In an era where technological advancements and shifting geopolitical landscapes are the norm, identifying inevitable trends is essential for the successful investor.
The use of the word inevitable is purposeful here.
We are not referring to trends whose foundations can be swept away by the stroke of a politician’s pen but rather those where a problem needs to be solved in order to meet ferocious demand from the modern world and hopefully send the equity prices of associated companies higher.
There are dozens of these research topics which occupy the minds of Laurium’s research team, but today we want to focus on one that is particularly relevant to our global equity fund.
This area of significant change is the modernisation of the American power grid—a critical infrastructure undergoing substantial evolution to meet contemporary demands.
The American power grid, once a marvel of engineering, is now showing its age.
Built largely in the mid-20th century, more than 70% of U.S. transmission lines are over 25 years old, and some sections date back nearly a century.
This aging infrastructure is tasked with powering a modern economy that consumes unprecedented amounts of electricity.
According to the U.S. Energy Information Administration (EIA), total electricity demand in the U.S. reached 4,000 terawatt-hours (TWh) in 2023, and that number is only expected to rise as industries, consumers, and new technologies place increasing strain on the grid.
The weaknesses of this aging system are evident in recurring failures caused by extreme weather events.
In California, aging transmission infrastructure has been linked to devastating wildfires, including the 2018 Camp Fire, which resulted in billions in damages and was traced to Pacific Gas & Electric’s power lines.
Meanwhile, in 2021, Texas faced an unprecedented grid failure when a winter storm knocked out power for millions, causing at least 200 deaths and an estimated $195 billion in economic losses.
These failures underscore the urgent need for grid modernisation, not only to improve resilience – but to meet the rapidly growing demand for energy-intensive applications.
One of the most talked about pressures on the modern grid comes from artificial intelligence.
AI-driven data centres require massive amounts of power, with some estimates suggesting that a single advanced AI model training cycle can consume as much electricity as 100,000 U.S. homes use in a day.
The imperative to rejuvenate the American power grid presents a wealth of investment opportunities across its expansive supply chain.
From commodity producers supplying essential materials to firms specialising in infrastructure maintenance and modernisation, numerous companies are poised to benefit from this transformative period.
Our investment strategy is proactive in identifying and allocating capital to pivotal players within this important thematic where valuations and economic fundamentals are attractive.
It’s important to note that while we emphasise the power grid’s transformation today, our investment philosophy remains diversified, continually seeking opportunities across various sectors and geographies where we can find quality, world leading companies at reasonable prices.
Article from Business Tech
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