Kodiak Gas Services (NYSE:KGS) shares gained 4% on Wednesday morning after the company announced a long-term strategic partnership with Baker Hughes (NASDAQ:BKR) to provide gas-powered electricity generation for the expanding U.S. data centre market.
The multi-year agreement creates a framework for deploying up to 1.8 GW of power generation capacity. As part of the initial award, Baker Hughes will supply around 1 GW of gas turbines and generators by 2030 to support behind-the-meter power generation projects.
The first phase of the agreement includes NovaLT16 gas turbines, Frame 5 gas turbines and BRUSH Power Generation generators. The equipment is intended to power data centres and energy infrastructure projects across the United States, where rising electricity demand and grid capacity constraints are increasing the need for flexible energy solutions.
The rolling agreement is designed to give both companies the flexibility to match equipment deliveries with evolving data centre demand and project timelines. It is also expected to strengthen commercial and technical collaboration, improve project execution and shorten delivery times for power infrastructure.
“Our customers require dependable, efficient and rapidly deployable power solutions, and access to Baker Hughes’ industry-leading technology, training and support enhances our ability to meet that demand at scale,” said Kodiak President and CEO Mickey McKee.
Baker Hughes Chairman and CEO Lorenzo Simonelli said the partnership reflects the growing need for flexible power generation technologies as electricity demand continues to accelerate, driven by the rapid expansion of digital infrastructure and data centres.
In addition to equipment supply, the agreement includes technical training, spare parts support and a shared intention to establish a long-term services agreement covering the installed equipment.