All the Credit High Voltage: Exploring Developments Across the U.S. Electric Grid
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Dec 12, 2024 Michael Haigh, a U.S. Leveraged Loans Portfolio Manager at PGIM Fixed Income, and Maxwell Hausle, an Investment Grade Credit Research Analyst, dive deep into the surging demand for electricity in the U.S. They discuss how advancements in AI and data centers are driving this demand, alongside the regulatory challenges it presents. The duo evaluates the potential of nuclear energy in the mix and the economic pressures utilities face. Their insights reveal a complex landscape where regional power dynamics and rising prices affect both consumers and energy providers.
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US Power Demand Inflection
- U.S. power demand was stagnant for two decades.
- It is now projected to grow at low-to-mid single digits annually, impacting investments.
Power Demand Drivers
- Tech's AI push and data centers primarily drive increased power demand.
- Other factors include reshoring, electrification, and smaller growth drivers.
Power Sourcing Challenges
- Tech companies prioritize speed to market, potentially compromising clean energy goals.
- Power will come from renewables, gas, and existing nuclear, hindered by supply chain and permitting issues.