Pooja Sharma
Senior Project Manager, Energy
AI-driven data center expansion is increasing demand for power generation equipment and the lubricants needed to maintain it. For lubricant suppliers, the question is where this demand will develop and which products will be needed.
Power availability is becoming a constraint on data center development. The rapid expansion of artificial intelligence (AI) is driving electricity demand beyond what existing grid infrastructure can readily accommodate, prompting developers to consider alternative ways of securing reliable power.
This has implications for the lubricants industry. Kline’s research projects that lubricant demand associated with data center power generation equipment will increase approximately fourfold between 2025 and 2035, with growth concentrated in diesel engines, natural gas engines and gas turbines.
The scale of the increase is considerable, but the types of equipment being installed, their operating hours and regional power strategies will determine where lubricant demand develops.
Watch Kline’s Session: What Lubricant Opportunities Are There in Power Gen for Data Centers and AI Infrastructure? available on demand.
Data Centers Are Rethinking How They Secure Power
Most data centers rely on grid electricity, with diesel generators providing emergency backup. That model is coming under pressure as AI workloads increase electricity consumption and developers face longer waits for grid connections.
Kline projects that global data center electricity consumption will grow by approximately 10.4% annually between 2025 and 2035, compared with 3.5% growth in global electricity generation.
Grid connection delays, limited transmission capacity and equipment shortages are making it harder to bring new facilities online as planned.
Data centres are emerging as a significant new market for industrial lubricants. With demand from on-site and backup power generation equipment projected to grow fourfold by 2035, this is an opportunity lubricant suppliers can no longer afford to overlook."
Developers are therefore looking beyond conventional grid connections. Some are investing in on-site generation using natural gas engines and gas turbines, while others are expanding their backup generation capacity.
The industry is moving from a grid-first approach, where electricity is assumed to be available, towards a power-first model, where securing sufficient electricity influences development decisions from the outset.
What Does This Mean for Lubricant Demand?
Kline estimates that the global market for lubricants used in data center power generation equipment will grow from approximately 100 million liters in 2025 to 400–500 million liters by 2035.
However, installed generation capacity tells only part of the story. Lubricant consumption also depends on how equipment is operated.
A diesel generator used exclusively for emergency backup may accumulate relatively few operating hours. A natural gas engine supplying continuous or supplementary power will typically operate for much longer periods, with correspondingly different lubricant consumption and maintenance requirements.
This distinction matters when assessing future demand.
The growing use of on-site generation could increase lubricant consumption per installation, particularly where engines operate for extended periods rather than remaining on standby.
For suppliers, understanding equipment utilization will be as important as tracking the number of new data centers being built.
Natural Gas Engines Are Changing the Product Mix
Diesel engine oils currently account for the largest share of lubricant demand from data center power generation equipment.
Diesel generators remain the established choice for emergency backup because they can start quickly and provide reliable power when required.
Natural gas engines, however, are becoming more relevant as operators consider on-site generation for continuous and supplementary electricity supply.
Kline’s analysis indicates that natural gas engine oils will more than double their share of data center power lubricant demand by 2035.
Gas turbines are also attracting interest, particularly for larger facilities with substantial electricity requirements. Although turbine lubricant consumption is relatively small compared with engine oils, these applications have demanding performance specifications and OEM approval requirements.
For lubricant manufacturers, the changing equipment mix raises questions about product portfolios, technical capabilities and relationships with engine manufacturers.
Companies with established natural gas engine oil portfolios and relevant OEM approvals may be better placed to serve this demand.
Regional Power Strategies Will Influence Demand
The technologies being adopted vary considerably between markets.
In the United States, grid constraints are encouraging greater interest in captive generation, particularly natural gas engines and turbines. This could increase demand for lubricants used in continuously operating power generation equipment.
China remains more dependent on grid electricity, with growing investment in renewable power and integrated energy systems.
European markets, including Germany, are considering combinations of grid electricity, natural gas and lower-carbon power solutions.
These differences affect the type and volume of lubricants required.
Suppliers assessing regional opportunities will need to consider which technologies are being installed, how they will operate and which equipment manufacturers influence lubricant selection.
Where Should Lubricant Suppliers Focus?
Growing lubricant demand does not mean every supplier will be equally well positioned to compete.
Product availability is one consideration. Natural gas engines and turbines have specific lubricant requirements, and OEM approvals can influence which products are selected.
Access to customers is another. Engine manufacturers, equipment suppliers and maintenance providers can play an important role in lubricant purchasing decisions.
Reliability is also central to data center operations. Suppliers that can demonstrate lubricant performance and support equipment maintenance may have opportunities to build relationships beyond the initial product sale.
There are risks to consider. Delays in data center construction, changes in power generation technologies and differences between expected and actual equipment utilization could all affect lubricant demand.
For suppliers considering investment in this market, the immediate questions are practical: Which applications offer the strongest demand potential? Are existing products suitable? And where can the business realistically compete?
Exploring the Power Sector Lubricants Market
AI-driven data center development is creating a substantial new source of demand for power generation lubricants. The opportunity will depend on the equipment installed, how it is operated and the pace of development across different markets.
Kline’s Opportunities in Power Sector Lubricants Driven by Growth in Data Centers and AI study examines global and regional lubricant demand through 2035, including market forecasts, technology developments and competitive dynamics.
Explore the full study or speak with Kline’s Energy team about how our market intelligence and advisory services can support your product strategy, market positioning and growth plans.
