Cathay Pacific Haitong: The gas engine chain benefits from data centers and energy transition, and domestic manufacturers welcome global opportunities under the mismatch between supply and demand
The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that gas turbines are core power generation equipment, and demand is mainly driven by data center construction and energy transformation. The average annual demand is expected to reach 110 to 120 GW in the next few years. Under the wave of data center construction and energy transformation, the global combustion engine industry chain is in a stage of continuous mismatch between supply and demand. The global supply chain pattern is being reshaped, and domestic mainframe, turnkey and core component manufacturers are expected to usher in development opportunities and accelerate their entry into the global market.
Cathay Pacific Haitong's main views are as follows:
Demand side: Gas turbines are core power generation equipment. Demand is mainly driven by data center construction and energy transformation. The average annual demand is expected to reach 110 to 120 GW in the next few years
The combustion engine has the advantages of high flexibility, high efficiency, low carbonization and high reliability, and is the core power generation equipment. The rise in demand for combustion engines is mainly driven by the upgrading of the energy structure and the acceleration of data center construction. The average annual demand is expected to reach 110 to 120 GW in the next few years. Among them, 1) Data centers: led by markets such as North America, the global data center electricity demand range is expected to be 170 to 383 GW in 2030, and the average annual demand from 2025 to 2030 will be about 14 to 47 GW. Continued growth in artificial intelligence and global digital services will drive up data center construction expectations, and electricity demand is expected to rise; 2) Energy transformation: Combined cycle power plants are critical to energy transformation in the Middle East market, and major combustion engine plants around the world have received orders for combustion engines from multiple power plants.
Supply side: Global production capacity is in short supply, and combustion engine plants are in a phase of price increase and steady expansion of production
1) Tight production schedules: Global core OEMs have scheduled production until 2030. GEV quarterly/fiscal year gas turbine orders have continued to exceed actual sales since FY2024, and the ratio of orders to sales volume is 1 to 4, confirming that supply continues to be in short supply; 2) Price increase: gas engine prices continue to rise, measured in dollars per kilowatt. GEV expects the 2026H1 order price to be 10 to 20 percentage points higher than 2025Q4 orders. 3) Steady expansion of production: Benefiting from strong orders, global core combustion engine manufacturers have begun to expand production. Taking GEVs as an example, they are expected to steadily expand production from 20GW of annual production capacity in July 2026 to 30GW of annual production capacity in 2030.
Domestic opportunities: Under the mismatch between supply and demand, the global supply chain pattern is being reshaped. Domestic manufacturers are expected to accelerate breakthroughs, pointing the finger at the global market
1) Core components and materials: In order to cope with the sharp increase in demand for combustion engines, global OEMs are putting forward higher demand on the warranty side of the supply chain. China's core components/materials companies have ushered in the opportunity to enter the supply chain of world-class OEMs to obtain more model parts supply opportunities. For example, Yingliu Co., Ltd., Wanze Co., Ltd., and Aerospace Technology have signed long-term strategic cooperation agreements with some world-class OEMs. 2) Autonomous combustion engines and power generation: Domestic manufacturers such as Dongfang Electric and Steam Turbine Technology are speeding up the development and commercialization of autonomous combustion engines. China already has independent development technology related to medium to light combustion and heavy combustion. Among them, Dongqi G50 has begun to enter the international market. Meanwhile, in the field of combustion engine power generation, domestic manufacturers are going overseas at an accelerated pace. Taking Jerry Co., Ltd. as an example, it has obtained multiple core engine head resources. As of July 2026, it has received about 2.6 billion US dollars in generator set orders in North American data centers and other fields.
Risk Alerts
1) Industry risks: Increased industry competition, risk of delays in downstream data center & energy transformation projects, risk of international trade conflicts, risk of adverse exchange rate changes; 2) Company risks: production capacity expansion falls short of expectations, resource and customer expansion falls short of expectations, revenue and profit falls short of expectations, globalization strategies fall short of expectations, etc.