SoftBank announced a $7.1 billion quarterly loss on Tuesday, with over half stemming from losses tied to power-generating equipment. The investor had placed nonrefundable deposits on more than 13 gigawatts of turbines starting roughly two years ago, roughly 50% more capacity than it needed, and now considers much of that investment worthless, resulting in over $3 billion in charges.
SoftBank's SB Energy subsidiary announced in February plans to spend $33 billion on a 9.2-gigawatt natural gas power plant. The strategy of over-ordering turbines was intended to secure equipment and accelerate projects in a market where queues for turbine orders now extend into the early 2030s.
Peter Gardett, CEO of Noreva, told TechCrunch that SB Energy had limited options. "SB Energy did not have a choice except to overbook turbines in the future if they wanted some turbines right away," Gardett said via email.
The over-ordering reflected both a bet that natural gas would become the primary power source for AI data centers and an attempt to secure supply in a constrained market. Gardett characterized the charge as "price discovery finally happening" after SoftBank overpaid for capacity it ultimately did not need.
Brent Nelson, senior managing director of markets and strategy at Ascend Analytics, noted that data center operators face risks with natural gas, including winter curtailments when supplies dip and demand spikes. Nelson suggested most data centers would be better served by grid connections paired with large batteries to manage peak loads.
The losses are unlikely to trigger mass cancellations of gas power plants given AI's large power demand, but SoftBank may have found the ceiling for natural gas investment in the sector.