SoftBank takes over $3B hit on natural gas turbine orders for AI

In short: SoftBank says it lost over $3 billion after putting down nonrefundable deposits on natural gas turbines meant to power AI data centers.

What's going on

SoftBank and its SB Energy unit had been lining up natural gas turbines, which are large machines that burn gas to make electricity (like an engine, but for a power plant). According to reporting cited by TechCrunch, SoftBank put deposits on more than 13 gigawatts of turbines, about 50% more than it needed. The goal was to lock in scarce equipment and move faster than other builders.

That bet looks weaker now. SoftBank recently reported a $7.1 billion quarterly loss, and TechCrunch says over half came from losses tied to power generating equipment. Because the turbine deposits were nonrefundable, SoftBank now considers much of that money effectively lost.

The backdrop is a rush to power new AI data centers, which use a lot of electricity to run servers (rows of computers in warehouse-sized buildings). With long waits to connect to the electric grid, some companies have treated natural gas plants as a “safety blanket” because the technology is familiar and can be built near a data center.

What to watch

Analysts told TechCrunch that as data center operators learn more about their real power needs, many may prefer smaller grid connections plus big batteries (like a backup tank for electricity) instead of relying heavily on natural gas. SoftBank’s loss does not mean gas projects will stop, but it may slow how quickly new gas plants get planned for AI.

Source: TechCrunch AI