With the rapid advancement of AI Technology, the Global demand for Electrical Utilities is entering a new round of growth.

On Wednesday local time, the analyst team led by Stephen C Byrd from Morgan Stanley released the 2025 Global Generative AI Electrical Utilities Outlook, citing the International Energy Agency (IEA) predicting that by 2026, the power consumption of Datacenters, AI, and the Cryptos Industry could double, with Datacenter power consumption potentially exceeding 1000 TWh, equivalent to Japan's annual power consumption.

In this major trend, certain segments are being undervalued by the market. According to the report from Morgan Stanley, areas such as Fuel Cell Energy, Bitcoin mining sites, power transmission, and grid enhancement technologies are examples.

Morgan Stanley believes that the repurposing of Fuel Cell Energy and Bitcoin mining sites will provide new energy solutions for Datacenters, and that power transmission and grid enhancement technologies are crucial for the efficient and secure electricity usage of Datacenters, emphasizing the importance of power generation facilities like Nuclear Power near Datacenters.

Additionally, legislative proposals in Texas may promote the construction of Henry Hub Natural Gas power plants, while the new Trump administration will take steps to support the growth of AI infrastructure.

Fuel Cell Energy, Bitcoin mining sites, power transmission... are being undervalued.

The report points out that some areas play a key role in the growth of AI Electrical Utilities demand, but the market has not fully recognized their value and potential, including:

1. The development prospects of Fuel Cell Energy.

Morgan Stanley is particularly Bullish on the application prospects of Fuel Cell Energy technology, stating that this technology provides an efficient energy solution for Datacenters with its significant time and Operation advantages.

The report points out that, compared to traditional Electrical Utilities supply, Fuel Cell Energy can be deployed faster, with higher energy efficiency and lower emissions, making them an ideal choice to support AI infrastructure.

Morgan Stanley is Bullish on China's Fuel Cell Energy industry, expecting rapid development, cost reductions, continuous improvement in infrastructure, and accelerated promotion of hydrogen Fuel Cell Energy vehicles in the future.

2. The repurposing of Bitcoin mining sites.

Morgan Stanley points out that many Bitcoin miners are undervalued compared to their electricity generation capacity, indicating that the market has not fully recognized the potential of these sites to be converted into Datacenters.

Bitcoin mining sites typically possess a large amount of electrical infrastructure that can be repurposed to support the operation of Datacenters, especially in the energy-intensive fields of AI and Big Data processing.

With the development of AI technology, the demand for electricity is skyrocketing, and the energy infrastructure originally used for Bitcoin mining can be transformed into valuable Assets supporting AI Datacenters. This conversion can not only improve the economic efficiency of these sites but also reduce the time and cost required for building new Datacenters.

3. Electrical Utilities Transmission Value Chain

The report mentions that electrical utilities transmission is a key link connecting power plants and datacenters, especially in the context of the rapid development of AI technology, where the demand for electricity from datacenters is continually increasing, making electrical utilities transmission even more important.

Morgan Stanley believes that with the development of AI and digital infrastructure, the technology and services of electrical utilities transmission companies will face greater demand, thereby playing a more important role in the electrical utilities transmission value chain.

4. Grid Enhancement Technologies (GETs)

Grid enhancement technologies refer to a series of hardware and software tools that can reconfigure the transmission network and adjust its parameters to improve grid capacity and enhance the reliability and safety of power transmission, further releasing more grid access for datacenters and new factories.

Morgan Stanley believes that the Trump administration prioritized funding for foundational AI research and computing infrastructure, focusing on eliminating regulatory restrictions on AI technology scheduling, which may promote the application and development of grid enhancement technologies.

Catalysts Driving Growth in AI Electricity Demand

In addition, Morgan Stanley presented several potential catalysts in its report, which may drive the growth of electricity demand in the field of AI.

1. Co-location of nuclear power plants and large datacenters

The report emphasizes that as AI technology advances, the electrical demand of datacenters is surging, particularly in the USA, where nuclear energy has immense potential to meet these needs. Establishing nuclear power plants in close proximity to datacenters will reduce losses during the electrical transmission process and allow for an uninterrupted power supply without external connections.

Therefore, Morgan Stanley advises that more attention should be paid to companies providing on-site "main power supply" for new datacenters, as recent interest from datacenter developers in installing main power generation on-site has surged.

2. Off-grid datacenter strategy

The off-grid datacenter strategy involves technologies such as fuel cells, turbines, and energy storage. Morgan Stanley believes these technologies can help datacenters operate without relying on traditional power grids, enhancing the stability and reliability of their power supply.

For example, ECL has announced the world's first modular, sustainable, off-grid datacenter, which uses green hydrogen as its primary energy source and achieves 99.9999% uptime. The design of this off-grid datacenter includes cooling using water generated from hydrogen power, eliminating dependence on external resources, and it is capable of rapid deployment, with a planning to construction cycle of only 6-9 months, far less than the 18-24 months for traditional datacenters. Additionally, this datacenter has a very high energy efficiency, with a Power Usage Effectiveness (PUE) of 1.05, and each rack can reach up to 50KW.

3. Texas legislative proposals

The report indicates that legislative proposals in Texas may drive the construction of new Henry Hub Natural Gas power plants, which are crucial for supporting the energy demands of new datacenters.

The logic behind these proposals is that with the rapid growth of energy consumption by Datacenters, especially against the backdrop of rapid development of AI technology, the demand for stable and sufficient electrical utilities supply is increasingly urgent. Texas, as a major energy state, indicates through its legislative proposals an emphasis on investment in Energy infrastructure, aiming to meet the growing energy demands of Datacenters by increasing power generation capacity, ensuring that these critical facilities can run steadily and support the development of the digital economy.

4. Support from the Trump administration.

Morgan Stanley stated in its report that the Trump administration is expected to take measures to support the growth of AI infrastructure, especially through the Federal Energy Regulatory Commission (FERC).

The policies of the Trump administration tend to relax regulations on AI issues while strengthening export controls, focusing on competition from specific countries, and reducing antitrust enforcement related to the EU. Especially in the field of AI, the Trump administration has prioritized funding for foundational AI research and computational infrastructure, machine learning, and AUTOMATED SYS, striving to eliminate regulatory constraints on AI technology scheduling.

In addition, the Trump administration may also revoke regulations imposed by previous administrations that restricted fossil fuel production and consumption, which will further promote the growth of AI-related data capacity and increase electrical utilities demand, necessitating significant investments in new power generation and transmission infrastructure.

5. Announcement of new large-scale Datacenters.

Morgan Stanley believes that the construction of large Datacenters will be propelled by collaboration between super giants and fully integrated regulated utilities. This collaboration can ensure that the energy demand of Datacenters is met, as these partnerships often involve power development companies that can provide the necessary electrical utilities supply to support the operation of Datacenters.

Morgan Stanley also predicts that by 2025, technology giants will invest a total of about 300 billion dollars in ultra-large scale capital expenditures, mainly to support the development of generative AI and massive language models.

Editor/ping