We believe the thesis has considerable runway given electric demand growth through at least 2030 and the challenges bringing new supply on-line. Given accelerated power demand, energy infrastructure, (power generation, renewables, transmission, gas pipelines) has become increasingly valuable and development opportunities abound. Smaller utilities with limited balance sheets need partners to finance larger projects. Consolidation is driven by higher capital investment budgets and economies of scale, as accelerated energy demand and decarbonization create double-digit rate base growth and require significant debt and equity issuance. EIA December Short-term Energy Outlook forecast Henry Hub gas prices to average $4.01/MMBtu in 2026, higher than the roughly $3.56/MMMBtu in 2025 and the $2.19 MMBtu in 2024. As an example, NJ’s largest electric utility, PSEG, highlights that the June 2025 average electric bills rose to $158 per month, from $134 in Janaury2025 with $20 of the $24 increase due to the PJM capacity auction.

A critical component of this is using customer effort score (CES) as a key metric, with a management focus on eliminating dissatisfiers and reducing operating costs by process and journey. By enhancing self-service and digital employee enablement capabilities, including artificial intelligence (AI), GenAI, robotic process automation (RPA) and other traditional digital areas, P&U providers can drive lower cost and better employee and customer experiences. There is a growing importance on maximizing the ROI of customer initiatives to capture load-growth opportunities, maintain affordability and balance investments with the significant capital commitments many utilities are making.

Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Despite high capital costs and regulatory hurdles, the industry is modernizing infrastructure, embracing renewable energy and using AI to optimize operations. Ultimately, the right mix of top-quality people, greater efficiencies through technology and a forward-looking operating model can provide more time and ability to expose value across a company. Like the PPAs and nontraditional partnerships around nuclear and renewable energy discussed above, PE-owned IPPs are leaning into the utilities sector with hopes to capitalize on elevated power and capacity market prices.

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• At least two states now have LDES requirements totaling more than 2.75 GW.16 Utilities are also procuring 8-to-10-hour storage to address reliability gaps during high-demand seasons and reduce unused renewable energy generation.17 While this can relieve peak stress, it is not a one-for-one substitute for firm generation like gas or nuclear.
• Some utilities are flush with cash, while others face significant balance sheet issues.
• Dynamic tariffs are likely to spread, exposing hyperscalers to real-time signals.
• Rocket Lab has also remained one of the most active launch providers in the sector.

The story of the hyperscalers in 2026 has largely been “the beatings will continue until the cash flow outlook improves;” this could help change the story for Meta. The second-best performing is Constellation Energy Corp. (+71%), which is America’s largest owner and operator of https://www.wtf-film.com/short-course-on-what-you-should-know-9/ nuclear power plants. But, despite Nvidia’s inexorable rise and the ongoing dominance of the Magnificent 7, it’s good old fashioned utility stocks — think electricity, water, and gas companies — that are leading the market this year, up more than 27%.

• Utilities that set the pace will be those that embed financial, operational, and digital flexibility into their playbooks—delivering capacity where and when it’s needed while safeguarding affordability.
• The information in this report represent the opinions of the individual Research Analysts’ as of the date hereof and is not intended to be a forecast of future events, a guarantee of future results, or investments advice.
• All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions.
• Utilities are matching Silicon Valley’s capex boom to keep pace with Big Tech’s big power demands.

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• In response, the state established the Texas Energy Fund to support new dispatchable generation, approving roughly 10 GW across 17 gas-fired projects, though some have since withdrawn or been replaced.
• Despite high capital costs and regulatory hurdles, the industry is modernizing infrastructure, embracing renewable energy and using AI to optimize operations.
• Many providers are experiencing unprecedented load growth driven by data centers, manufacturing and overall electrification.
• Big tech companies signed new contracts for more than 10 gigawatts of possible new nuclear capacity in the one-year period leading up to early 2025, and Goldman Sachs Research sees potential for three plants to be operational by 2030.
• In response, utilities are striving to quickly finance and build additional energy infrastructure while continuing to balance reliable energy delivery, keeping customer rates low and meeting decarbonization targets.
• In a significant shift, the Federal Energy Regulatory Commission (FERC) has decided to abandon its transmission incentives policy, particularly the construction work in progress (CWIP)…

A key source of affordability anxiety stems from deregulated power markets—particularly PJM, a 13‑state region that includes New Jersey and Virginia. Had been viewed as a stable, regulated way to participate https://heplerbroom.com/blog/illinois-proposed-power-act-implications-for-ai-data-centers-developers-and-municipalities/ in the AI‑driven data‑center build‑out, which requires massive incremental power demand and supports sustained rate‑base expansion. Utilities We believe the pause and reassessment makes sense given the tremendous amounts of capital that the hyperscalers are investing and the potential for winners and losers in the AI space and data-center market.

It’s expected that partial asset plays, which enable utilities to progress their investments while generating returns for PE investors, will continue. Many providers are experiencing unprecedented load growth driven by data centers, manufacturing and overall electrification. Optimizing the grid — including driving electrification and enabling energy flexibility — is critical to how many utilities approach grid modernization, but customer experience is often an afterthought.