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 are under tight tension, with electricity shortages difficult to reverse. Currently, North America’s power system faces issues such as long grid connection cycles, aging and decommissioned power/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 about six months to a year, investments in power grids and energy storage will begin to increase steadily. North American profits far surpass those of other regions globally, and the resilience of related industry chains is highly promising.

Full Text

CITIC Construction Investment: North American Power Shortage Difficult to Reverse, Energy Storage and Grid Construction Will Soon Mirror Gas Turbine Prosperity

This report uses detailed data to thoroughly depict the tense US power supply and demand situation, with persistent power shortages. Currently, North America’s power system faces issues such as long grid connection cycles, aging and decommissioned power/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. Currently, the market only recognizes the prosperity of gas turbines; in about six months to a year, investments in power grids and energy storage will begin to increase steadily. North American profits significantly exceed those of other regions worldwide, and the resilience of related industry chains is highly promising.

Large-Scale Deployment of AIDC, US Power Shortages Show Long-Term Trend

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. Backup capacity shortages across regions reflect that the US power supply-demand imbalance will continue to worsen under large-scale AIDC construction, while the gradual decommissioning of thermal power plants further exacerbates power shortages. We believe that US power shortages and tight supply-demand will become the norm.

Grid resource constraints make off-grid natural gas power a 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 turning to off-grid solutions. North America’s relatively abundant and low-cost natural gas resources enable quick project deployment using off-grid gas turbines. Texas, with its rich natural gas resources, has become a hot spot for AIDC planning, with 108 projects/48 GW planned.

AI giants pledge to build their own power sources; gas turbines are recognized as prosperous, while energy storage and grid solutions will soon become reality

Recently, AI giants signed commitments at the White House to build their own power sources, including self-built or co-located power plants, fully bearing grid upgrade costs, and contributing to grid stability to prevent outages. (1) Gas-fired power, with its high reliability and rapid deployment advantages, is currently the preferred self-built power solution. Diesel engines, marine medium-speed engines, SOFC, and aviation-grade gas turbines are also favored options. 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 have exhausted 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, then energy storage, with simultaneous grid equipment development

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

(Article source: People’s Financial News)