The exponential growth of data centers raises critical questions about electricity sourcing and the infrastructure investment needed to support digitalisation and decarbonisation. According to Maple-Brown Abbott, insatiable demand for data centers is creating attractive investment opportunities in the US power sector where one third of the world’s data centers are situated.  

“We are positive on the US electric utilities sector because of compelling valuations coupled with emerging opportunities around data center growth, digitalisation and decarbonisation” says Georgia Hall, ESG Analyst, Global Listed Infrastructure at Maple-Brown Abbott.

“Data centers form the backbone of the digitalised world, supporting various services from cloud computing to e-commerce and artificial intelligence – but they are voracious consumers of electricity. According to the Electricity 2024 report by IEA, estimates suggest global power demand from data centers could surpass 1,000 terrawatts per hour (TWhs) by 2026 – roughly the equivalent of Japan's entire electricity consumption. While data centers are driving electricity consumption to unprecedented levels, we also believe their growth is helping to accelerate energy transition infrastructure investments.

“Data center growth presents a major opportunity for regulated electric utilities to expand their customer base and revenue streams while spreading the energy transition costs across more consumers. This is especially true in the US, where landmark policy incentives such as the Inflation Reduction Act are turbocharging investments in renewables and grid infrastructure.

“We believe underappreciated structural growth tailwinds will persist for decades to come but are not yet reflected in the market prices for these assets. Our current allocation of 37 per cent to US electric and multi-utilities in the Maple-Brown Abbott Global Listed Infrastructure strategy reflects our conviction in the sector,” Ms Hall said.