Key Takeaways: U.S. utilities are preparing to spend $1.3 trillion from 2026 through 2030 to meet AI-driven electricity demand, a capex wave that is reshaping the sector's investment case.
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ELFY ETF captures $1.3 trillion utilities AI spending boom
U.S. utilities are preparing to spend $1.3 trillion from 2026 through 2030 to meet AI-driven electricity demand, a capex wave that is reshaping the sector's investment case.
U.S. utilities will spend $1.3 trillion from 2026 through 2030 to meet AI-driven electricity demand, according to Regulatory Research Associates.
"Data centers, along with other large industrial loads such as new manufacturing facilities, are fueling the need for new power supplies through 2035, adding 374 TWh of energy demand and over 45 GW of peak load," S&P Global Market Intelligence said.
The capex wave is already showing up in ETF performance. The ALPS Electrification Infrastructure ETF (ELFY), which turned a year old in April, allocates 35.67% of its portfolio to utilities. The fund is up more than 22% year-to-date, roughly six times the return of a typical benchmark utilities ETF.
The spending surge extends beyond AI. Power grids across the U.S. need modernization as a matter of national security, and data-center construction spending is projected to rise from $60 billion in 2026 to $109 billion by 2030.
Capex Programs Target Grid Modernization
"Capex programs are targeted at infrastructure modernization to enhance grid reliability and resiliency, alongside a significant build-out of new generation and transmission capacity to meet continuing data center growth and the need to connect to new resources," S&P Global Market Intelligence said.
Power construction is forecast to rise from approximately $176 billion in 2026 to $274 billion by 2030, while utility five-year capital plans approach $1.3 trillion for 2026-2030. Goldman Sachs estimates U.S. data-center power demand could rise from 31 GW in 2025 to 41 GW in 2026 and 66 GW in 2027.
The data-center boom is creating a second construction boom around it. A data center needs the building itself, but it also needs substations, transmission connections, backup generation, cooling infrastructure, roads and electrical distribution. That creates opportunities for contractors and equipment suppliers far beyond the data-center shell.
ELFY's Diversified Exposure
ELFY's portfolio extends beyond utilities, with more than 45% allocated to industrial and energy stocks. That diversification helps the fund outperform standard utilities strategies, which typically lack exposure to the electrification infrastructure theme.
The broader AI infrastructure buildout is accelerating. Hyperscalers alone are projected to spend roughly $700 billion in AI-related capex in 2026, while McKinsey projects $7 trillion globally on AI-centric capex by 2030, with $1.3 trillion aimed at energy. Nvidia recently reached a deal with BlackRock and Goldman Sachs to raise $500 billion for AI infrastructure funding.
The $1.3 trillion utilities capex forecast signals sustained revenue growth for utility companies and the contractors building the infrastructure. Investors will watch quarterly earnings from ELFY's top holdings and the pace of data-center grid connections for signs the spending pipeline is converting to actual construction.
This article is for informational purposes only and does not constitute investment advice.
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