Global gas turbine shortage threatens energy goals in Asia

By Francis Allan L. Angelo

A deepening global shortage of heavy-duty gas turbines is adding major delays and cost pressures to gas-fired power expansion plans in Vietnam and the Philippines, with energy experts warning that both countries are unlikely to meet their ambitious gas-to-power targets for 2030.

According to new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), the world’s top gas turbine manufacturers—GE Vernova, Siemens Energy, and Mitsubishi Heavy Industries (MHI)—are facing unprecedented production backlogs that could stall power infrastructure development for years in emerging Asian economies.

Together, these three Original Equipment Manufacturers (OEMs) have supplied approximately 90% of all heavy-duty gas turbine orders globally since 2015, and their current delivery timelines stretch as far as seven to eight years into the future.

“The turbine backlogs add to an already lengthy list of regulatory and financial challenges delaying gas-to-power projects in Vietnam and the Philippines,” said Sam Reynolds, LNG and gas research lead for IEEFA Asia and lead author of the report.

“Meanwhile, the rapid expansion of low-cost renewables and storage could ultimately limit the long-term role for gas and liquefied natural gas (LNG),” he added.

In both Vietnam and the Philippines, national energy plans rely heavily on rapid gas-fired capacity growth to meet electricity demand and replace aging coal plants, yet the report finds their pipeline of projects is becoming increasingly uncertain.

In Vietnam, the government aims to install 22.5 gigawatts (GW) of LNG-fired capacity and 14.9 GW of domestic gas capacity by 2030.

However, IEEFA expects a shortfall of 25.2 GW combined, including 19.7 GW from LNG-based projects and 5.5 GW from domestic gas.

Today, the country has only 1.6 GW of LNG-fired capacity and 8.3 GW running on domestically produced gas.

Out of dozens of projects proposed under the country’s Power Development Plan 8 (PDP8), only two—the 1.16 GW O Mon IV domestic gas plant and the 1.2 GW Hiep Phuoc LNG-fired plant—are likely to have secured turbine contracts.

Even these projects still face major obstacles, including a lack of power purchase agreements (PPAs), gas supply contracts, and government guarantees for foreign exchange convertibility and payment obligations.

In the Philippines, the only LNG project expected to become fully operational this decade is the EERI Batangas Combined Cycle Gas Turbine (CCGT) plant, which is slated to come online in 2025.

The remaining 10.7 GW of proposed LNG-to-power projects are in early stages of development and unlikely to have secured any turbine orders.

Many of these projects face challenges in securing long-term offtake commitments with utilities, which are typically awarded through competitive selection processes (CSPs) that prioritize the least-cost option.

Without such PPAs, gas developers struggle to achieve financial closure, especially given the increasing capital requirements.

Globally, gas turbine demand has surged, particularly in the United States and the Middle East, where data center growth and coal plant retirements are driving electricity needs.

In 2024 alone, OEMs reportedly received around 80 GW in orders, nearly triple their estimated annual production capacity of just over 30 GW.

By 2027, global annual turbine orders are projected to exceed 100 GW.

The United States is expected to add 19 GW of gas-fired power capacity annually through the end of the decade.

As a result, emerging markets like Vietnam and the Philippines are being priced out of both the turbine and LNG markets.

“In recent years, emerging Asian economies relying on imported LNG have had to compete with wealthier buyers in Europe and Northeast Asia for expensive fuel supplies,” Reynolds said.

“They find themselves in a similar situation today, only this time it’s for the hardware,” he added.

The supply-demand imbalance has also dramatically increased capital costs for new gas projects, which have nearly tripled from USD 700–1,000 per kilowatt (kW) to around USD 2,400/kW today.

In some cases, OEMs are charging non-refundable reservation fees just to secure a production slot, with one developer reportedly paying GE Vernova USD 25 million for a turbine delivery in 2030.

Meanwhile, maintenance and overhaul schedules for existing turbines are also growing longer, with reports of turnaround times extending to 350 days, nearly three times the traditional 120-day service cycle.

IEEFA notes that while OEMs have announced cautious plans to expand production capacity, these will take years to materialize due to persistent shortages of materials, components and skilled labor.

Additionally, scaling up manufacturing in anticipation of AI-driven data center demand carries risks, as a mismatch between expectations and actual growth could leave manufacturers overextended.

Reynolds said emerging markets have limited alternatives to the big three OEMs, as second-tier suppliers often lack the necessary track record and technical capabilities to meet high-efficiency baseload power requirements.

“Relying on alternative suppliers is challenging given the limited number of established heavy-duty gas turbine producers and the complexity of turbine systems, contracts and procedures,” Reynolds said.

Some project sponsors are considering the use of smaller gas turbines, but these typically have lower thermal efficiencies, which means higher LNG consumption per unit of electricity.

Given the already high cost of imported LNG, this could dramatically increase the levelized cost of electricity and make projects economically unviable.

The growing list of technical, regulatory, and financial barriers to gas-fired power expansion is prompting a strategic shift toward faster, lower-cost renewable energy alternatives.

In Vietnam, wind and solar capacity has increased from near zero to more than 21 GW between 2018 and 2023, and PDP8 recently raised the country’s 2030 solar targets by sixfold.

Battery storage is also gaining ground, with PDP8 boosting storage targets from just 300 megawatts (MW) to between 10,000 and 16,300 MW by 2030.

In the Philippines, solar has emerged as the country’s fastest-growing energy source, with over 13 GW of new renewable energy contracts awarded through government-run auctions since 2022.

By contrast, gas-fired generation in both countries is currently lower than it was in 2015, indicating that fossil gas has not made significant inroads in recent years.

“Timelines for solar and wind projects are typically around one year, while LNG-to-power projects can take four years or more, even before factoring in turbine delays and regulatory hurdles,” Reynolds said.

“Gas turbine shortages make the case for renewable energy in Vietnam and the Philippines even clearer,” he added.

The IEEFA report argues that every year of delay for gas and LNG-to-power projects reduces future demand for LNG, weakening the long-term business case for additional import terminals, supply contracts, and infrastructure investment.

The shortage also undercuts bullish LNG demand forecasts from suppliers and industry stakeholders who continue to pitch gas as a bridge fuel for Asia’s energy transition.

While some policymakers remain committed to gas for energy security and grid reliability, the continued rise of solar, wind and battery storage is rapidly reshaping the investment landscape.

Vietnam and the Philippines now face a strategic crossroads, where their ability to meet energy needs may depend less on conventional baseload strategies and more on flexible, decentralized, and renewables-driven alternatives.

The IEEFA warns that sticking to outdated assumptions about gas growth could leave both countries exposed to stranded assets, expensive contracts, and missed opportunities in the clean energy transition.

With the economics of gas deteriorating and turbine availability constrained, future power planning will require more adaptive, cost-efficient, and climate-aligned strategies.

In an environment defined by volatility in global fuel markets and manufacturing supply chains, governments in Southeast Asia must rethink their approach to energy security.

That includes updating procurement policies, rebalancing investment incentives, and ensuring that energy development aligns with both climate goals and fiscal realities.

Reynolds concluded that while gas may still have a role in select applications, the broader trajectory is clear.

“Every year of delays for gas and LNG-fired power plants means that less gas and LNG will be needed in the long run,” Reynolds said.

“Vietnam and the Philippines have an opportunity to lead with renewables and build more resilient, affordable, and sustainable power systems,” he added.