3 Under The Radar Plays On The Booming AI Power Demand

Industry Overview - U.S. power consumption is rising for the first time in over a decade, with an average increase of 1.7% per year since 2020, approaching the 2% yearly average from 1990-2005 [2] - The rise in electricity demand is driven by factors such as the growth of AI, which requires significant data and power, benefiting both power producers and companies involved in grid upgrades [3] Grid Improvement Strategies - The most cost-effective approach to enhance the grid involves maximizing the use of existing infrastructure, addressing weak spots, and then constructing new lines [1][10] - Smart sensors and software can optimize the current grid by allowing utilities to manage electricity flow more efficiently, which can be implemented quickly and at a low cost [4][9] - Upgrading substations and implementing basic protective measures can significantly reduce outage risks [5] Cost Considerations - Underground power lines, while more reliable in adverse weather, are expensive, costing approximately $3 million per mile for typical distribution lines [6] - Reconductoring existing lines can double their capacity at a fraction of the cost of new lines, making it a more economical option [7][9] Regulatory Environment - Permitting for new lines is complex and slow, often involving multiple approvals and legal challenges, but recent rule changes aim to streamline this process [8] Companies Positioned for Growth - Quanta Services: This company is well-positioned to benefit from increased utility spending on grid reliability and has a backlog of projects that ensures steady revenue growth [11][12] - Hubbell Inc.: Specializes in manufacturing essential components for the grid, benefiting from durable pricing power and a shift towards grid hardening and automation [13][14] - American Superconductor: Produces equipment that stabilizes the grid, with growing demand as renewable energy projects and data centers increase, offering potential for rapid revenue growth [15][16]