Energy Sector Impact - Iran ordered public offices closed across half the country to ease energy demand [1] - Intense heat is driving the increased energy demand in Iran [1]

Energy Sector Performance - Wind turbine output in Britain nearly ceased due to calm conditions during a heat wave [1] - The UK had to switch to gas for power generation [1]

French power prices rose to their highest since March on concern that a heat wave building across the country this week could curb output from its fleet of nuclear reactors https://t.co/8L0dfKX9yd ...

Europe’s next heat wave is already building over the Iberian peninsula, potentially testing more temperature records after an unseasonably cool start to August https://t.co/epjEAi2Lm9 ...

Industry Trend - The financial toll of a heat wave is hard to estimate, but risk modelers and insurers are trying to quantify it due to the rise of extreme heat [1]

A heat wave will bake western Europe in conditions as much as 10C above the norm in the coming days, threatening harvests, stressing power systems and triggering health alerts https://t.co/IQJzpaTpbV ...

Industry Trend - U S power grids are facing a major test due to a heat wave bringing extreme temperatures and humidity [1]

Industry Trends & Growth Drivers - Electric, gas, and water utilities are experiencing significant capital expenditure (CapEx) growth, projected to increase over 50% from $150 billion annually to nearly $250 billion by 2026 [2] - Data centers are fueling load growth for utilities, contributing to a national average growth of 2-3%, with some areas experiencing high single-digit or slightly higher growth [8] Impact of Weather & Regulation - Heat waves are generally beneficial for utilities, allowing them to demonstrate the value of infrastructure upgrades and grid reliability [2][3] - The impact of heat waves on profits varies by state due to decoupling mechanisms, where some utilities like Exelon (EXC) in Illinois do not directly benefit financially from increased demand during hot weather [3] - Utilities may experience slightly higher operation and maintenance (O&M) expenses during extreme weather due to increased maintenance needs [5][6] Investment & Valuation - The utilities sector is currently trading at an 18% discount compared to the S&P 500, despite having comparable earnings growth of around 7% and offering a better dividend yield [10] - Potential rate cuts could further enhance the attractiveness of the utilities sector [11] - Despite having growth drivers, the utilities sector is still viewed as a defensive sector, similar to a bond proxy [13][14]