Highlights: In the ‘New World Order’ laden with tiffs, threats, and tariffs, if a nation can’t fight, feed, and fuel itself, it is no longer secure. With national security becoming multi-dimensional, nations are building domestic resilience by:

• Developing a clear industrialisation strategy to aid domestic manufacturing. Keeping supply chains outsourced means being vulnerable
• Developing adequate digital and physical infrastructure to stay ahead in the AI race, as there’s a growing realisation that technological prowess is an indispensable part of any defense strategy. How well a nation does on these two fronts will determine how secure it is not just territorially, but also economically. But all these strategic endeavours need adequate power supply. However, there isn’t enough of it going around, given the chronic underinvestment in national grids

AI’s power hunger: Besides national security, there’s an immediate demand for electrification from tech companies to feed AI’s insatiable power hunger. Data centres’ demand for electricity has been straining America’s power networks. US electricity bills are rising, and consumers are irked. Add to it the pressure from extreme climate events that are pushing America’s power infrastructure to a breaking point. In a year of midterm elections, such power constraints are a big impediment to administration’s push for lower energy bills. In this report, we elaborate on why we think electricity is a power (and security) play by focusing on the strategic role both ‘electricity adequacy’ and low cost will play in building a nation’s energy security, its AI supremacy and its impact on everyday life.

What are the investment implications of this new dynamic for investors?

• Nuclear Energy: Energy security is strategic for governments and will be achieved through an optimal mix of traditional fossil fuels and renewables. The mix of electricity generation (nuclear, solar, wind, gas etc.) is the result of each nation’s political choices. Nuclear energy, as a steady source of power is likely to emerge as a clear winner, in our view
• Infrastructure: Building resilience in domestic energy infrastructure will be crucial – from power grids to investing in small nuclear reactors – to have affordable and abundant energy. Digital and physical infrastructure therefore offer attractive opportunities for investors
• China: China’s energy-building boom is unmatched. In the past four years, China has added more power generation than the entire US system. With the build-out going from record to record, the priority is clearly security of supply, and abundant availability of competitively priced energy
• US: With energy security and electricity’s cost imperative a policy priority, we see opportunities in beneficiaries of American re-industrialisation, like industrials, materials and utilities. Our investment theme on Energy security taps into both the US and global opportunities emerging in this space