Elon Musk's gas turbines could shake up the backlogged sector

Elon Musk reckons he specialises in converting the impossible to the merely late. That neatly encapsulates Tesla and SpaceX's pursuit of electric vehicles, humanoid robots, reusable rockets and Martian settlements. Now, however, the entrepreneur has turned his disruptive sights to the more prosaic gas turbine market: SpaceX is set to cast the blades and vanes for them in-house.

The aim appears to have shifted to making the impossibly late more readily available. The data centre boom requires lashings of electricity. Developers struggling to connect to the overloaded electricity grid have turned to dedicated power generation facilities, mostly using gas as a fuel.

As a result, turbines, largely supplied by GE Vernova, Siemens Energy and Mitsubishi Power — which account for over three quarters of the installed heavy-duty base according to S&P Global — are not available for love or money before 2030.

Breaking into this market is tough, given the advanced engineering and prolonged testing that these devices require. And while Musk reckons that by producing his own blades and vanes he can accelerate the turbine delivery timeline by up to 18 months, there are lots of other bottlenecks to getting gas-fired power generation up and running, including specialised installers.

Still, success would be a game-changer — not least for Musk himself. More electricity equals more data centre capacity and one of the ways in which SpaceX currently makes money is by renting it to the likes of Anthropic and Google: annual revenue from just these two deals amounts to roughly a quarter of next year's total, according to S&P Capital IQ. It is also quite possible that advanced turbine parts, such as those Musk is proposing to cast, will double up for use in his rockets.

Musk has already been seeking creative ways round the gas turbine bottleneck, reportedly acquiring APR Energy, which operates a fleet of mobile gas and diesel turbines, for $1bn this year. SpaceX has been using mobile turbines in Mississippi and has agreed a plan to switch to a permanent power plant with local regulators.

Conversely, should Musk make convincing strides into the gas turbine market, that would put pressure on parts manufacturers including Howmet Aerospace. Its stock has fallen about a fifth since mid-August, but still trades at over 40 times this year's earnings on S&P Capital IQ estimates. The impact on the big three turbine suppliers is less clear: while Musk's arrival on their turf is a destabilising prospect, they may also benefit if more competition is introduced into their supply chains.