June 24, 2022

Reliable, affordable electrical power is a key requirement for US businesses to compete effectively in a global economy and a necessity for consumers. Meanwhile, there is growing consensus among global policymakers, corporations, and investors that supports transitioning to clean and renewable sources of energy. The US has committed to a multi-year program to produce 80% of domestic electricity from clean sources by 2030. This is a very ambitious goal, since as of 2022, fossil fuels like natural gas and coal still provide 61% of our power nationwide. Upgrading the grid and improving the transmission and distribution of electricity is critical to making progress towards the current administration’s vision.

Grid modernization is an enormously complex topic. It will require massive capital investment, according to Princeton University, potentially as much as $360 billion in this decade, and a total of $2.4 trillion by 2050. It will also require cooperation between the public and private sectors, and new legislation at the federal, state, and local levels. Much of our domestic infrastructure needs to be upgraded, modified, or replaced to increase capacity and effectively generate, store, and transport electricity. We believe that this modernization will produce significant and long-lasting investment opportunities over the next decade and beyond.

– Nico Falkinhoff & Mike Buck, CFA®, JAG Investment Team

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