth.

3. Investment Recommendations:

• Low Expansion Willingness of European and American Supply Chains: Domestic blade, casting, and forging companies are advancing product certification and order imports.

• Domestic Independent Gas Turbine and Integration Suppliers Have Export Potential: These suppliers are capable of exporting to overseas markets.

Risk Warnings:

• Demand Risks: Changes in national infrastructure policies may lead to lower-than-expected power investment; grid investment may fall short; data center capital expenditures may be below expectations.

• Supply Risks: Rising prices of bulk commodities like copper and steel; tight supply of power electronic devices affecting infrastructure development.

• Policy Risks: Support for new power market mechanisms may be weaker than expected; infrastructure construction may lag.

• International Risks: Rapid easing of energy crises and falling energy prices; deepening international trade barriers.

• Market Risks: Significant changes in competitive landscape; intensified competition may lead to lower profitability in power equipment segments; rising transportation and logistics costs.

(Source: First Financial)