The transition to renewable energy is well under way, but the interplay between power demand and supply also reflects near-term realities, risks and headwinds. In our report Charging Forward: The Case for Investing in Power Now, we attempt to provide a clear-eyed assessment of these demand and supply drivers in the context of the long-term global push to decarbonize the energy landscape. Key points include:
- Global demand for power has exploded since the mid-20th century[1] and is set for more dramatic growth in the decades ahead.[2 Industrial development and an expanding middle class are driving demand for power infrastructure in emerging economies. AI-driven investment in data centers, EV adoption, and industrial electrification are stretching power networks in the developed world.
- Countries, companies, and customers are demanding cleaner power. Natural gas has been seen as a logical source of inexpensive, stable, cleaner power, but it is far from emissions-free and its pricing is volatile.[3] Renewable power’s intermittent nature requires energy storage and resilience technology. Nuclear is emissions-free and provides stability, but waste, cost, and perception remain challenges.
- Establishing the supply needed to meet demand requires new and better solutions. Technological advances and policy changes both in the U.S. and other key countries and blocs support long-term growth for companies with sustainable competitive advantages in power markets.
- Disruptions to the long-term growth trajectory for renewables remain a risk, given geopolitical uncertainty and the imperative among developing nations to generate economic growth. The secular trend toward cost parity between renewables and fossil fuels should, however, continue to support expansion of emissions-free solutions.[4]
- We believe the sectors listed below are positioned to benefit from this classic supply/demand imbalance over the long term:
- Grid infrastructure and broad infrastructure
- Energy generation operators (utilities)
- Raw materials, metals, minerals,
- Storage, efficiency, resilience solutions
- “Beaten-down” renewable energy OEMs
- Natural gas products and services
- Carbon capture storage
If you are a Pathstone client and would like more information about specific investment opportunities, please contact your client advisor.
Download the executive summary of our report here.
Download our full-length report here.
[1] https://www.iea.org/reports/electricity-information-overview/electricity-consumption
[2] https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf
[3] https://www.eia.gov/todayinenergy/detail.php?id=50798
[4] https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf
