If there is one element that underpins the development of artificial intelligence and reindustrialisation of America, it might be electric power.
Power demand in the US is set to surge over the next decade, driven by rapid expansion of AI data centres, new manufacturing facilities and electric vehicle networks. Data centres account for about 4% of US electricity use, but estimates suggest that figure could climb to 9–14% by 2030.
Overall, what is unfolding is a fundamental shift for the power industry, which has undergone a decade of stagnant consumption.
Power is transforming into a critical enabler of growth from what was once a behind-the-scenes segment of the economy. With multiple drivers of power demand, the US should see increased investment in electric infrastructure, utilisation of the power generation fleet, and new technologies emerging.
The last time the States witnessed massive power investments was the late 1990s and early 2000s, which resulted in an overbuild of gas-fired generation plants in newly deregulated markets. The bursting of the dot-com bubble, excessive demand outlooks and natural gas price collapse all helped plunge the market into oversupply, triggering a wave of bankruptcies and stranded assets. Today, there are few signs of this excess and speculative buildout.
With that in mind, this paper outlines several structural constraints anticipated to keep power generation tight through at least 2030. We expect these dynamics to offer a variety of investment prospects.
