Rolls-Royce to expand SC engine plant on data center demand

Currently, most of the components are machined in Germany and sent to the U.S. as finished goods, the British multinational said.

Earlier this year, Rolls-Royce announced a $24 million expansion of its Mankato, Minnesota facility, adding 100 jobs to its U.S. Power Systems division.

These expansions are being driven by the rapid growth of data center construction, which are putting electric grids under pressure. The mtu Series 4000 engines that power the backup generator systems are built in Aiken and then assembled into complete generator sets at the Rolls-Royce facility in Mankato.

Phase one of the Aiken, South Carolina project will add 37,000 square feet to the facility’s existing manufacturing. Construction is scheduled to begin in Q1 2026 with production expected to start in July 2027. Rolls-Royce said it may later expand the site by an additional 22,000 square feet, depending on future demand.

In addition to serving data centers, Rolls-Royce provides backup generators for hospitals, municipalities, and government installations.

More power

Data centers are voracious consumers of power and they have been feeding on the power grid more as AI becomes more widely used.

As AMU reported in January, the average Chat GPT query requires 10x the electricity of a standard Google search, according to a Goldman Sachs analysis in May 2024. The analysis estimated that data center power demand could increase 150% by 2030, potentially consuming as much as 8% of total U.S. electricity.

To meet that growth, Goldman Sachs believes the U.S. will need to invest $50 billion in new power generation capacity, in addition to additional 3.3 billion cubic feet/day in increased natural gas demand.

In June, the Dodge Momentum Index, an measure of non-residential building projects entering the planning phase, rose about 6.8% month over month, with a large part of that growth driven by data center planning.

While data center construction could drive some aluminum demand, it also intensifies the competition for electricity. That creates a big challenge for restarting or building out primary aluminum capacity. In fact, electricity was a contributing cause to the loss of over 30 smelters over the last four decades, as AMU reported in May.

The aluminum industry requires low-cost energy to operate economically. By contrast, the AI sector is rapidly scaling up its’ power usage and is willing to pay a high price tag for it.

As AI’s energy appetite grows, projects like Rolls-Royce’s highlight the next wave of industrial investment as well as the mounting pressure on grid capacity.