CITIC Securities: North American Power Shortage Deeply Entrenched and Hard to Reverse, Energy Storage and Grid Construction Will Soon Replicate Natural Gas Turbine Prosperity

CITIC Construction Investment points out that the US power supply and demand situation is tight, with ongoing power shortages that are difficult to reverse. Currently, North America’s power system faces issues such as long grid connection cycles, aging and decommissioned power sources/grid equipment, and insufficient backup capacity. The explosive demand for AIDC will lead to a power gap in North American grids reaching 39.9 GW, 51.8 GW, and 67.8 GW in 2026–2028. CITIC Construction Investment believes that gas turbines, energy storage, and grid equipment will gradually become core beneficiaries. Currently, the market only recognizes the prosperity of gas turbines; in the next six months to a year, investments in power grids and energy storage will begin to increase steadily. North America’s profit scale far exceeds that of other regions globally, and the resilience of related industry chains is highly promising.

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CITIC Construction Investment: North American Power Shortages Are Difficult to Reverse; Energy Storage and Grid Construction Will Soon Mirror the Prosperity of Gas Turbines

This report uses detailed data to thoroughly depict the tense US power supply and demand situation, with ongoing power shortages that are hard to reverse. Currently, North American power systems face issues such as long grid connection cycles, aging and decommissioned power sources/grid equipment, and insufficient backup capacity. The explosive demand for AIDC will cause the North American grid power gap to reach 39.9 GW, 51.8 GW, and 67.8 GW in 2026–2028. We believe that gas turbines, energy storage, and grid equipment will gradually become core beneficiaries. At present, the market only recognizes the prosperity of gas turbines; in the next six months to a year, investments in power grids and energy storage will begin to increase steadily. North America’s profit scale far exceeds that of other regions worldwide, and the resilience of related industry chains is highly promising.

Large-Scale Deployment of AIDC and Long-Term Power Shortages in the US

The US 2030 peak power load forecast has been significantly raised by 166 GW to nearly 1000 GW, with data centers contributing 54%. This has led to long-term increases in regional electricity prices and record-high capacity prices, with backup capacity shortages across regions, reflecting that the US power supply-demand contradiction will continue to intensify under large-scale AIDC construction. The gradual decommissioning of thermal power sources has further exacerbated power shortages. We believe that US power shortages and tight supply-demand will become the norm.

Under grid resource constraints, off-grid natural gas power becomes the preferred solution for data centers

Power availability is a core factor in AIDC site selection. However, the US grid’s average connection cycle has already exceeded four years, and most regions have less than 15% backup margin. Coupled with transformer aging and lagging transmission infrastructure, CSP manufacturers are forced to turn to off-grid solutions. North America’s relatively abundant and low-cost natural gas resources make off-grid gas turbines a quick-start option for projects. Therefore, Texas, with its rich natural gas resources, has become a hot spot for AIDC planning and construction, with planned projects/capacity reaching 108/48 GW.

AI giants pledge to build their own power sources; prosperity of gas turbines recognized by the market, energy storage and grid will soon follow

Recently, AI giants signed commitments at the White House to build their own power sources, including self-built/co-located power plants and full funding for grid upgrades, with an emphasis on preventing power outages. (1) Natural gas power generation, with its high reliability and rapid commissioning advantages, is currently the preferred self-built power source. Additionally, diesel engines, marine medium-speed engines, SOFC, and aviation-grade gas turbines are also favored solutions. After data centers are operational, grid connection remains necessary for reliability. (2) Energy storage can meet the load-side response requirements of new grid regulations and is an essential component, with potential to further supply green electricity via solar and storage. The US has announced a $75 billion ultra-high-voltage grid investment plan, with rapid increases in capital expenditure by US grid companies. Given that new energy grid connection orders and related equipment orders have already exhausted the capacities of European, American, and Japanese companies, Chinese grid equipment firms are expected to benefit significantly during this US grid investment cycle.

Investment Recommendations: Prioritize Gas Turbines, Follow with Energy Storage, and Develop Grid Equipment Simultaneously

Based on the actual project deployments of giants like xAI, Meta, and Microsoft, we believe that natural gas power generation and energy storage are sequential rather than mutually exclusive in AIDC power supply solutions, with grid construction proceeding in parallel.

(Original source: People’s Financial News)