The wires are the opportunity, both literally and metaphorically. A lot of mindshare and capital have gone to solar power and electric vehicles, but what has been underappreciated is the grid infrastructure that connects them-and where a meaningful investment opportunity may lie. As we wrote in our 2026 Outlook, investors should prioritize cross-asset exposure to the expansion and modernization of electricity grids. We reaffirm that view here.

Multiple structural forces are converging: AI-driven electricity demand, the electrification of transport, industry, heating, and other applications, and the integration of distributed renewable generation into a grid designed for a different era. On top of those forces, high and volatile fossil fuel prices because of the Iran War may further accelerate electrification. European electric vehicle (EV) sales jumped 51% in March 2026, and China's "new three" exports (solar, batteries, and EVs) rose 70% year-over-year, according to Ember and Chinese customs data.

The combination of demand pressures is significant. Hyperscalers are racing to build AI compute capacity, and new data centers require more power and often new transmission connections as well. Electrification is adding load from EVs, heat pumps, and industrial processes, while the shift to distributed, intermittent renewable generation requires storage, load balancing, demand response, and smart grid technologies that the existing system was not designed to accommodate.

The numbers are stark.

Similarly, 40% of European distribution grids are more than 40 years old. According to the International Energy Agency, while investment in renewables has doubled since 2010, grid capex has remained largely flat, creating a choke point for electrons in developed economies. Order backlogs for transformers, cables, and switchgear are growing, and lead times for large power transformers now span three to five years in North America and Europe.

The opportunity spans asset classes. In public equities, large industrial companies supplying grid equipment-including transformers, cables, and switchgear-have seen significant re-ratings. The more attractive opportunities are likely to be companies with multi-year order backlogs and demonstrable pricing power, rather than those primarily riding the thematic wave on sentiment. Private infrastructure funds can offer exposure to grid assets with long-duration, inflation-linked cash flows. Growth equity and venture capital can provide access to grid-enhancing technologies, including demand response platforms, energy storage software, and grid optimization tools, increasingly enabled by AI. What distinguishes strong managers in this space is the combination of engineering expertise, understanding of industry-specific sales cycles, and the ability to navigate highly localized regulatory complexities.

The context is different in many low- and middle-income countries, where the challenge is often not modernizing an aging grid but expanding energy access for the first time. Solar costs have fallen more than 90% since 2010, and the combination of rooftop solar, mini-grids, and battery storage now offers a faster, cheaper, and more resilient path to electrification than extending the traditional grid. This is the energy leapfrog, analogous to how mobile phones bypassed fixed-line telecommunications across many emerging markets. Here, the opportunity set is more distinct and often centers on distributed energy, last-mile distribution platforms, productive-use appliance financing, and the digital infrastructure-including metering, payments, and demand forecasting-that makes distributed energy commercially viable at scale.