A new electricity supercycle is under way
Subscribe to enjoy similar stories. The factory floor of Schneider Electric’s plant in Conselve, Italy, hums with urgency. Workers at the power-equipment company’s facility, which is in the midst of a major expansion, are busily assembling advanced cooling systems for the data centres underpinning the development of artificial intelligence (AI).
“The key is the integration of grid to chip and chip to chiller," says Pankaj Sharma, an executive at the company, referring to a new design it recently developed with Nvidia, an AI chip giant. Over the past year Schneider’s market capitalisation has risen by over a third, to around $140bn. It is not the only maker of electrical gear that is booming (see chart 1).
The market value of Hitachi, a Japanese conglomerate, has tripled since the start of 2022, thanks in part to the rapid expansion of its power-equipment division. After a difficult 2023, weighed down by troubles in its wind-turbine division, shares in Siemens Energy rose by 300% last year, outperforming even those of Nvidia, owing to fast-growing sales in the German firm’s grid-technology business. “Electricity is a key driver for us," explains Christian Bruch, its chief executive.
Scott Strazik, boss of GE Vernova, a power-equipment business that was spun out from the conglomerate last year, sees a “supercycle" in the making. Demand for everything from transformers and switchgears to high-voltage transmission cables is being turbocharged. The International Energy Agency (IEA), an official forecaster, estimates that global investment in grid infrastructure reached nearly $400bn in 2024, up from a little over $300bn in 2020 and reversing a decline that began in 2017 on the back of slowing demand in China (see chart 2).
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