Baseload

It’s quite a thing that the best performing stock YTD in the blue-chip S&P 500 is an ‘integrated retail electricity and power generation’ company. NVIDIA may court all the souped-up AI headlines, but the shares trail, by some distance, Vistra Corporation’s near 200% romp. Indeed NVDA is the seasoned meat in a power sandwich, with the third best runner being Constellation Energy, a company whose mojo has recently been dusted in glitter after signing a deal with Microsoft  to provide clean energy to satisfy the booming needs of its data centres. This sort of makes sense when the likes of Goldman Sachs forecast a 160% increase in power demand by 2030. Why? Well, by all account every ChatGPT ‘ask’ chomps up nearly ten times as much electricity as a simple ‘Where does Sir Keir buy his suits’ Google search. Hence all the mutterings about a ‘sea change’ in demand. Hence Microsoft’s deal to make sure that it’s not caught short, firing back up a nuclear reactor at Pennsylvania’s Three Mile Island power station. That the cost of giving everything a new lick of paint is thought to be around $2bn is not lost on shareholders. It’s expensive. It captures, more broadly, a trend of massive capex outlays from once asset light businesses as the search for reliable, baseload power takes on white-lipped importance. Valuations, after years of excess, may yet start to squirm. And if Big Tech is getting in on game, Wall Street will not be far behind. Cue this week a group of fourteen global financial institutions lined up, held hands, and announced that they will be going all in on nuclear, supporting projects and financing the transition to a low-carbon economy. The narrative is changing. The world might need more data-centres, but what it really needs is more energy. More power. The more reliable, the better.