Recent headlines about slowing AI spending and volatile tech stocks miss a bigger story. The U.S. power grid isn’t ready for what’s coming. That was the message from speakers on a July 27 webinar sponsored by SS&C ALPS Advisors.
Key Takeaways:
- U.S. electricity demand is set to grow faster than at any point in decades.
- Grid upgrades could require another $1.4 trillion in spending by 2030.
- ELFY spans utilities, contractors and materials tied to the grid buildout.
Roxanna Islam, VettaFi’s head of sector and industry research, moderated the webinar. Panelists Mark McLain, managing director and head of power and energy at Ladenburg Thalmann, and Paul Baiocchi, head of fund sales and strategy at SS&C ALPS Advisors, joined her. Both argued that electricity demand is accelerating for reasons that go well beyond AI chatbots.
Baiocchi said electricity demand grew less than 0.5% a year over the past 25 to 30 years. That pace should climb to about 7% by 2027, with growth running above 3% a year into the next decade.
That shift matters for investors, Baiocchi said. Most investors tilt their portfolios toward the companies creating electricity demand, such as megacap tech stocks and AI developers, while carrying little exposure to the utilities, contractors and materials producers that have to build it.
Energy makes up less than 5% of the S&P 500 by weight. Just four midstream companies sit in the index, according to Baiocchi.
See more: Macro Tailwinds Power a Strong First Half for Midstream
McLain compared the current moment to the years following World War II, when electricity shifted from a luxury to a necessity with the arrival of television, refrigeration and air conditioning.
New technology, this time AI data centers and robotics, is playing a similar role today, McLain said.
Demand is showing up unevenly across the country. McLain said Virginia, a hub for data centers and new factories from companies including Volvo Group and Caterpillar Inc. (CAT), is forecasting electricity demand growth of 7% to 9% through 2030.
NextEra Energy, Inc.’s (NEE) pending acquisition of Virginia utility Dominion Energy, Inc. (D) is one sign of that pressure, McLain said. Texas is approaching 10% load growth of its own.
A Grid Built for a Different Era
McLain said 70% of U.S. transmission lines are more than 25 years old, and the country spent $1.4 trillion upgrading the grid over the past decade.
Utilities have signed 15-year contracts that lock in massive spending, and the grid is on pace for another $1.4 trillion by 2030, McLain said.
Transmission and distribution spending reached $105 billion in 2025 and could climb to $140 billion to $150 billion in 2026, McLain said.
Renewable generation grew by 15 gigawatts last year, enough to power roughly 11 million homes. Meeting clean energy mandates in 32 states will require another 100 gigawatts by 2030 and 360 more by 2050, he added.
State mandates aren’t the only driver. Inflation Reduction Act rules that require companies to source 40% to 50% of renewable project materials domestically are also fueling a wave of onshoring and factory construction, McLain said.
Natural gas remains the largest single contributor to U.S. power generation, at about 42%, according to Baiocchi. Pipelines, turbines and storage remain central to keeping the lights on as renewables expand.
Building ELFY Around the Grid
McLain said the ALPS Electrification Infrastructure ETF (ELFY) was built around that entire supply chain. It doesn’t invest in the companies using electricity, just the ones building the infrastructure to deliver it.
ELFY weights each of its roughly 105 to 110 holdings equally, spanning regulated utilities, independent power producers, specialty contractors and electrical equipment makers, according to Baiocchi.
Midstream gas companies, copper producers and turbine makers such as GE Vernova Inc. (GEV) round out the list, according to McLain.
Baiocchi said advisors can customize that exposure depending on a client’s goals. Those seeking broader commodities exposure tied to the buildout can pair ELFY with materials-focused funds, while income-oriented clients might lean into energy infrastructure names. Advisors wanting more renewable exposure can add the ALPS Clean Energy ETF (ACES) instead.
See more: Electrification Surge Fuels Case for Clean Energy ETF ACES
McLain said the fund wasn’t built around AI at all. It traces back to 32 states that adopted their own clean energy standards, after the U.S. exited the Paris Agreement during President Trump’s first term.
For more news, information, and strategy, visit the ETF Building Blocks Content Hub.
VettaFi LLC (“VettaFi”) is the index administrator and calculation agent for ELFY, for which it receives a fee. However, ELFY is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ELFY.
Facts Only
U.S. electricity demand growth is projected to reach approximately 7% by 2027.
Grid upgrades may require $1.4 trillion in spending by 2030.
70% of U.S. transmission lines are more than 25 years old.
Transmission and distribution spending reached $105 billion in 2025.
Estimated spending for 2026 is between $140 billion and $150 billion.
Virginia forecasts electricity demand growth of 7% to 9% through 2030.
Texas is approaching 10% load growth.
Natural gas accounts for approximately 42% of U.S. power generation.
32 states have adopted clean energy mandates.
Inflation Reduction Act rules require 40% to 50% of renewable project materials to be sourced domestically.
The ALPS Electrification Infrastructure ETF (ELFY) holds 105 to 110 equally weighted companies.
Executive Summary
U.S. electricity demand is accelerating after decades of stagnation, driven by the expansion of AI data centers, robotics, and industrial onshoring. This surge is creating significant pressure on an aging power grid, where the majority of transmission lines exceed 25 years of age. To meet this demand and comply with clean energy mandates across 32 states, an estimated $1.4 trillion in grid upgrades is required by 2030.
While megacap tech stocks drive the demand, the necessary infrastructure relies on a supply chain of regulated utilities, specialty contractors, and materials producers. Natural gas remains a critical baseline for power generation at 42%, even as renewables expand. Investors are encouraged to look beyond the software and AI developers to the physical infrastructure—copper, turbines, and midstream gas—that enables the energy transition. There is a clear divergence in regional growth, with hubs like Virginia and Texas seeing significantly higher load increases than the national average.
Full Take
The strongest version of this narrative is that a massive, physical bottleneck—the electrical grid—now stands as the primary constraint on the digital economy, creating a "picks and shovels" investment opportunity in the industrial base. It frames the current era as a second "Great Electrification," mirroring the post-WWII surge in consumer appliances.
However, the structure of this information is a textbook example of a vendor advertorial. The "crisis" of grid inadequacy is used as the primary catalyst to drive a specific financial product: the ELFY ETF. By framing the grid as "not ready" and highlighting the risk of missing the "bigger story," the narrative creates a sense of urgency that can only be resolved by the investment vehicle provided. The evidence for the systemic need is cited primarily by representatives of the firm sponsoring the ETF and the index administrator.
Patterns detected: ARC-0021 Authority Game, ARC-0002 Fear Appeal
The driving paradigm is "Infrastructure Determinism"—the belief that the physical capacity to deliver power will dictate the pace of technological evolution. This echoes historical cycles where energy transitions (coal to oil) shifted global geopolitical power. The second-order consequence is that the "AI boom" is effectively being exported from software developers to the copper mines and utility contractors of the Midwest and South.
If this were a coordinated influence campaign, the playbook would involve creating a "hidden danger" (the grid collapse) and then presenting a proprietary "safe harbor" (the ETF). The content aligns structurally with this pattern.
Bridge Questions:
1. If energy efficiency in AI models improves faster than predicted, how does that impact the $1.4 trillion spending projection?
2. What are the political and regulatory hurdles to spending $1.4 trillion on transmission lines that cross state borders?
3. Who bears the cost of these grid upgrades—the tech companies driving the demand or the end-ratepayer?
Counterstrike Scan: The content matches the pattern of a vendor-sponsored lead generation piece, using macro-economic alarmism to justify a specific product offering.