Something Really Exciting Just Happened in the Energy Sector

by | May 2, 2024

Something Really Exciting Just Happened in the Energy Sector

I know we’ve spent a lot of time talking about the energy sector lately. But energy has been a front and center topic this year.

The US is facing a massive surge in electricity demand as AI data centers start sucking up more power, semiconductor and battery manufacturing kicks back off in the US, and the need for electric vehicle charging swells to new highs.

Over the last decade, electricity consumption has grown at a relatively flat rate. But by the end of the decade, Wells Fargo expects total electricity consumption in the US to climb by at least 20%.

And there’s been some major plays being made by some of the biggest names across tech. That’s why this once-boring sector is rapidly becoming all the rage.

So you’re probably wondering, what happened?

Microsoft just signed a $10 billion deal with Brookfield Asset Management (Ticker: BN) to develop 10.5 gigawatts of renewable energy capacity to power the rapidly growing demand for artificial intelligence and data centers.

According to the agreement, 10.5 gigawatts of renewable energy will be delivered to Microsoft between 2026 and 2030. And the deal stands as the largest single electricity purchase agreement between two corporate partners.

But what the deal really is in essence, is an investment into renewable energy. A spokesperson for Brooksfield even characterized it the same way, as “$10 billion of investment into renewable energy” — which is a big deal for Microsoft.

You see, Microsoft’s goal is to reach 100% zero-carbon energy purchases by 2030.

And Brookfield has an extensive portfolio of energy solutions and research outside of just wind, water, and solar. This includes nuclear services, renewable natural gas, and carbon capture and storage methods.

So, much like how Microsoft saw the early potential in ChatGPT and OpenAI and invested early, they’re seeing the same potential with Brookfield to take them to the clean energy frontier.

What This Means For Us

But as investors, why should we care?

Well you see, Brookfield is a publicly traded company. It trades under the ticker BN.

It also has one of the largest electricity operating portfolios in the world with over 33 GW of energy capacity across hydro, wind, solar, and storage systems. And these are spread across North America, South America, Europe, and the Asian Pacific.

More than that, however, Brookfield boasts a massive development pipeline with 155.4 gigawatts of power generation development in various stages of completion.

This deal with Microsoft could give Brookfield the capital it needs to rapidly advance its projects through the pipeline and bring them to market, while also helping to fund additional growth opportunities for Brookfield into diverse technologies beyond just wind and solar.

We could see some pretty interesting advancements from its nuclear, and carbon-free power generation technologies, which could mean some serious profits for Brookfield.

And for anyone invested in the company, it could mean some serious gains.

As traders, we still have quite a bit of time before anything with Brookfield comes to any meaningful fruition (between 2026 and 2030.)

But this is one stock that I want to keep on our radar as we look to the future. There could be some future opportunities lurking here.

To your success,

— Nate Tucci

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