Tag: power

OM in the News: One Way to Power New AI Data Centers

Where is the energy to power the hundreds of new data centers that are popping up to run artificial intelligence demands coming from? “In the battle for AI dominance, every engine of the economy is getting recruited into the fight—including jet engines'” writes The Wall Street Journal (Feb. 18, 2026). 

Jet engines are a natural fit. Power equipment giants GE Vernova, Siemens Energy, and Mitsubishi Heavy Industries  already sell power turbines—known as aeroderivatives—that are modeled after these very jet engines. Aircraft engine companies such as GE Aerospace , Howmet Aerospace and Woodward also sell land-based aeroderivative turbines or components.

Yet designing the turbine, which keeps as much of the original jet engine features as possible, is a roughly 18-month undertaking.  Instead, it only takes 30 to 45 days to convert a plane’s jet engine to a power-generating turbine. (There are 2 main modifications to convert an aircraft engine to a land-based natural gas turbine. One is replacing the fuel nozzles to utilize natural gas instead of jet fuel. The other is replacing the large fan on the front of the flight engine with a much smaller fan).

Retired aircraft, at an Air Force base near Tucson, Ariz

A company can remanufacture jet-engine parts with a few years of remaining life for use in power turbines, where they can operate for many additional years. Narrow-body jet engines experience higher stress from repeated takeoffs and landings. Power turbines can run as peakers—turning on only when demand surges—or continuously as baseload. Either way, they accumulate less wear and tear.

About 1,600 commercial aircraft engines are retired every year. If a third of those engines get converted into turbines, that would represent about 13 GW of capacity, or more than a quarter of the existing global natural gas turbine capacity.

AI-obsessed tech giants are planning to spend more than $700 billion in capital expenditures this year. The lure of that cash pile will generate a lot of creativity in the power sector.

Classroom discussion questions:

  1. Why is there a need to convert jet engines?
  2. Discuss the growth of data centers and the demands they create. (See our recent post on that topic.)

OM in the News: AI Push Is Costing a Lot More Than the Moon Landing

It’s bigger than the railroad expansion of the 1850s, the Apollo space program that put astronauts on the moon in the 1960s and the decadeslong build-out of the U.S. interstate highway system that ended in the 1970s.

We’re talking about the data centers now being built and financed by some of the world’s biggest companies in the artificial-intelligence boom. Four U.S. tech giants—Microsoft, Meta, Amazon, and  Google—are planning to spend $670 billion to build out AI infrastructure this year alone as they scramble to increase the computing power needed to operate and scale their AI-related endeavors.

And if you compare this spending to some of the biggest capital efforts in U.S. history by percentage of gross domestic product, you can see exactly how staggering the figures are, reports The Wall Street Journal (Feb. 9, 2026). In fact, it’s dwarfed only by the Louisiana Purchase, completed in 1803, which doubled the size of the U.S. and consumed 3% of the GDP.  (The AI buildout is projected at 2.1% of GDP, while railroads in the 1850s were 2%, the US highway system was 0.4%, and the Apollo space program was 0.2%).

The four companies’ capital spending has been increasing as a percentage of their annual revenue the past few years. In 2026, Meta’s spending could amount to more than 50% of its sales for the first time ever.

How is this build-out an OM issue? First, as we discuss in Chapter 2, these four companies are betting that they will attain competitive advantage by competing on low-cost and response. Second, our chapter on sustainability (Supp. 5) points out the costs of carbon footprints, which data centers generate heavily. Third, as we note in the chapter on location strategies (Ch. 8), the centers locate where power is cheap and plentiful.

As of late 2025, Northern Virginia has 64 data centers under construction, solidifying its position as the world’s largest data center market. The region hosts over 550 existing facilities.  They consume massive amounts of power, comparable to the total usage of large states like Minnesota.

Classroom discussion issues:

  1. Discuss the plusses and minuses of this massive construction trend.
  2. What do the builders hope to obtain?

OM in the News: Bitcoin Goes to Where the Power is Cheap

Power cords connect to hundreds of computers inside Giga Watt’s Washington mining facility. Giga Watt employs 45 people here.

“Home to hydroelectric dams that harness the flow of the Columbia River, north central Washington has some of the cheapest power in the U.S.,” writes The Wall Street Journal (Feb.12, 2018). That has made the largely rural area best known for its apple orchards a magnet for bitcoin miners, who use powerful specialized computers to generate new units of cryptocurrencies—a process that requires vast amounts of electricity to run and cool thousands of machines. “If you ask the guys at UPS or FedEx what they’re delivering to Wenatchee, I think they’d tell you it’s a whole bunch of bitcoin mining machines,” says that town’s mayor.

Mining operations can squeeze into small spaces. Shoebox-size computer servers that suck up as much power as 1,000 homes can be packed into a 25-by-25-foot room. Miners have popped up in unexpected places in the area: an old laundromat, a former warehouse, apartments. There are already at least 30 known cryptocurrency-mining operations in north central Washington.

These aren’t the first businesses to come to the region for its cheap power. Aluminum smelters once flocked here. In more recent years, companies including Microsoft and Dell have built data-storage centers. Electricity in the region costs 2 to 4 cents per kwh compared with more than 10 cents nationwide. Some residents and officials hope that mining will be the first step toward transforming the area into a business hub for blockchain technology, bringing new jobs.

Others worry these miners will drain the area of the surplus power that helps keep rates low. Here is why: Comparative power usage rates (per sq. ft. per year): school-10; home-12; hotel-18; hospital-32; grocery store-40; computer data center-2,100!

Classroom discussion questions:

  1. Why are some towns not welcoming the new miners?
  2. What is the primary location factor for cryptocurrency miners?