We’ve all felt the sting of energy shortages and power outages—those inconvenient moments that remind us of our reliance on a stable energy system. The summer of 2024 was particularly telling, shattering heat records and pushing demand for cooling systems to unprecedented levels, leading to power outages around the globe.
In the U.S. alone, heat-season power outages climbed 60% in the 10 years between 2014 and 2023 compared to the first 10 years of the new millennium, as reported by Climate Central.
But rising global temperatures and increased air conditioning demands are just part of the story. Rapid economic growth, widespread electrification across industries, and the rise of energy-hungry technologies are also pushing energy systems beyond their capacity.
Years of underinvestment in traditional energy sources, combined with a slower-than-anticipated rollout of renewable technologies, have left us at a critical crossroads. Now, we face the challenge of balancing immediate energy needs with the need to accelerate the transition to long-term, sustainable solutions.
Ripple Effects
The energy transition has proven to be more than just a passing trend. It is a structural megatrend that’s reshaping the global economy and sending ripple effects beyond traditional energy players.
Consider data centers. As they move from general-purpose computing to Generative AI and accelerated computing, their appetite for energy is growing: Running a single ChatGPT query consumes about 10 times more energy than a typical Google search, Goldman Sachs research found. This shift could push data centers’ share of global electricity consumption from just over 1% today to a staggering 8% by 2030.
And it doesn’t stop there. As data centers’ appetites for electricity grow, so does demand for more advanced cooling systems. Infrastructure companies must innovate with cooling solutions that ensure optimal performance, reliability, and energy efficiency.
Energy Trilemma
Although the energy transition is motivated largely by the need to reduce greenhouse gases, environmental responsibility isn’t the only driver. Equally critical are energy security and accessibility. Together, these three challenges—decarbonization, security, and access—form what is known as the energy trilemma.
Until recently, much of the world took their fossil fuel supply for granted. Globalized markets provided a sense of adequate and reasonably priced energy supplies. However, the landscape shifted dramatically in 2022 with Russia’s invasion of Ukraine and its subsequent gas supply cuts to Europe, triggering worldwide disruption. The resulting price volatility, supply shortages, security risks, and economic instability created what the International Energy Agency describes as “the first truly global energy crisis.”
This crisis underscores the need to create a safer, more sustainable energy system, which the energy transition is effectively targeting while lowering dependence on fluctuating fuel prices and reducing energy costs.
Amping Up Technology
Central to resolving the energy trilemma is technology. However, the scale and complexity of these challenges demand more than what current technologies can provide.
According to McKinsey Global Institute, only about 10% of the low-emissions technologies needed to achieve net-zero carbon emissions by 2050 have been deployed. Bridging this gap requires building a new, high-performing energy system with technologies that don’t yet fully exist or haven’t been implemented at scale.
To transform today’s energy system, we need advancements across multiple fronts—grid efficiency, energy storage, carbon capture, and more. Addressing these challenges requires unprecedented investments in research, development, and deployment.
As much as up to $3 trillion per year will be needed by 2050 to develop and scale the necessary innovations, according to Thunder Said Energy. And the technologies that succeed will not only need to be sustainable but economically viable, fundamentally reshaping how energy is produced, distributed, and consumed.
Solving the energy trilemma will be one of the defining challenges—and opportunities—of our time.
Investment Potential in Overlooked Sectors
While many investment narratives around the energy transition focus on renewable energy and electrification, we believe promising opportunities also exist in less obvious sectors.
Our actively managed global, long/short, equity strategy is designed to identify and capitalize on opportunities across the entire energy value chain—companies we believe are poised to either accelerate or hinder the energy transition.
We currently see significant investment potential in solutions addressing energy shortages, either through energy efficiency or increased power generation via nuclear, gas or renewables. We are also excited about U.S. reshoring trends, driven by corporate leaders' commitment to enhancing supply chain and energy resiliency, amongst others.
Capitalizing on Change
The challenges of energy security, access, and decarbonization are real, but so are the opportunities for investors with a pragmatic approach.
By focusing on businesses leading the developing solutions to these challenges—while also keeping an eye on those at risk of being left behind—our long/short investment strategy offers investors an opportunity to participate in a multi-decade megatrend.
The global energy transition is a structural megatrend that represents trillions of dollars of investment opportunities in the coming decades.
In this webcast, our founder Lisa Audet sat down to discuss more about the global energy transition.
Interested in learning more about our pragmatic approach to investing in the energy transition? Get in touch or subscribe to our insights below.
