Gasoline is the devil and electricity is an angel. Electricity is key to the environmental future and electric cars and soon trucks are at the forefront of that. Does anyone think that the environmental store is going into reverse anytime soon?
Unless we are all going back to the plough, more and more of the energy we use is going to start with electricity.
If it means I don’t have to breath carbon nanoparticles, that’s fine by me, I’m OK paying a premium for a nice world.
But here is the problem. There just isn’t enough of it about.
There is nowhere enough generation or infrastructure out their right now to anywhere near fulfill the dream.
It wasn’t that many years ago when server farms where taking down the power in California and that was just a surge in demand to run your email and AOL. A 50% jump in demand in electrical supply requirements for vehicle electrification is simply not on the cards right now.
Remember how the kevetching got shrill when Bitcoin was going to boil the oceans with its electricity consumption? That’s not even an iota to what cars will need to electrify.
Now I am not saying this is a terrible idea, it feels like progress to me. Electric vehicle are wonderful and they also represent a fantastic investment opportunity but I’m not talking about hitching your wagon to Elon Musk’s alien technologies.
In a boom its is always the infrastructure folk that make a mint.
What is better, electricity infrastructure companies are broadly listed and as cheap as the chips some of them use to make electricity.
They are cheap because governments wrap them up in mountains of red tape and ruthlessly beat them to stop voters getting upset with their bills.
However if these companies are going to increase their generation by 50% before AOC and Greta defined human extinction date, they are going to have to be unbounded.
This unbinding will slingshot these companies valuation from levels worthy of broke companies to levels of sexy companies who have been granted a license to print money to build out some of the biggest big iron there is.
This has been obvious to me for a couple of year but it is at last seeming to be a thought crossing the minds of the avant-guard in these sort of macro themes.
Investors should start rolling electricity generation/infrastructure into their portfolio and while they are at it the will notice they are often getting fat dividends in the process.
The alternative to an almost impossible growth in electricity generation, is to keep the internal combustion engine for generations to come or the restriction of car usage to the rich worthy via huge taxes. It’s the dream of some but is unlikely to happen and whats more wont shift the need for a huge expansion of electricity infrastructure.
These electricity infrastructure stocks, the generators, particularly in litigation light Europe are stocks you can buy now and hold forever, because one thing is for sure it will take a long time for high prices to solve high prices when you are talking about projects the scale of electricity generation.