Data Centers Turn to Off-Grid Power, Electrification ETF Gains

Core Insights - Data center developers are increasingly investing in onsite power to reduce reliance on utility grids, driven by the urgency for energy independence and rising electricity demand [1] - The ALPS Electrification Infrastructure ETF (ELFY) provides exposure to companies involved in building domestic power systems, as demand surges and geopolitical tensions challenge grid capacity [1] Data Center Trends - By 2030, approximately one-third of data centers are expected to utilize 100% onsite power, reflecting a 22% increase from a previous survey [1] - More than half of new data center campuses are projected to exceed 500 megawatts by 2035, with nearly one-third surpassing 1 gigawatt, equivalent to the electricity consumption of San Francisco [1] - Texas is anticipated to capture nearly 30% of the U.S. data center market share by 2028, while Georgia's market share is expected to grow by 75% [1] Energy Independence and Market Dynamics - The recent spike in crude oil prices, exceeding $90 per barrel, has renewed focus on energy independence, with potential prices reaching $150 per barrel if geopolitical tensions escalate [1] - The appeal of domestic power systems is emphasized by industry experts, highlighting the risks of dependence on foreign natural resources [1] ETF Performance and Composition - ELFY tracks the Ladenburg Thalmann Electrification Infrastructure Index, which includes 18 subsectors related to power delivery infrastructure [1] - As of December 31, the fund's allocation is 40.37% utilities, 27.57% industrials, and 14.31% energy, with top holdings including PG&E Corp., Hudbay Minerals Inc., and Teck Resources Ltd. [1] - ELFY has attracted $110 million in assets under management and has increased by 14% year-to-date, outperforming the S&P 500 [1]