Wärtsilä (WRT1V) Status update summary

Market opportunity and growth drivers

• Data center power demand is rapidly increasing, especially in the U.S., driven by AI, digitalization, and grid connection delays, with off-grid solutions gaining traction.

• Orders for data center power solutions have surged, with nearly 800 MW booked last year and recent U.S. orders totaling 1.2 GW, reflecting a 50% pipeline growth in six months.

• The addressable U.S. market is large but uncertain, with estimates for data center power needs ranging from 40 GW to 113 GW by 2030, and a growing share expected to be gas-powered or off-grid.

• Europe and Asia are expected to follow the U.S. trend, though at a slower pace, with opportunities emerging as grid constraints and power needs increase.

• Revenue recognition from these projects will ramp up from 2026, with service business potential increasing toward 2030.

Technology and competitive positioning

• Medium-speed engine technology offers high efficiency, modularity, rapid ramp-up, and low water usage, making it well-suited for large-scale, off-grid data centers.

• Compared to turbines, engines provide lower CapEx and OpEx in the 50–400 MW range, with significant advantages in part-load efficiency, maintenance, and lead times.

• Engines consume up to 2000 times less water than gas turbines, offering a major advantage in water-scarce regions and for data center operators.

• The company’s strong global service network and tailored agreements enhance reliability and operational security for data center customers.

• Hybrid solutions combining engines and turbines are expected for very large sites, leveraging each technology’s strengths.

Customer and market dynamics

• Main customers are developers, utilities, and new segments like hyperscalers, with repeat business growing as new customers experience the technology.

• Technical conservatism and established relationships with turbine suppliers are barriers, but growing awareness and successful projects are shifting perceptions.

• Competitive advantages include shorter delivery times, modularity, and flexibility, but site-specific factors like space, emissions, and local regulations influence decisions.

• Water usage and lead time are increasingly important criteria for customers, especially in regions with agricultural interests or water scarcity.

• The company is expanding production capacity in Finland by 35% (or 80% from current utilization) by 2028 with a €140 million investment to meet rising demand.