Let's start with one question per analyst, and then continue with the follow-up questions. I would like to remind you that the purpose of this event is to focus on long-term business opportunities, and as a reminder, we will host pre-silent call on March 23 together with our CFO, Arjen Berends. So let's leave the questions related to detailed financials to that call. Håkan and Anders, time to start, please.
Thank you, Hanna-Maria, and warm welcome, everybody. So today we have me here, Håkan, and Anders. You know, Anders is President of our Energy business, so to say. I will say click when we shift the pages, so if we can go back to where we started. I think the whole topic of today is, of course, power supply for data centers. You could say that last year we had a breakthrough in the U.S. data center market. We were actually in the European market before, but last year we had a breakthrough in the U.S. We do see a significant opportunity for growth, both in new build and later on in services, associated services. Have an opportunity, you know, right now—the biggest opportunity is in the U.S.
We do see movements in Europe, and Asia will certainly come as well. So we also have received a lot of questions in the past, you know, about our data center business and, you know, how we think about it. So we wanted to take this chance to spend some more time. You will also see that we will provide some trends and graphs. I wanna make a general disclaimer, because this market is growing so rapidly, and it's so dynamic that customers, they don't want to talk with their names, et cetera, et cetera. So the full visibility of all, you know, the growth numbers, et cetera, is not there. But we have been trying at least to give the trends and outlines here going forward.
So if we look at today's agenda, we talk a little bit about the market development, and I will start there. Then Anders will take us through more on the technology side. You know, why is engine, why are engines the right choice, going forward, and why have we had a breakthrough in the U.S.? And then also, you know, where are we competitive, and why are we competitive? And then we will open up for the Q&A. So I would envision our presentation will take maybe 45 minutes, something like that, and then we will have about 45 minutes for Q&A. So that's the time frame. And we will go through the presentation, then we take the questions after the presentation. Okay, click. Click.
So, basically, I mean, we are a player in a rapidly evolving market. And we have entered this market for primary power production. And it is quite a recent development. I mean, you know, two years ago, you could say that we, as Wärtsilä, were not in data centers. And back in those days, the data centers were more focused on, you know, traditional storage applications, storage or mobile photos, et cetera, et cetera. And in those days, the data centers, they were needing tens of megawatts, and our engines, and they normally hooked up to a grid, and they had some backup engines, and our engines were not the right solution for that type of application.
So you could say, roughly speaking, two years ago, we were not into data centers. Now, what has happened, we all know it, AI is developing, and as AI require a lot of compute, they also require much more energy. And now we are talking of hundreds of megawatts of power needed, sometimes gigawatts. And it's a challenge to get grid access. And can somebody turn this off? Because I-it really annoys me, so to say. And sorry, we have some pop-up here coming all the time. So basically, you know, it a lot goes off grid because it's hard to get utility access.
This is also where we are coming in, because the type of power, hundreds of megawatts, sometimes gigawatts of power that we are talking about, are very well suited for our technical strengths and also shorter delivery times than some of the competitive technology. Our solutions, they have some intrinsic benefits. They are energy efficient and modular, I mean, compared to competing technologies, and we will talk more about that. They don't derate in hot climates, the world is getting warmer, and they require basically zero water. Water, access to water is a challenge in many areas in the U.S. and other parts of the world.
Also, I mean, we also see over time a connection to the balancing narrative that for those of you who have followed us, we have been talking about for quite some time, that engines have this superior capability to operate in tandem with renewables, providing the balancing power for robust power supply. And this also in combination, this property, in combination with our development of sustainable fuel side, it supports the data centers owners or even the hyperscalers' long-term ambitions for decarbonization, so to say. And last year, we captured orders of totally close to 800 MW, two orders there. And now we started this year very strong with another 429 MW. That. Now, that was a utility order.
The two first orders, they were, you could say, data center developer orders. This was a utility order, but it's utility with this plant having a dedicated or very, I mean, focused purpose for data centers. So this is the context. Now, we talk about, you know, the data center market, where we are and how basically a big chunk of the market is shifting into our sweet spot. And, and, you know, there is certainly a shift, not all, but there is a strong shift into standalone baseload power, driven by particularly in the U.S., but we see similar development in other parts of the world, by the long lead time for grid connections, you know?
You know, if you look at historically, and I mentioned that before, you know, when we were talking about data centers, mainly focused on data storage, you know, you were talking about power needs of 10 MW, 20 MW, even to a 100 MW. The typical power supply was grid- connected, and then you had some high-speed engines for backups. Customer focus was, of course, on power availability, but also CapEx. Now, when data centers are growing in size and accelerated by AI and the need to compute, you know, the need for additional compute power, the energy consumption and need for energy goes up. Grid interconnection, particularly in the U.S., it's for many instances tough, and it takes time.
I mean, five, seven years, eight years, and this is where the off-grid solutions grow in importance. And our sweet spot is, and this is loosely defined, between 50 MW and 400 MW. But I would like to highlight or underline, it's loosely defined, because as you've seen, we have taken orders also above 400 MW, and we can certainly do that in the future. There is no kind of electrical or mechanical limitation. It's basically a question about how much land you have. Because if you certainly, if you go to gigawatts, you will go with combined cycle gas turbines, because the energy density for the CCGTs is better. But so this sweet spot you should take, it's not as distinct as we put it here.
On the lower end of the spectrum, when we talked about that, you know, our engines are probably too big. They are really higher than CapEx. They're really good in OpEx, but some of the customers, you know, they will go for high speed or other solutions instead. And above 400 MW, and this is certainly loosely defined, but in the high, certainly on the gigawatt side, you would see, you know, heavy-duty gas turbines, the OCGTs and CCGTs. So this is the landscape that we are moving in. But as I said, we see a lot of need, demand for off-grid power coming into this 50 MW-400 MW loosely defined sweet spot of ours. Now, this is the ecosystem, and this is also to clarify, you know, how are we interacting?
Because we do work with our, you could say, traditional customer segments, but also with new one. When we look at the ecosystem, you know, we have the operators and end users to the far right. There you have that hyperscale and colocation data centers. And we don't deal directly with them because in between, we have the developers and the utilities. And we have dealt for decades with the utilities and the IPPs, but now we also start to deal with the data center-focused developers. This segment, the developers and utilities, they, you know, they engineer the data centers, the power, and they build and often own it, and they buy then the equipment. They buy equipment from us.
They, of course, buy equipment from other suppliers, and they build these data centers, including the power. So our customers are mainly the developers and the utilities. And they contract, the developers and utilities, they contract with the hyperscalers. Now, there is another element also that I think is really, really important. You know, because sometimes we get this question, "Oh, okay, I mean, the power line is coming, you know, in eight years' time, then there is no market." But we don't see that at all. I mean, our data solution meets the customer demand for quick access, but they are also very well suited for flexible power generation of the future.
So now you can say basically step one, now everybody's running for power, and you know, to be able to grow the data center need and the compute need. I think what I mean, what we see happening, you know, a couple of years down the line, 6, 7, 8, depending, there are in many cases or in some cases, there is a power line coming in. And what our customers are saying then, because the modularity of the solution, they might add a couple of modules, and then they start to sell power to the grid as well. So they will still sell the data center, but they will also start exporting to the grid. And the key to manage that type of operation is flexibility.
For those of you who follow us, you know, where we really stand out is this flexibility. And then if it's step three chronologically, but we also know the hyperscalers, they wanna, they want a green power. And I think increasingly they will be looking at bringing in, you know, power from wind and solar. And wind and solar are great, but they are intermittent, and this is where it becomes more of a balancing solution. And as you know, we are working a lot on the balancing power segment already today. So in all these kind of development aspects, our technology is a very interesting technology, and it has some competitive advantages in its flexibility.
Now, looking out over the globe, you know, right now there's a lot of things happening in the U.S. It's developing rapidly, and key customer segments are the data center developers and IPPs, but we certainly see the utilities as well as we've seen here in the beginning of the year. I mean, the targeted applications include off-grid and behind the meter data centers, and we had our first two orders last year, close to 800 MW, and we started this year strong with another order for 430 MW.
On the Europe side, we actually started in Europe as Wärtsilä in data centers, and that was the partnership that we still have with AVK, and we have had three orders in Ireland, and that is, those projects are still ongoing. But I would say the development in Europe is slower currently than it is in the U.S., clearly. But it will come over time. And we provide, you know, the equipment and maintenance support. This is for us both. I mean, all over the world, it's primarily a EEQ business, an equipment business. And we see opportunities in Spain, Germany, and the U.K., so there are opportunities, but it takes longer time in the U.S. Then Middle East and Asia will also come.
I think now the interest in data centers is clearly there, but then, of course, you know, how much power can you take from the grid? How much power will you take from the grid? And when people land in that, how much additional power do you need? And then that will likely translate into business opportunities for us. So this is also coming slower than in the U.S., but it might accelerate quicker than Europe. Let's see. Now, the big question is, of course, that is on many people's mind, you know, what's the size? What's the potential volume and gigawatt size of the market? And I think the short answer, I don't think anybody knows.
And there is a lot of smart people that, you know, have made estimates and, you know, try to look into the crystal ball, and you can see some of the, you know, organizations where we have brought forward their numbers, so F3, Goldman Sachs, McKinsey, IEA, et cetera. And I think the conclusion here, if you look at the prediction, this is the U.S. figures, but, you know, the spread, which is the key message, would be the same for other geographies. If you look at the spread, it's everything from 40 GW to 110 GW. So what's the right number? I don't think anybody knows. It will grow. That's for sure.
When we talk to our customers, I mean, basically, if I simplify the message, they say, "Okay, this is not about ChatGPT. ChatGPT is exciting," but this, where we see the real growth more over time, it's in corporate AI. What they mean with that is that companies like Wärtsilä or, you know, any industrial company or the banks, we start to use AI to drive our internal efficiency, but also to develop our customer offering. And as Wärtsilä, I can certainly relate to that. I see a lot of great things going on in Wärtsilä when it comes to how we run our business and also how we develop our customer base. So these are the drivers.
I would say these are the predicted, you know, development, but as we all see, there is, there's quite a span. Then also on top of that, of course, there is a funnel process. You know, if there is a need of, of, let's say, just taking a figure of 113 GW, the top of this range, you know, that's the total DC power, then, you know, how much will proceed? How much will be gas-powered? Because not everything will be gas-powered. I think short term, absolutely. I think over time, gas power will have a significant share, but it will not be alone, clearly. And then how much will go into our sweet spot, loosely defined, and, and how much is off-grid, so to say, or, or behind the meter?
So there is clearly a funnel process, before it reaches, you could say, the addressable market, you know, our sweet spot where we are competitive, we can grow. But still, all, even considering this funnel process, I mean, our conclusion, there are significant growth opportunities going forward. So, we have a growing pipeline of data centers. Sorry, we have a growing pipeline, yeah, both of data center, but a growing pipeline of data center opportunities, with attractive life cycle margins, huh? And we do see high activity in the off-grid, data center segments with a continuously increasing pipeline.
I mean, we will not go into the gigawatts, et cetera, but I can say that, you know, our pipeline on everything we see, it has grown with, you know, about 50% the last six months. So, there is clearly a lot of things happening. Now, in that pipeline, there are new things coming out, but there are also things going out. So it's a very dynamic development, but it's certainly growing. Data center customer, they highly value speed to power, and clearly the market is short on equipment supply. Now, if you look and, you know, if you consider our pipeline and how we, you know, the portion we would translate into business, we expect the revenue recognition to connect it to the deliveries.
It will pick up, you know, gradually here over 2026. So it's starting in 2026 and ramping up towards the end of 2026, and then the business, service business will come. But there's quite a lot delay. We see it's picking up around 2030, and that is, of course, you know, you need to install, there is a warranty time, you need to run the equipment for a time. So that would be a very interesting service business. But it takes time for that to, you know, to translate into revenues and bottom line. So having said that, that's a kind of overview of the market, very exciting market. I think we are very well positioned, but it all starts with having a competitive technology and great people. But Anders, t alk about technology.
Thanks. Yeah, thanks. So let's go to the next page. Here you can see some of the attributes where we are very strong with our engine technology. First of all, the full load efficiency. We have a good efficiency at full load, but engines also have the advantage that they also are good in part load efficiency. And we can also do unlimited starts and stops, which is also beneficial as not all engines on the running a full load all the time as load goes up and down. We also have a modular design, and I will show later on how we benefit from the modular design, and that we don't have two big building blocks.
The heat tolerance, which is, of course, only applicable where it's very warm climate, but we have very little derating with the temperature. Up to 40 degrees Celsius, we have very, very little derating if we compare with competing technologies. Also altitude tolerance, if that should be an issue. At a higher altitude, we also derate much less than competing technologies. Of course, the efficiency also makes sure that you have low CO2 emissions. We know since we had a winter storm in Texas some years ago, that we can also deal with lower gas pressure if the gas pressure should drop due to ice storms or other things in the environment.
Also, minimum water usage, which is, of course, very important where there is a dry climate and there is a lack of water. But even I met with a customer yesterday, I pointed out that actually it's also important where you have water, because of agriculture interest and other interest in communities is not to use that water. So actually, water is important, not only in dry climate. Go to the next page. So here we have looked how we are comparing with the medium-speed engine technology to the high-speed engines, but also the aeroderivative gas turbines and combined cycle gas turbines. So starting from the left, we look at the efficiency, and there we have put in some rounded numbers of what the efficiency are for the different technologies.
So you can see that, of course, the combined cycle gas turbine has the highest efficiency, but the medium-speed engines are following closely at 50%. Then you have the ramp up to full load, where you can clearly see that the engine technologies, both the high speed and the medium speeds, are doing better than the turbines and certainly than the combined cycle gas turbines. How many starts and stops you can do? Clearly advantage for engine technology. Modular design due to the size of the engine, clearly, advantages to engine technology over turbine. Heat tolerance, also, engine has an advantage. Altitude, engine has an advantage. CO2 emissions, they're, of course, the most highest efficiency have the best, which means the combined cycle, but medium-speed engines are following, and then high speed aeroderivatives are the ones with the highest CO2 emissions.
Then you have the gas pressure and the water usage. The reason, of course, why the water usage is very low on engines is that we have closed-loop system. Go to the next page. Here we are trying to take in the—if we look in the sweet spot of 550 MW-400 MW, the trade-offs, and we selected the scalability, efficiency, modularity, and flexibility, and compare the different technologies to the left. And then we have summarized that in the diagram to the right, where you can see that the medium-speed engine technology is actually ranking the highest if you take these four attributes together.
Of course, I did mention also other attributes, and it depends, as I say, on the site, what are the most important, but to point out, these are, these are the four, that we see, as, as the most common, attributes that customer evaluates on. But as I mentioned before, water consumption, CO2, heat tolerance can also play a big role, but they are not included in the diagram. But, we should not forget that there are also other things that can determine what, technology that is best to use in that specific site. Go to the next slide. And looking at the competitiveness of our technology versus, some other technologies here. So move to the next slide.
So here we have taken an example and said that, okay, let's look at a case where we have 300 MW, off-grid, data center in Texas. Then we have looked up with CCGTs, aeros, and medium-speed engines, how to come to 300 MW. First of all, with the modularity, you have to see how can you scale this up to fit to 300 MW. Clearly, if you go with CCGTs, and each CCGT have a 72.8 MW, then you need five of them to be above 300 MW, so to say. Then you need the same thing you do with the aeros that have 33.2 MW, then you need 11 units, and then you come up to 365 MW.
But what is then also important is that with the high 99.9% availability that you require from primary power source, you then need to consider also the maintenance reserve. And if you then add that on top of the basic requirements, so to say, then you end up with the engines based on our V34 engine at 358 MW installed, while the aero, you have to go to 465 MW, and the CCGT is to 510 MW, which actually means that you have 210 MW extra capacity, so to say, to all the time be able to deliver that time and availability requirements that the customers have. And with aero, it's 165 MW on top, and for the engine, it's only 57 MW on top, which of course have a impact on the CapEx, as we will see, going to the next slide.
Anders also, if I may make a comment, if you go back, I think it's also very important to highlight—this is, you could say, an archetype case, when we try to, you know, just to clarify the value of the modularity. But there is also a note. I think what we would see, especially on the big power plants, you will use a blend of different technologies. So there will be some CCGTs, there will be some engines to get the right equation here, because to just go with CCGTs will be extremely costly.
Yeah, and especially if you go up to 1 GW scale. Yes, we go to the next. Here we have now tried to convert this into what it means in terms of CapEx, and we have looked at the fixed cost CapEx, and then we have also looked at the OpEx as well. So we have both in here. And of course, as I mentioned in the previous slide, the CapEx is, of course, affected on how much installed power you have. And then we have run basically a case here where we assume $4.3 per Btu fuel price. And then, of course, the CCGT would have 30% higher LCOE than the engine power plant.
Of course, if you double that fuel price, the difference will decrease, but there will still be a 60% higher LCOE than the engine power plant, for the CCGT. Then you have the aeros, of course, that have an even higher OpEx, and of course, that gets even worse if you double the fuel price. This is what you can see in Europe per megawatt hour, if you consider both the installation cost with the CapEx and also the OpEx, both in terms of maintenance and the fuel. Go to next page. We mentioned water consumption, and just to highlight that, of course, it depends on if it's CCGT or aeros.
But as you can see here, since we have a closed-loop cooling system, we basically require, very, very little, water consumption, so basically just to top up. And you can see that CCGTs have more than 2,000 high consumption and the 500 MW for the aeros. So it's a fundamental difference on... And I think that the more, the community around the data centers do care about water, and especially if there are agriculture things going on, it is important, and it's not only in dry places where you have a lack of water. It's also if you have the needed use of water for other things. So very important.
Actually, the customer I have met yesterday said that actually, that's one of the most important besides the lead time for them at the moment when they look at how they choose technology. Go to the next slide. I mentioned now lead time being still, of course, very important, and you know that. And here we have indicated what are the normal typical times to plant commissioning under normal circumstances. And then we have also added, since this varies, and right now we can see, of course, that due to capacity constraints we see very much a longer time.
And here you have a difference of going from 30 months, so 2.5 years for engine technology, up all the way to 54 months if you look for CCGTs and aeros. I think are somewhere in between. But this is, of course, varying, depending on the capacity, cancellations and new orders. So this can vary in time, but this is to show what is the normal time, when there is no limitations, on capacity versus the current situation that is today. Go to next page. The other thing that I think also is we benefit from in Wärtsilä with our offering is that we have a very strong service offering.
We have built out service network, we have a very good references of doing service, and we can also offer all types of services, meaning that we can start with just having parts agreements to optimized maintenance agreements to full outcome-based agreements, and even doing the O&M. And we have experience of doing all of this, and we have a network, both in the U.S., but also in the rest of the world, that is well built out. So we have references and customers feel confident that we can also deliver on our promises. And since especially the data center customers, for them, it is very important with availability and reliability, but of course, also the security.
I think we have a good position with our references and also offering on the service side. And of course, we know that data centers are going to run many hours, and then it's also a good opportunity for us to offer these services to our customers. Next. Coming back to what exactly we have offered in the U.S. So we had two orders last year in total of 789 MW. It was 42 what we call the 50SG engines, which is a workhorse that is well-established in the U.S. and that today can also run on sustainable fuels, hydrogen, for example, up to 25%, but could also do more in the future.
And these orders were booked in Q2 and Q4 last year and will be delivered, starting deliveries in the first order later this year. And these orders were followed by, as Volker mentioned, a utility order, but that was dedicated to data centers from the utility. So we want to mention that as well, and that was for 24 50SG engines with a total of 430 MW in the U.S. Thank you. To the next page.
And then I would like to come back to a page that we have also highlighted in our interim report, our recent interim report, and that is, you know, with this very positive development, specifically in energy, but also certain extent in marine. Let's to focus on energy today, that it will take longer time than it, you know, some time back to convert the existing order book to sales. I mean, and there are basically two kind of mechanisms that are playing out here. And we are, first of—we are taking orders further out in the future, clearly. And then, you know, for those of you who has followed us, we do much more of equipment deliveries than EPC, I mean, where we do the civil and installation as well.
So in the data center orders, given that they're in the U.S., this is clearly an equipment, so EEQ. And here we have a revenue recognition model, which is basically based on milestones, and there are normally several milestones, but you could say one major milestone is always when you deliver the equipment. And so then you recognize revenues, and you also recognize profit. And this is different from the EPC model. An EPC model, and it's a conventional contracting model, there you recognize, you know, revenues and profit continuously over the project time, all the way from day one, all the way to the end. So of course, you understand that these different type of models, they results in different prioritization. And then I would say we will recognize in general in sales later than before.
And then we also indicated how quickly the U.S. data center deliveries will ramp up. So we start now, we ramp up towards the end of 2026, but the service business will pick up later. Then, and this is nothing new, for those of you who follow us, but we are very happy and proud that we just recently announced our capacity expansion of the industrial system related to our sustainable technology hub in Vaasa, Finland. And we are investing both in the facility that we have, but also in our global supply chain, because they need to go in tandem. If we're gonna ramp up our capacity, we are clearly working in partnership with our supply base as well. And we will be investing EUR 140 million.
It's in addition to the EUR 50 million that was announced in April 2025, so 50 + 140. We also say we're gonna expand our technical capacity with 35%. We use the technical capacity as the reference point, and we will expand that until, you know, it should come in operation in Q1 of 2028. There is a certain lead time to get this in place. Also, you know, just to help you to assess this, is we also been talking about that in 2025. Last year, we were running at 75% of technical capacity. If you start from 0.75, and you go to 1.35, that's actually an expansion with 80%. I guess it's both are correct.
It's a little bit how you wanna talk about it. But we normally, we are engineers, so we talk about technical capacity and how we work around. So, very much in progress, and this is, of course, also part of, you know, how we—it will make a contribution to how we develop our order intake going forward. So, to sum up a little bit, we are well positioned to grow across a multiple of customer segments in both balancing and baseload. So let's not forget our overall narrative because it still holds. It's not all about data centers.
On the balancing side, we do see it playing out a lot in the U.S. as well, and it's based on renewables often being a very affordable source of energy, and they need a balancing to keep the system stable. So that certainly continues, and we are working on the balancing side. We are working with the utilities, our traditional customers, and IPPs, and there are new IPPs coming in, so that is very positive. And on the baseload side, I think there are several trends. I mean, if I take globally, you know, we have the electrification of several industry, transport, et cetera. People will use more and more electricity that drives baseload demand. We in the U.S. and also in Europe, we have an aging power infrastructure.
So there is, you know, there is renewable rate of needed generating assets that also feeds into this. I mean, on a global scale, the climate is getting warmer, so the demand for air conditioning; it's quite a big driver. Look at the data from International Energy Agency. It's the same magnitude as data centers globally. So that's another. And then we have the data centers that we talked about today. And here we work with utilities and IPPs, but also industrials and now new customers on the data center, you know, builder and integrator side. I mean, our focus is clearly to support our customer to maximize their value.
For us, it's a profitable growth opportunity in both new build and services in a highly dynamic, and I say this in a positive way, at market for thermal power. So if we sum it all up, click. Coming back to power for data center is a significant growth opportunity for us, both in new building services, you know, off-grid power is expanding rapidly. Our technology is very well placed. We see a strong demand also in the existing grid market, and baseload power, it will be there, and we have a high value service potential as well. So data centers is a very interesting opportunity for us. So that was the message for today, and thank you, Anders. We give over to Hanna-Maria and the team for the Q&A.
Thank you, Håkan, and thank you, Anders. Now, we have plenty of time for Q&A, so if you have a question, use raise your hand functionality in Teams. In the case it's not possible to use it, please, you can also send an email for me. First question is coming from Vivek Midha. Please go ahead.
Thank you very much, everyone. Good afternoon. Hope you can hear me well, and thank you very much for doing the call. Really interesting. Lots of really interesting data points. I'm interested in understanding a bit more about CapEx costs in the slide 17, particularly on a per megawatt basis, given, A, how fluid the pricing situation in this industry has been the last few years. You know, the fixed costs in the chart also includes things like fixed maintenance and so on. Part of the comments you made around CapEx have been about the extra redundant capacity you need on the turbine side. Would you be able to share with us the CapEx per megawatt assumptions that you've used to underpin this case study?
Maybe if you don't want to be as specific as that, would you maybe be able to talk about your relative competitiveness on the pricing per megawatt? Has the inflation we've seen on the turbine side helped you in becoming maybe more competitive on price, with the turbine players, or is that a minor contributor? Is that not really been a driver? Thank you.
So if I start, Anders, then please feel free to chip in. And I mean, the challenge here is really to compare apples with apples and not apples with bananas. Because I know I fully understand, you know, everybody's trying to assess what's the cost per kilowatt hour and kilowatt or megawatt, et cetera. It's not easy because first of all, you know, you compare different price points, and, you know, what's the scope? Is it fully PC? But even if we go to—and if it's not, let's say it's equipment, you know, how much of balance of plant is included, how much of auxiliaries are included.
So even if, for instance, it's talking about ourselves, when we—you know—when you read our official reporting, you know, you will see that this varies quite a lot. Even if we define it as equipment, it's because the scope varies quite a lot, and that's why it makes it very hard to compare. You know, I understand you want to do it, and you know, you really need to triangulate and give and work with intervals there. That I would encourage. I will not go into all the details, and I think you understand why. Now, in terms of, you know, where do we stand with the gas turbine guys and girls?
You know, I think we definitely have an advantage on shorter delivery times in general, although our delivery times are also getting longer for certain engines. For other engines, I think we still have relatively short delivery times. But I would say, because some people say, "Well, you're selling your engines just because the gas turbine guys are sold out." And I would challenge that statement, because of this. I like to refer it as the tic-tac-toe, you know, this 9, 3x3 matrix of technical advantages. And you also see that if we go to page, the following page there, if you can help me. Because I mean, the world is not black or white, and you know it, but I want to restate that.
Thank you very much.
Wait, hang on. I'm coming. I'm just waiting for-
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... someone to put up the slide.
Sorry.
So this one. No, the next one. Number 14. This one. Because here we try to... You know, how customer evaluate the technology. This, we try to synthesize. How does a customer evaluate the different technologies? And, you know, in this case, of course, it's our slide, so we come out winning. And we obviously, we don't always come out winning, but we are coming out winning. And it's because customers are clearly evaluating the offerings in different dimensions. And some of the technologies are stronger in certain dimensions. Other technology, like ours, are strong in other certain other dimension. And then the customers make a holistic assessment. And of course, customers, they have different preconditions, they have different focus, CapEx, OpEx.
Not one customer is like the other customer, and that's why, you know, because sometimes I get challenged, you know, "If your technology is so great, which it is, why don't you just win everything?" Of course, we will not win everything, but we will. My key point is that we have a place to play in this market. I mean, the, it's moving into our suites, but these intrinsic advantages, they, they are there. It's not marketing only, they are real. And, and, and that would mean that we have a very strong proposition, not for all customers, for many customers. And, and, and, and, and I also make the point that, you know, once customers... We, we have many new customers that are coming in now. They are trying, we are talking to them.
Once they try the new candy, the engines, I'm pretty convinced that they will like them because I have repeat customers in the U.S. They are coming back. Lower Colorado River Authority, [Wake Energy], et cetera, et cetera. So, they are coming back not only because we are nice people; they are coming back because, you know, they can see that this is real. Now, of course, then to pricing and, you know, strength, et cetera, I mean, it is, of course, if you look at supply and demand, there is a shortage of supply. And this, of course, gives all the, you know, the manufacturers certain pricing power. But I would also like to balance that a bit because, you know, we have a customer, and, you know, the customer needs to make the business case fly for them.
So, it's a balance. It's a good old balance, but in general, you know, the business is certainly contributing to that. So overall profitability from a life cycle perspective.
Thank you very much.
Next question comes from Uma Samlin. Please go ahead, Uma.
Hi, thank you so much for organizing this call. It's super helpful for us to understand a bit more on the data center opportunity here. So, I have a question on your slide, the same slide from earlier, those, page 17. So it seems like you're saying your, you know, OpEx cost is a bit lower than aeroderivative turbines as sort of comparable to the combined cycle turbines. So how do you calculate that? Because what we have heard from the turbine makers seems to suggest that engine maintenance will be a lot more costly because you will have to maintain them more frequently, on a frequent basis, like, you know, every, a few thousand hours. So I just want to understand a bit more there, how you look at that.
Yeah. So, even though it's, you're right, it's more frequent, but it's also the cost of the major maintenance that you have on the turbines that are much higher than the cost on the engines. And then also in the OpEx is not only the maintenance, you also have the fuel being part of that. So obviously, with the efficiencies difference between aero and medium-speed engines, you get a big part of the OpEx difference is, of course, the fuel. And, you can, of course, see that also varying with price, but, with a big difference in efficiency, a large part of the OpEx difference is the fuel. But the maintenance itself, the OpEx maintenance, so to say, it's not a big difference between aero and engines. But engines have more continuous maintenance, while you have a bigger maintenance coming up on the aeros that are more costly.
Thank you so much. But I guess, you know, like, what are the sort of pushbacks you get from your customers then? Because if you look at Siemens Energy, they book, like, 36 GW of orders, and you're looking at, you know, a few, yeah, less than 1 GW, year to date. So just wondering, like, what are the sort of pushbacks you get, and if you both have a short delivery time and also cheaper, sort of, you know, both from OpEx and CapEx perspective?
So I would say that, that there could be many things. One is obviously, that I think that many customers knows the turbines, and the turbine suppliers very well from the past, so to say. So that's one thing. We are less known, especially in the U.S., than if I compare with GE, and maybe Siemens as well. And, the other thing is, I think, Håkan sort of alluded to it, that when you have bigger sites and if you have site constraints in terms of space, obviously, the density, the power density is higher with turbines than with engines. So that could be another reason. And, as we also said, every site is different, so there could be specific reasons for that particular site. So it depends.
I mean, it could be, you know, I showed the emissions here as the overall emissions in CO2. That's one aspect, but you, of course, have PM2.5, you have other things, and emissions, especially in the U.S., is not only measured on the data center itself, but it is what is in this area. So if you have a coal power plant, for example, you have already used up a lot of the particles already for that. So then obviously, in that specific site, that might then play a bigger role, which might be to our disadvantage. So I would say that it's very, very site-specific, what is the criteria on that particular site.
Well, but to give some further, you know, color to the whole topic, because we need to move away a little bit from this, that, you know, the world is black and white, and there will be only one solution. There will be several solutions, and I think the this tic-tac-toe advantages that we have, combined with delivery time, that will build us a handsome business. I can say that. And customers, they believe in it. I had a new customer here recently in the region. I cannot say who it was and, b ut I will give you the context. So it's a U.S. customer.
It's a big, one of the big IPPs, and they, on senior level, they said that, "You know, we have great engineers in this company, and they love the gas turbines. I mean, they've been working with them for their whole professional lives. And I have been trying now, because, you know, of the constraints, to get my team to, you know, try the engines. But it's so difficult because, you know, there's a conservatism. You know, people, it's an engines is a new technology." So this senior leader, he came to, "I wanna do a project, an engine project with you in another country, because then I can use that as a kind of change management tool to get my engineers to really look at the engines.
Because I know when they look at the engines, they will see what you have been saying for a long time, that's, it's true. And then once we've done that in country X, Y, Z, we will bring that to the U.S." So, there is this journey of technical conservatism, and you could say one area where we need to develop and improve is to get our message out there, and then, of course, the proof is in the pudding. And that's why I bring up this with the repeat customers. I mean, yeah, you can sell something, but if you want the customers to come back, you need to deliver on your core promises, and that's why I... And I've been talking about that over time, and now I'm talking long term.
I think this is a fantastic opportunity for us to prove our technology, and over longer time, build our market share.
That's super helpful. Thank you.
Yeah.
Oh, sorry.
I would say, maybe to add to what you said, Håkan, it's a little bit like if you haven't been driving an EV, you worry about a lot of things, and then when you have been driving an EV, I think those of you that have done that, you know that it's not a big worry, and you probably won't go back. It's the same thing.
Thank you. Thank you. Thank you. Next question comes from Antti Kansanen. Please go ahead, Antti.
Yeah. Thank you, guys, and thanks for taking my question. I wanted to continue on the same theme a little bit, referring to slide six, kind of a value chain that you are looking at and talking about the developers and utilities. When you guys talk about kind of having some challenges of being less well known and being kind of a challenger in with the engine technology, are you now referring to kind of exactly the utilities and the developers who are operating in this space? I'd imagine that the end users, the hyperscalers, are not the ones who are making the decisions. So I would want to better understand kind of the scope, are you operating with multiple, a very fragmented base of developers on a certain project?
Do you believe that there will be kind of a few bigger ones that maybe are already familiar or will become familiar with the engine technology? So there would be some scalability into kind of penetrating better into that, that developer space. So maybe talk about that a little bit.
Yeah. No, please, Anders, go ahead.
No, so, definitely, I think there is an advantage, so to say, to work with the ones that have a pipeline of projects. You have many small developers, but those projects take longer time and also are more unsure. But I think that the ones that have a good pipeline of projects and also prove that they are in this business and that they manage to pull off the projects that we're working with them, which we are doing now, the first order come from such a company. I think this is a benefit. And when you talked, you also asked about the utilities. I would say that if I look in the U.S., historically, so to say, we've been very strong with the local municipalities.
So also what Håkan mentioned, the big utilities, they have a lot of gas turbine people in their organizations, and what I'm very happy to see is that in the last years here, we're also starting to make good inroads to the big utilities. The advantages with that, and we have repeat customers now on the utility side, the advantage with that is that they also have a long pipeline. If you go to municipalities, they don't have a long pipeline. They, they are not the same size. So it's good, and they will talk to other municipalities, so from that point of view, it's good that we can get a new order from another municipality due to a good reference, but typically, they don't have many orders like utilities have that are much larger.
For us, it's definitely an advantage that we have made inroads to bigger utilities and also to bigger data center developers that have pipeline of products. That's clear advantage, and that's what we're doing.
Kind of if you look at the opportunity for the next, I don't know, five years, are there some kind of, kind of a focus areas that you want to target with, whether it would be choosing certain kind of developers, utilities, certain regions, areas in the U.S. that you would be targeting more?
Yes. We have, of course, and now I'm not talking data centers, I'm talking energy market in general. It's quite clear that we have been focusing on certain regions, and if you follow our press releases, you can also see what those regions are. So, of course, we target those. We're having a bigger need for balancing applications, and then on top of that, now also the data centers where they are located on. Yes, so you can see where there is a lot of renewables and where there is a lot of data centers. Those are regions where we target.
All right. Thank you.
Thank you. Next question comes from Anders Idborg. Please go ahead.
Yeah, thank you so much. I wonder if we could throw in energy storage into the discussion, mainly from a technical perspective. I mean, I'm looking at Fluence's presentations here. They talk about, you know, 36 GWh of pipeline, and I just want to understand how that would impact as well, you know, your solution, you know, from a competitiveness. They talked about smoothing out the peaks, basically, and I understand there could be upside, of course, given that you have the business as well in-house, you know, but, but mainly, you know, how it interacts with the engine offering would be interesting at this point.
Basically, I think this is an evolving area. I mean, and you're fully right in the sense that specifically the learning data centers, they have big loads, I mean, tens of megawatts swings in the second, millisecond area, time domain. These are fairly challenging, you know, from a technical perspective. Different data center developers, they use different technologies to kind of smooth them out, I mean, low pass filter. Batteries is one of the technologies, but there are also other, I mean, synchronous condensers. There are different type of specialty solutions, so to say.
So, those type of, I don't know what to call them, smoothing technologies, you need them for your gas turbines, you need them for engines as well. But different methodologies are used. Now, battery storage is one of the solutions, clearly, and could this be an opportunity for our storage business? Yes, it could. We are still evaluating this from several perspectives, so that's why we haven't brought storage here today. We emphasize the thermal side because this is where we are formulated, and then we are starting the battery side.
Okay. Got it. Thank you.
Thank you. Next question comes from Sven Weier. Please go ahead.
Yeah. Hi, good afternoon. Thanks for taking my question. It's coming back to the competitive advantage, but not against turbine makers. I mean, I guess every one of you will talk their own book and how great they are, but I was wondering more about your edge against other engine makers, right? I mean, there are a few also local ones. What do you find there as a, as a, as an edge or as an upside, maybe?
I think we showed in the table on page 16 our relatively so the competitiveness to high-speed engines. And of course, since both are engine technologies, one is high speed and one is medium speed, there are differences, but they also share many of the advantages, so to say, with startup time and thermal capability and all these things. So of course, there are smaller differences. I think if you look on the high-speed side, clearly the size of engine is one difference. We also showed on the efficiency that you have some difference. So there are differences to the high speed.
If you, if you're asking because you didn't specify that, but if you're asking to other medium-speed engine suppliers, I would say that we clearly have much stronger network in the U.S. for making sure that these plants can run on very good service and therefore run with a very good availability. I think that this is key for data center customers to reassure themselves, and not only data center customers, by the way, it's also true for balancing customers, that it is important for them to make sure that these engines start when they should start, and they are maintained when to the best quality, and that they are always able to deliver the availability.
That is key, and I think we have with the network of service, network that we have around the world, and especially in the U.S., that I think is absolutely an advantage for us.
If I may add, I fully support Anders, but I would say that the high speed they have one commercial advantage to us, clearly. Because they have been dealing with the data center segment much longer than we. Because as you remember, I mean-
For backups.
For backups. Exactly. So when back in the days when data center was storing, you know, moving to AI, so, you know, they are, they know customers, they have well-established customer relations. You know, the sweet spot is moving into our market. So of course, we are, Anders and his team is working a lot on building customer relations, et cetera, et cetera. So initially, high speed has a customer relations advantage, but we will catch up because we have a very competitive technology.
How important is fuel flexibility and advantage relative to the gas turbines? We think about later upgrade to hydrogen. Is that important at the moment at all, or not really?
Oh, I would, I would say that at the moment, that comes further down on the list. It's another parameter, but I would say that that other things like the modularity, for sure, the lead time, but the modularity and scalability with that, and also the water consumption is probably higher than the future alternative fuels, so to say. So-
I would say, if you remember this three-stage rocket or whatever you want to call it, you remember I put the renewables. I think that is more of a in focus in long-term thinking. I mean, right now everybody's rushing, but I think the hyperscalers, they certainly have in the back of their mind, "We need to go green." So I... You know, the balancing property, I think, is, at least my perspective, balancing property is more important than alternative fuel capability. Now, as you know, Sven, because you follow us, we are well prepared for alternative fuel, and also because of our, you know, decarb strategy. But I would say that from a market perspective, I mean, the balancing capability will be more important.
Thank you.
Thank you, Sven. Next question comes from Vivek Midha. Please go ahead.
Thank you so much, for the opportunity for a follow-up. Just one follow-up on a comment you made earlier around things like PM 2.5. And, you know, one thing we have heard from certain sort of industry players is, you know, there are things like nitrogen oxide, methane slip, and so on, can also be topics where potentially, you know, there are questions about the reciprocating engines. Is that something which you also hear coming up? You know, is there an issue around, say, data centers, which are closer to population centers and so on? How important is that as a factor? Thank you.
I think, so far, as I mentioned, we have a case on PM2.5. I'm not aware about any other cases, what you mentioned with methane slip, et cetera, that has been a deciding factor against us, so to say. So I'm not aware of such a case.
I mean, technically, we to deal with NOx, we would of course apply the SCR, et cetera. So then you would give you will equal out a difference. And it really comes back to this slide about different customers use different criteria. They put different emphasis, and the world is not black and white, but we will win, and sometimes we will not win. Clear.
Thank you very much.
Next question comes from Robin Fiedler. Please go ahead.
Hi, thanks for the presentation. I think it's clear from what you're saying today that there's obviously pros and cons for both turbines and engines, and they both have a place in this market. Given what's for now a clear time-to-power advantage, given your lead times and given the value that that has to the end customers, I'm just so curious why, so far, your engine pricing for data centers seems to not have shown any upside yet. Is that just a function of when with your initial deals the pricing terms were set maybe a year ago before there was this severe tightness? I'm just trying to gauge what the pricing opportunity is directionally, if any, or is this more a volume opportunity?
Thank you. No, I mean, that is a good price realization. But you, as I said, and I know you're always trying to, you know, look, what did we invoice, and you divide by megawatts, et cetera. But unfortunately, you don't see, I mean, it's very hard to see through the whole full complexity of that. And as I said about, you need to make sure, you know, EEQ, what type of EEQ is it? You know, are the balance of plant included, et cetera, et cetera. We don't communicate that, so it's impossible for from an external party to see through that complexity. So that's why one should be very careful that, you know, saying, you know, yeah, we certainly know that gas turbines, they have increased our prices. We also have a good price realization.
At the end of the day, we have a good competitive technology, and you know that the customers can build viable business case and make money on. I think that's the key thing, and I have said it many times that you know the data center business will contribute to Wärtsilä's profitability. And also, I talked about you know deliveries are starting to ramp up gradually this year, et cetera, et cetera. So it's too early to evaluate you know the profitability of data centers and looking at our current interim reports, so to say.
Also, please also note that this, you know, the comment that we made on that the service business in a meaningful way, I mean, in a significant way, will kick in 2030 and beyond, so to say. And that's nothing strange with that. That's just normal, you know, power plant business.
For the new build, we will start deliveries in end of the year and going into 2027 and forward, so to say, so.
But is it... Sorry, is it still as fair to assume that you are able to get pricing upside? I don't want-- I'm not asking you to give me a specific number, but let's say the turbine players talk about well over 50%, and they're saying most recently that the latest slots are 10%-20%, even higher. And so, you know, you must be getting some appreciation. And again, you don't have to give me a firm range, but-
I won't comment it more on that. I understand your question, I respect it, but I won't give any more comments. I will not make those statements that are just on my competition. I'm just saying this business, I mean, supply and demand is giving opportunities for price realization. I'm saying that, you know, this business is definitely contributing to the, you know, the overall profitability of Wärtsilä. And then, you know, to balance, we need to have propositions that are competitive for our customers and so they can make good business case.
Thank you. Our next question comes from [Jari Paakkarinen]. Please go ahead. [Jari], do you hear us?
Is it now better? Can you hear me?
Yes, we can hear you. Thank you.
Okay, thank you.
We heard it.
Thank you for the question. I think we could agree that the data centers, these gigawatt-sized data centers, will be mostly off-grid because of local politics, and also you don't need to pay for the grid operator anything when you have a local power supply and steady one. So in that respect, Wärtsilä sweet spot is below 100, well, 1,000 MW, 1 GW. So you are in a kind of a complementary, or then you have to scale up the product portfolio. Also, I think it's a wonderful decision to scale up the production capacity in Vaasa, but also one could wonder, that's question number one: Is this ambition level that you will have for 2028, or is there coming more?
And the second part of my question is on the portfolio, because when you look at in your slide number 16, you had a competition placed there. Siemens third 73 MW gas turbines, five of them, GE 33 MW, 11 of them, and then you put Wärtsilä 9 MW engines, and 39 of them. Why don't you put their bigger ones, like the 50SGs, which you need only 20 or so? Why is this kind of a comparison that you want to show? So these two questions about portfolio, can you stretch the capacity up beyond 20 MW, 30 MW, 50 MW? I don't know if it's technically possible. And then about the capacity, that would you be satisfied with this 35% increase in Vaasa in 2028, or is there more? Thank you.
So on the engine question, yes, we have different engines to be used, and in this case, we used the V34 engine. We could also have used the V50 engine that we have sold in the projects. The difference is that one is around 9.-something MW, and the other one is 19 MW in 60 Hz. So that's the difference between the two engines, but you could have, as you say, you could have used the 19 MW as well to make that comparison. That was on the first-
And then expansion, or expansion?
And expansion, I would say this is now the expansion that we have decided and communicated. And depending on what happened on the market and what is with the demand and supply, we are, of course, always looking and evaluating if we should do something else, but this is what we have now decided.
... Thank you. The next question comes from Louis Billon. Please go ahead.
Hi, good afternoon. Can you listen to me?
Yes.
Do you have bottleneck for ramping up your industrial capacity, and do you think it's easier for you than your competitors to increase capacity? Maybe in terms of, I mean, how many orders are left before having the same delays in delivery?
So, if I take a first cast, I mean, quite frankly, I don't know the details of the gas turbine supply chain. So, I mean, I think we all read about, you know, blades, et cetera, but you will have to ask them. And I think we are doing a very solid work in terms of making sure that our supply chain can follow us. That's why, I mean, one, you could say, proof point of that, and it's one, but, you know, we announced this strategic operation with Siempelkamp in December, which is one of our major casting suppliers. And so they, of course, are vital supplier. There are several of those vital suppliers. We are working very actively with that.
When we talked about the EUR 140 million investments, you know, the majority is in this stage, but we will also invest in our supply chain. So there's a structured work ongoing, and we feel, you know, confident we will make it. It's not 100% secure, but we feel confident. And then you have to ask the gas turbine guys about how they see their supply. It's not the same supply chain, just at that point, because the technology is different, so to say. So I think that was the first one. Then what else? Sorry, and if you could repeat that one once please.
How many orders are left before having the same delays in delivery? Because you're already at 13 months, and how many orders before reaching 40 or 50 months?
Yeah, that and I couldn't even answer that question. I get— What I can say, and this is, you know, that what we have communicated already, for certain engines, and we have not said which types, but just to give you, for certain engines, we are looking at delivery times, if you order it now, in 2028. And other types of engine, we can still deliver towards the end of this year. So it's a mix of different engine types. I would still say that overall, and, you know, based on what we see, what the competition is communicating, I think the fact that we have shorter lead times, it will be a competitive advantage with us for quite some time.
Thank you. Next question comes from Antti Kansanen.
Yeah, here we go. Thank you. I had a follow-up question on exactly the same theme, which is kind of the capacity constraints and, and for example, in the marine business, I mean, you would maybe have an extra capacity, but the yards are constrained, so that doesn't really help in terms of delivery time. So are you at any kind of risk, or are you seeing any signs of something else kind of curtailing the delivery schedules, that you would not actually be the bottlenecks regarding the projects that you are now quoting? And, and then again, the faster delivery times that you might have versus, say, a turbine competitor, doesn't really matter because the project can't go forward with, with your schedule anyway. So what are kind of the other limiting factors on, on those U.S. projects that you are working with?
I would say now that, you know, it's a very dynamic market, and there is a very high level of demand. And when I talk to our members, you can also comment, when we talk to our customers, you know, they say that this... I mean, based on the visibility that they have, this will take us to 2029, 2030. So, from a pure market perspective and the market feedback, you know, there is no signs that this dynamic will change. Then, of course, if you ask overall, what's the, you know, what's the biggest risk element for Wärtsilä right now? It's the geopolitical situation. I mean, we all know, you know, the dynamics between China and U.S., U.S. tariffs, et cetera. Those are, of course, risk elements we don't have control over.
When it comes to the fundamental demand side, when we talk to our customers, it seems to be strong, and it's strong, you know, I mean, all the way to 2029, 2030.
How do you currently deal with kind of the tariffs, given that, let's say, the delivery times are then stretching to 2029 or 2030? Is it just that the developer or the end client pays, or there's some type of a shared risks profiles in between?
No.
No, this is customer owns that risk.
Okay, thanks.
Thank you. Next question comes from Daniel Acosta. Please go ahead.
Hi, good afternoon. Hope you can you can hear me. This is super helpful call. Thank you for putting together. Just one question. I know you mentioned the aftermarket would kick in, like, later in the decade, but I think some of the experts we have spoken with, they flag that sort of these engines are meant to run at peak, basically, all the time now, bit different to when it's a utility-type environment. Does that change the aftermarket intensity and your potential penetration of the installed base compared to where you were today? What do you envisage there?
Yeah. So, so we have said, and I want to clarify, that this is a baseload application. That means that we have many running hours. However, we should remember that there is also built in an extra maintenance reserve, so to say, for having the availability very high, which means that you have extra capacity that you're not running at the same time.
So to go to the
The overall running hours are, of course, not 24/7 in the whole year, since you have those extra engines or gas turbines, in case of gas turbines, sitting there, so to say. You can see that very clearly on the page. If you have 300 MW as the full capacity to be delivered, then you have extra. In our case, with the size of engine we have used here, we have 57 MW of extra capacity that is actually not running then. And then I must also say that it also depends on the season and the load of the data center, because of course, all data centers are not running all year round at the maximum capacity of 300 MW.
They should be always have the possibility to go up to 300 MW, but it might also be that they are running at 80% on average or something like that.
But that's a support.
But there are many hours that is the case. Yes.
And you get the logic here. I mean, if we deliver something, yes, there is an additional engine, but the other end is they are running full speed, 300 MW. So therefore, it's an application that generates a lot of service hours, so to say, even though there might be one, or sometimes even two engines that are not running at all. But I think you get the logic behind the concept.
Yeah. Maybe actually one question on the slide, 'cause you mentioned there some of the gas turbines might need a backup power plant. Would that be a Wärtsilä engine as a backup? Is that what you actually also mean there?
Yeah. No, in this case, it's pure, it's pure, so to say, CCGTs or aeros or medium-speed engines in this case. What we are saying is that when the sites grow bigger, like the 1 GW, we might as well very likely see combinations where you probably have a big gas turbine to deal with the power density when you have or you don't want so many engines. And then you have engines for dealing with more ups and downs in the load and being prepared. So I think we will see hybrid, and we can already see examples of hybrids today, and I think we will see more of that, the bigger the data centers get.
Thank you.
Thank you. Next question comes from Johan Eliason. Please go ahead.
Yeah, hello, I hope you can hear me. Good. I was curious, you're making a very good case for the medium-speed engine in this data center opportunity. Historically, in the power plant market, you've had a very high market shares for your supply. Is the data center an opportunity for your sort of more marine-exposed guys to get into the power plant business as well, or are you seeing them at all?
We are seeing them, and you can find press releases from our direct competitors on engines as well. But I would say that we have a good market share, high market share, in the so to say, normal market, and I expect us also to have that on the data centers because of the references and because of the service network and all these other things, and also us having efficient engines. So I believe that versus the other engine competitors, we will have. I expect to have the same type of good market share.
But we should also remember that in the overall market, if you also include gas turbines, I think we have plenty of room to grow our market share because it's not so high if you look at the total market, and it's the same, of course, on data centers today.
Okay, excellent. Thank you.
Thank you. I have received a couple of questions by email. So, do you worry about overcapacity given Caterpillar expansion plans in relevant engines? So this is about competitive dynamics about medium and high-speed engines.
So, I mean, you know, we don't see high speed as a major competitor in our sweet spot, and we talked that through. I mean, you know, high speeds, they are, you know, they have certainly their place to play in the smaller power intervals, and we are not competitive there. When we go into our sweet spot, our energy efficiency is, you know, much, much better, and the life cycle cost makes our technology a winner. So, I'm not so concerned about Caterpillar expansion. I think they reactivated MAK, I don't know, well, you know, U.S. firm building a factory or reactivating in Germany for export to the U.S.. I don't know what they would offer, et cetera, et cetera. Let's see.
I think in the days when MAK was doing marine, I think we had a very competitive offering from technology and commercial perspective, so I think we will have a competitive offering also there going forward. So then, I mean, we should definitely acknowledge that many of the gas turbine players, they are also making significant investments, and you follow it, and you should talk to them. I'm sure you do. I mean, this also in the 60% and 80%, et cetera, et cetera. So of course, there will be new capacity coming into the market.
But it's also a very hot and buoyant market, and I, you know, I think we share the same view that this is not driven by one data center factor, but it's also we talked about aging infrastructure that needs to be replaced, both in the U.S. and Europe. It's heating, it's electrification, it's balancing power, et cetera, et cetera. So it's not just one driving factor, there are several. And I think also, I mean, I see a little bit similarities with ourselves and some of the—I think I know that at least when I see the press releases, many are expanding their existing facilities, and that is normally a relatively efficient way to expand the capacity, but also with a high flexibility.
You know, and if the demand would come down, you know, it's easier to deal with that type of, you know, than adjusting the capacity if you have expanded within the existing facility.
Then another question by email. Håkan mentioned the Middle East opportunity, the CapEx, OpEx comparison for the different technologies that Anders showed. Have you also made a comparison with 24/7 solar plus battery farms that are now being planned in the United Arab Emirates?
Yeah, I mean, we do balancing. So we haven't done the comparison for the UAE, so I have to draw a blank on that one. But I would say that, you know, we provide balancing also for wind and also to certain, I mean, thermal balancing also for solar. It depends on the application. It depends because batteries are great for handling short power swings. I mean, batteries don't generate energy, we all know that, but they're great on handling short power swings. But if you talk about seasonal swings, you know, the batteries become very large and therefore very costly, and then you need to build some.
Yeah.
But I have to pull a blank on UAE because we haven't done the analysis.
I think that the case in UAE that they refer to-
Mm.
is the case where they have built the 24, to bridge the whole night, day, so to say.
Mm.
You load the battery during the day, and then you bridge the whole night.
Mm.
So it's not a two or four-hour battery, it's a full overnight battery, which doesn't take away what you say, Håkan, that if there are seasonal swings, it won't help. But of course, it, it is different to what in most other places they do one-hour batteries, two-hour batteries, four-hour batteries, even in some cases of eight. But of course, to, to do the whole night, that is a bigger battery, and we have not studied that in detail, what that would mean.
And then the last question comes from Sven Weier. Please go ahead.
Yeah, thanks for taking the last question here. Just to follow up on the water usage, I was just wondering, I mean, how much of a difference does it make between wet and dry cooling when you run the comparison?
I know that there is a big difference between the two, and that's why we choose here to show two different examples, so to say. But there is a difference. Mm.
Do you have an overview in terms of the projects, how much can be done with dry cooling and how much cannot in the U.S. pipeline?
Not off the top of my head, at least. No, I don't know.
Let's take that with us.
Yeah.
Let's see if we can do that analysis-
Yeah
-when you're deep into the details. Well, let's see. But I-
Maybe too much.
No, no, no. I mean, I like-
Too much
... we like those engineering-oriented questions. Let's look. I mean, but more from a customer perspective, if I talk about the, you know, the market feedback that we are having, and I, I'm sure you read recently the New York Times article on, you know, Microsoft and their challenges, you know, related to water usage. And as Anders pointed out, it's not only, you know, in desert-type of environment, but, you know, it's in normal environment, you know, farming, there is increasingly considerations for water. And, you know, this recent customer interaction that we had, that was clearly one of the variables. So I think water will come in this evaluation, going back to this, looking at different dimensions, water will be increasingly becoming important also in the U.S.
Thank you.
Okay.
Thanks for the call.
Thank you for inspiring questions and good, good answers. So, I think this has been a very lively discussion. Pre-silent call will take place on March 23, so hope to see you there. Thank you.
Thank you, everybody.