The development of renewable energy and the electrification of transport will lead to a significant increase in energy transmission and distribution capacity. The Biden infrastructure plan, still awaiting a final vote in Congress, will be a first step towards 2030.

An inevitable densification of electricity network infrastructures

The energy transition and in particular the electrification of transport will lead to a significant increase in electricity demand in the coming decades (at least 70 GW increase by 2050, compared to a 10 GW decrease over the last decade due to efficiency gains).

In terms of transmission and distribution, two key elements will lead to a strong densification of the networks in the US:

• Additional electricity generation capacity will be predominantly renewable, with the share of the production mix increasing from around 20% in 2020 to over 70% in 2050.
• More than 80% of electric vehicles will be recharged at home, moving from a system where the consumer has to go to a refueling point (about 150,000 gas stations) to a system where energy is delivered directly to the consumer (more than 140 million households in the US).

The electricity grid infrastructure must therefore be reconfigured to accommodate a completely decentralized electricity production setting (from ports and large cities today to a multitude of renewable energy sites tomorrow) and a much more disintermediated transmission and distribution mode.

The Biden plan's forecasted allocation of around $70bn, combined with a capex tax credit mechanism for transmission infrastructure development projects between now and 2030, is therefore only the first step in a fundamental transformation of the US electricity grid.

Our exposure to US power infrastructure

We are currently invested in two US companies that are highly exposed to the power grid transformation opportunity:

• Quanta Services, a company that generates 69% of its revenue from the design, installation and maintenance of electrical infrastructure. The group has a 60% market share of large transmission projects in the US.
• Eaton Corp, a group specializing in electrical equipment for low and medium voltage networks. The company generates 38% of its turnover in its domestic market.