What Investors Need to Know about the Electrification Megatrend

Well, we think at a high level the electrification theme is one of the investment mega trends that advisors operating on behalf of investors have to pay attention to.

And the reason we believe that is because you've got this convergence of a number of massive social and economic trends that are shaping this mega trend.

So when you think about AI, and we made a little bit of jokes about AI on the pre-call, but the amount of electricity demand coming from AI data centers alone is mind-blowing.

Depending on what you look at, you're talking about multiple cities of Philadelphia in terms of just electricity demand coming from data center footprints from some of the bank seven companies or some of the grid hyperscalers that are ultimately trying to build out the AI infrastructure needed to support all of the adoption of AI that's been forecasted.

And so you've got that massive driver of an increase in electricity demand.

You've got these social trends where people are switching from internal combustion engines to EVs.

That's increasing electricity demand at the margin.

And then you're switching from things like gas stoves to induction stoves, which again increases electricity demand.

You're trying to move people from their typical heating unit to a heat pump, which again increases electricity demand.

So you've got consumer level, institutional, the reshoring of manufacturing that's driving electricity demand up along with AI data center demand which is also driving electricity demand up.

And so we're seeing at least from a forecasting perspective electricity demand growth in the United States that is expected to be greater than what we've seen in decades, in fact going back to the 1960s.

And so all of that requires additional capacity.

It certainly requires additional grid investments.

One of the the key quotes that I've seen recently, the NRG CEO said about the grid, we're building the plane as we fly it.

And what that means is we don't have enough grid capacity to accommodate the increase in electricity demand.

So what do we need?

We need some of the raw materials to support the electrification theme.

We certainly need massive investments in utilities who are tasked with providing the electricity both to consumers and to institutions and to commercial enterprises including AI data centers.