Summary of Distributed Power Update Industry Overview - The distributed power industry is increasingly recognized as a critical component in addressing the anticipated power gap of 60 GW by 2028, particularly in relation to the AI trade [1][2][6] - The industry has shifted from being a temporary solution to becoming a primary power source for data centers, driven by long-term contracts with hyperscalers [4][10] Key Insights - **Power Gap Forecast**: The U.S. is expected to face a significant power gap starting in 2028, with only 41 GW of gas turbines projected to be delivered, while demand from hyperscalers and other data centers is estimated at 50 GW and 10 GW+, respectively [4][6] - **Distributed Power Growth**: Over the past 90 days, more than 5 GW in distributed power has been ordered, indicating a robust demand for medium-sized turbines and reciprocating engines [4][10] - **OEM Capacity Expansion**: Original Equipment Manufacturers (OEMs) are expanding capacity, but concerns about overbuilding are considered premature due to the substantial power gap and limited number of OEMs in the distributed power sector [4][5][10] Market Dynamics - **Natural Gas as a Key Resource**: Natural gas is expected to be the primary energy source for AI infrastructure due to its reliability and affordability, despite a shortage of gas turbines [6][10] - **Valuation Variability**: Companies involved in distributed power are experiencing varied valuations, with some like Solaris Energy Infrastructure seeing significant stock price increases [9][13][36] - **Investor Sentiment**: Investors are increasingly recognizing power as a bottleneck for the AI trade, leading to a re-evaluation of companies involved in distributed power solutions [9][10] Important Developments - **Contracts and Orders**: Notable contracts include VoltaGrid's 15-year agreement with Oracle for 2.3 GW of power and Solaris's joint venture with xAI [4][12][38] - **Legislative Impact**: Regulatory changes, such as Texas Senate Bill 6, are pushing large power users towards on-site generation solutions, further supporting the distributed power model [19][10] Challenges and Considerations - **Supply Chain Issues**: The supply chain for medium-sized turbines and reciprocating engines is becoming increasingly strained, which could impact expansion plans [42][10] - **Debates on Future Viability**: Key debates include whether distributed power is a temporary solution, the potential for OEMs to vertically integrate, and concerns about overbuilding in the market [9][38][10] Conclusion - The distributed power industry is positioned to play a crucial role in meeting the growing energy demands of the AI sector, with significant opportunities for growth and investment, despite challenges related to supply chain and market dynamics [1][2][10]