China Merchants Securities has released a report stating that concerns over power supply for AI data centers in North America are transitioning from a long-term worry to an immediate constraint. This shift is forcing data centers to prioritize "time to power" when selecting electricity sources, alongside considerations of off-grid capability, high stability, and efficiency. Against this backdrop, SOFC (Solid Oxide Fuel Cell) technology is poised for accelerated deployment, benefiting related supply chains.
Key insights from China Merchants Securities include:
The power shortage in North America is becoming a reality, creating a clear bottleneck for data center deployment. The timeline from planning to operation for large data centers is 18-24 months, with power infrastructure becoming a critical, immovable bottleneck between months 4 and 10. Delivery times for large transformers over 100 MVA extend to 2.5-3.5 years, and GIS switchgear takes 90-130 weeks, making equipment lead times the critical path. Withdrawal volumes for queued projects in the PJM grid continue to rise, individual project scale is increasing, and computing power is concentrated in a few areas like Virginia and Texas. Combined with the vulnerability of aging grids, the power shortage is evolving from a future concern into a current constraint.
Stricter regulation and rising costs make "time to power" a core competitive dimension. US policy, previously centered on tax incentives from 2021-2024, is now shifting. It increasingly requires data centers to build their own power sources and bear grid upgrade costs, exemplified by New York's statewide ban on large data centers, the termination of the Virginia Digital Gateway project, and Oracle's need for over $7 billion in credit guarantees for its Wisconsin project. PJM capacity prices have surged from $28.92 to $329.17 per MW-day. With longer interconnection timelines and tight core equipment supplies, the competition for AI infrastructure has extended from "time to GPU" to "time to power." This highlights the value of distributed power sources that can be deployed quickly and operate off-grid.
SOFC offers significant advantages, and large-scale commercialization is accelerating. Compared to the grid, gas turbines, and SMRs, SOFC has a delivery cycle of only 55-90 days. It supports behind-the-meter island-mode operation, bypassing grid interconnection approvals. It also produces lower carbon emissions, faces less environmental opposition, and is naturally compatible with 800V platforms, requiring less lithium battery storage. With GEV's gas turbine order backlog reaching a constrained 116 GW, delivery bottlenecks are forcing data centers to accelerate toward alternatives like SOFC.
Bloom Energy's order book validates demand, and the domestic supply chain is poised for performance growth. Bloom Energy's backlog of orders continues to grow strongly, validating the industry's demand outlook through its order book and commercialization capability. Domestic companies integrated into the global supply chain of Bloom Energy or actively developing SOFC technology will see clear performance gains. Domestic SOFC demonstration projects are also rapidly catching up. Recommended companies to watch include: Chunhui Zhikong, Sanhuan Group (Electronics), Yilian Technology (Electronics), Zhenhua Co., Ltd., Longbai Group (Chemicals), Yishitong (Chemicals), Weichai Power (Automotive), and Johnson Electric (H).
Risk warnings: Risks include competition from alternative technologies, downstream demand falling short of expectations, and the progress of cost reduction not meeting forecasts.
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