Gas engines used to be deployed in the power generation market for relatively small capacities. Over the past decade or so, they have gradually invaded the lower end of the gas turbine space. But anyone wanting 20 MW or more, nearly always selected gas turbines over gas engines. Those days are gone. The mad scramble to provide data centers with power is driving gas engine manufacturers to higher capacities. They can now compete as high as 300 MW. A few highly ambitious announcements push that number beyond 1 GW.
While the gas engine market has been healthy for many years, the data center boom has given it further impetus. Analyst firm Global Market Insights (GMI) placed the value of the global gas generator market at $6.9 billion in 2024. The projected growth rate is 8.8% per year, reaching $16 billion by 2034. Gas generators beyond 330 kVA are the fastest growing segment. They will exceed $3.5 billion by 2034, by which time machines greater than 750 kVA will account for around a quarter of the total, due to surging data center and AI demand.
Market numbers from Rolls-Royce indicate that the data center gas engine segment grew almost 50% in 2024 and is expected to record similar gains this year. No wonder Rolls-Royce is investing $75 million to increase production of its MTU Series 4000 engines at its facility in Aiken, South Carolina while spending $24 million expansion to expand its manufacturing plant in Mankato, Minnesota.
Perhaps the biggest player, though, is Wärtsilä Energy of Finland. One of its U.S. projects will supply 282 MW of engines for a data center in Ohio. Fifteen of the company’s 18V50SG engines will run on natural gas. Each of these machines can now generate 18.3 MW.
“Data center developers are facing increasing time-to-power challenges due to grid connection delays,” said Risto Paldanius, Vice President, Americas at Wärtsilä Energy. “Quick access to power combined with high reliability, fuel efficiency and exceptional heat resilience make engines the ideal power supply for data centers.”
Another example is a data center campus being developed in Millard County, Utah by Joule Capital Partners, Caterpillar and CAT dealer Wheeler Machinery. Although the power of each Caterpillar G3520K generator set is only 2.5 MW, developers say the facility could eventually climb as high as 4 GW of natural gas generation and battery energy storage. It’s hard to imagine anyone deploying 1,600 engines to arrive at 4 GW. Nevertheless, a great many engines will be installed at the site.
Generator packager Fidelity Manufacturing of Ocala, Florida is another company benefitting from the AI data center boom. It has grown from 40 to 500 personnel over the past few years, primarily due to a surge in data center business. It is tripling its production space to make room for more generator packages.
Cummins Power Generation, too, has increased its range of generator offerings for data centers, and has brought higher engine capacities to market . The containerized Centum Force, for example, is engineered for easy transportation, simple installation and stackability.
No Longer Just Backup Generation
For decades, backup generators have been a rarely used part of data center infrastructure. Existing only for those moments when other power sources fail. But their profile is shifting due to the chronic shortage of available power across North America.
Data center developers have grown impatient with long lead times from utilities, gas turbine OEMs, and new nuclear generation technologies. With gas turbine OEMs telling potential customers that they will have to wait many years, some customers are looking elsewhere.
In some cases, gas engines are being looked upon as a bridge to a time when either the gas turbines are delivered or the utility can bring enough power to the site. In other words, they bring in gas engines now, used them to power the data center during the construction phase and the first couple of years of operation – at which point, the engines resort to backup duty.
But lack of power is driving innovation. Expect, therefore, that announcements of larger gas engine installations will become increasingly common over the next year or two. After all, GW-scale data center complexes are popping up all over North America. Consulting firm DC Byte said more than 12 GW of new data center capacity were added in 2024 and another 35 GW-scale projects were announced. Another 15 projects broke ground that were only slightly below 1 GW in size.
“The speed-to-power advantage of our generation package is critical for meeting the explosive growth in demand for compute capacity,” said Melissa Busen, senior vice president of Electric Power at Caterpillar.
