Wärtsilä (WRT1V) Status update summary

Market opportunity and trends

• Data center power demand is rapidly increasing, especially in the U.S., driven by AI and compute needs, with off-grid solutions gaining importance due to long grid connection lead times.

• U.S. data center power demand estimates range from 40 GW to 113 GW by 2030, with a 50% pipeline increase in the last six months.

• Orders for nearly 800 MW in 2023 and recent U.S. orders totaling 1.2 GW reflect robust pipeline growth and high activity in off-grid data center segments.

• Revenue recognition from these projects will ramp up from 2026, with service business contributions expected to pick up around 2030.

• Europe and Asia are developing more slowly than the U.S., but opportunities are emerging as grid access challenges persist globally.

Technology and competitive positioning

• Medium-speed engine technology offers strong efficiency, modularity, scalability, and flexibility, outperforming gas turbines in the 50-400 MW range.

• Compared to gas turbines and high-speed engines, medium-speed engines require less redundant capacity, resulting in lower CapEx and OpEx, especially as fuel prices rise.

• Engines consume up to 2000 times less water than gas turbines, with closed-loop cooling systems minimizing water consumption.

• Shorter delivery and commissioning times (as low as 30 months) provide a competitive edge, especially for smaller plants, though lead times are lengthening for some engine types.

• A robust global service network and tailored agreements support high availability and reliability for data center customers.

Customer and market dynamics

• Main customers are developers, utilities, and new segments like data center-focused developers and hyperscalers.

• Technical conservatism and established relationships with turbine suppliers are barriers, but repeat customers and successful projects are building credibility.

• Each project is highly site-specific, with factors like space, emissions, and local regulations influencing technology choice.

• Fuel flexibility and future alternative fuels are less important currently than modularity, lead time, and water usage, but balancing capability is a key long-term differentiator.

• Service business is expected to grow as installed base increases, with high running hours in baseload applications driving aftermarket opportunities.