Utilities are About to Grow Substantially
Not all of them, but the forward thinking ones are set to grow much faster than the past
Electricity needs have grown at a nice sedate predictable pace for decades. And utility companies have handled that growth with a nice sedate predictable operation. With a nice sedate predictable return providing a very safe predictable ROI to investors.
And then Crypto, followed by AI happened. Now suddenly electrical demand is shooting upward. Pretty much every utility is struggling to meet demand today. And these companies do not have the experience & knowledge to figure out what the demand will likely be, and build for it, over the next several years.
And those that do figure out what they need to do, then need to figure out how to accomplish it. Those that do come up with a good plan, and then successfully implement that plan, are going to grow. A lot.
So… how to find the utilities that will be successful. I think it’s a couple of things. I’ll be diving in to each of these and posting here as I learn. But here’s the big picture:
How are they going to generate the additional energy? The only candidates for quickly adding significant power is solar/batteries and natural gas.
Wind is becoming a niche source, nuclear has too long a lead time, and coal is obsolete.
Where will they get their solar & batteries from? If it’s China, what happens if the Trump Administration implements 60% tariffs. Do the numbers still work? If not, what’s the backup source for these?
How are they going to get this newly generated power from the solar fields to their customers. The best candidate for this is to replace their power grid lines with higher capacity cables and the new smart transformers. Additional lines added is good too, but it’s so much faster to get approval to replace a line than to get approval and then build new lines.
What source will they use for power lines and transformers? Will those manufacturers be able to meet their demand? And again, will the Trump tariffs impact this significantly.
Who are they going to hire to build this all out? The companies with expertise to do this (the companies with all the guys wearing yellow hard hats) have limited resources. The greatest plan in the world will fail if they can’t hire the companies that can implement it.
What is the company estimating their growth to be year by year for the next 5 years. How clear is their plan to accomplish it.
What other companies/products are they dependent on to accomplish this?
What do they view as their largest challenges.
My guess is as I dive in to the various utilities I’ll find some that just don’t have this info public (which usually, but not always, means they haven’t figured this out). Some will still be operating business as usual and they’ll continue as podunk businesses. And I think a fair number will be stepping up to this challenge.
My next step is to find out which utilities are all in on growing to provide abundant energy. And then find what components and construction companies they are using. Because the question is not what company manufacturers the best transmission line, it’s which company with an advanced transmission line are the utilities buying from.
In other words, home video tape was a great idea and it was going to be successful. But the format that ended up winning, VHS, was inferior to BETA. Which is fine as the key thing was to get home movies and VHS got the job done.
So anyways, as I learn more, I’ll post it here.
And please, if you have any knowledge on this subject, post it in the comments.
