Global power demand reshapes infrastructure investment for 2026

Setting the stage for global infrastructure growth

The global energy infrastructure sector is entering a multi-year expansion cycle driven by powerful secular trends that are reshaping how energy companies operate and where they invest. Unlike previous cycles focused primarily on the energy transition, this growth is being propelled by rising demand across all forms of energy—including natural gas, renewables, and nuclear—alongside unprecedented investment requirements from datacenters and electrification. This "all-of-the-above" approach is creating opportunities for infrastructure companies with established footprints to leverage their existing assets while capturing high-return growth opportunities.

Across North America, Europe, and Australia, investors should expect a supportive environment throughout 2026 and beyond driven by positive secular trends impacting existing footprints as well as accelerating new regulated or long-term contracted growth projects. Companies with established infrastructure networks and regulated monopoly positions stand to benefit the most, as they possess the operational expertise and capital access needed to execute on this expanding opportunity set. Growing demand for all forms of energy should provide a tailwind for global energy infrastructure companies positioned to capitalize on new investment.

North American utilities: duration emerges as the new focus

In the United States, the investment thesis is shifting in meaningful ways. Moving into 2026, the market is expected to shift from asking "who is next to revise their growth rate upward?" to "how long can you provide supernormal earnings growth?" as the relative rate of change in upward revisions slows. This focus on duration means that utilities with visible and conservative load growth extending into the middle of the next decade—particularly from datacenters—are becoming increasingly valued by the investment community.

Canadian utilities face similar dynamics as rising energy demand continues to drive growth through the end of the decade, with new five-year capital plans from utilities featuring rate base growth and total capital spend at or above prior plan levels. The availability of growth opportunities is not an area of concern; if anything, this theme can offer a positive valuation re-rating for the sector.

For Canadian companies, the outlook is particularly brightened by Alberta's emerging datacenter opportunity. 2026 is anticipated to be a year of clarity for Alberta Power companies as they advance datacenter strategies, with announcements expected tied to early datacenter customers in the province. Government policy frameworks incentivizing large-scale datacenter investments are being introduced, supporting customer confidence and project economics.

"Growing demand for all forms of energy should provide a tailwind for global energy infrastructure companies. Companies with established infrastructure footprints and/or regulated monopolies stand to benefit the most."

Managing affordability amid capital acceleration

While the investment opportunity is substantial, a critical challenge looms: customer affordability. Moving into 2026, both ratepayers and regulators have become increasingly attuned to concerns about rising bills. Over the past 12 months, affordability has played a key role in elections across multiple U.S. states and in regulatory proceedings nationwide, a trend that we expect to continue in the lead-up to mid-term elections later this year. As the market shifts from an "announcement" phase into the "execution" phase of this rapid infrastructure build-out, focus on ratepayer protections and cost allocations will intensify.

In North America, this means utilities must balance aggressive capital deployment with careful structuring of tariff protections. States that have tariff structures slightly more protective of ratepayers are likely to be preferred by investors, as these structures are not too onerous to prevent competition for large loads while also alleviating risk of cost shift to existing customers. The challenge is particularly acute for utilities serving datacenters and other high-demand customers, where contract terms around minimum volume commitments, termination protections, and exit provisions are becoming focal points for investor scrutiny. Market participants should anticipate significant focus on these protections as utilities move from the "announcement" phase into infrastructure execution.

Midstream's brownfield advantage

Midstream companies are well-positioned to capitalize on the growing demand for energy infrastructure. Natural gas demand growth is creating incremental opportunities, with large "shadow backlogs" of unsanctioned projects that can meaningfully add to earnings growth through 2030 and beyond. The specific advantage lies in brownfield expansion projects, which offer attractive economics compared to greenfield development. These opportunities are typically underpinned by long-term contracts or regulatory frameworks, and carry comparatively less permitting and regulatory risk than other capital allocation options.

Canadian Midstream sentiment has improved dramatically following supportive government policy. A recent memorandum of understanding between federal and provincial governments signals alignment on energy and electricity policy, providing confidence to customers and supporting new project sanctioning. Companies have maintained equity self-funding models while prioritizing balance sheet strength and dividend growth sustainability, creating a disciplined approach to capital allocation that investors reward. This production growth is supported by rising crude oil, liquefied natural gas and liquefied petroleum gas exports from Canada and the U.S., higher electricity demand including from datacenters, coal-to-gas conversions, and local distribution company reliability requirements.

"This realignment in government approach to supporting the energy industry while maintaining net-zero targets supports better confidence levels among investors and customers and ultimately leads to robust growth outlooks for the sector in the near-term."

In the United States, midstream infrastructure is responding directly to datacenter demand dynamics. While power demand estimates vary, the consensus is for material growth over the next decade, with datacenters expected to drive approximately 75% of growth through 2030. This creates opportunities not just for traditional pipeline and processing infrastructure, but also for behind-the-meter solutions and lateral connections serving datacenters directly with natural gas. The speed to market and reliability that natural gas provides—especially to datacenters—should continue to generate substantial opportunities in this space.

Renewables and clean energy: the practical solution

Meeting surging power demand will require investment across all generation types. Renewable energy is the cheapest bulk source of power in many regions, can be deployed within two to three years, and can help hyperscalers meet carbon neutrality targets. However, market enthusiasm for renewable developers is selective. Companies benefiting most are those generating cash flow upside from rising power prices through recontracting existing assets without incremental capital investment, while those dependent on contracted development pipelines see more muted investor interest.

Good visibility on U.S. renewable tax credits is supporting development momentum. Tax credits fund 30% or more of utility-scale wind and solar project costs, and recent legislation clarified that projects must begin construction by mid-2026 to qualify. This may trigger a rush of development activity in the first half of 2026.

“Both Canada and the U.S. are experiencing power demand growth, with U.S. growth driven particularly by datacenters. In order to meet demand, growth in all types of new generation are required, including renewables, natural gas, and nuclear.”

Renewable energy development in Canada is primarily procured at the provincial level, with several provinces actively running requests for proposals to procure power generation and storage capacity. The development environment is expected to be more supportive in 2026, with lower interest rates and potential labor market softening creating better project economics for developers.

Europe's transition from geopolitical disruption to opportunity

European infrastructure faces a unique tailwind: the end of Russian energy imports. Western Europe has faced energy cost pressures from geopolitical disruption, but the hopeful end of that conflict could benefit gas prices and economic competitiveness. While lower gas prices may pressure medium-term earnings for some generators, this could be offset by deflationary effects on rates, improved competitiveness boosting demand, and continued investment in battery energy storage systems to enhance project returns.

European datacenters are emerging as a new growth vector, with recent deals signaling market attention, though these are largely end-of-decade projects. Battery energy storage is viewed as a key driver of outperformance, with operators targeting significant portfolio growth to meet power reliability needs alongside rising renewable penetration. The continent's electricity demand remains approximately 3% below the five-year average, but regional variation exists, with Spain and France showing growth while Germany, the United Kingdom, and Italy post declines. This varied performance suggests opportunities for infrastructure companies in specific jurisdictions where demand tailwinds are strongest.

Transport infrastructure: divergent regional dynamics

Transport infrastructure presents a more geographically mixed picture than energy infrastructure, with distinct regional dynamics shaping investment opportunities. In Europe, we see growing infrastructure requirements driving opportunities, particularly as Germany's €500 billion fund for infrastructure, defense, and climate provides reassurance that contracting demand will be bigger for longer. Current levels of investment in transport, energy and other infrastructure sectors in the U.S. and European Union are approximately 20% short of estimated requirements, according to the Global Infrastructure Outlook, creating substantial unfilled need. We see encouraging medium-term outlook for traffic trends, with some traffic elements offering scope for further post-pandemic recovery potential and lapping soft prior-year comparables, supported by Bloomberg consensus forecasts of stronger economic growth in Western Europe over 2026-2027 (approximately 1.3% annually) compared to 2023-2025 (0.9% annually).

Australian transport infrastructure faces a starkly different environment. Rising inflation and cost-of-living pressures mean Australian governments are hesitant to overlay additional private-side infrastructure costs onto consumers. With new project announcements notably absent in Queensland despite pending 2032 Brisbane Olympics commitments, and Victoria taking spending onto its own balance sheet rather than pursuing private partnerships, the availability of domestic opportunities is getting harder to find. Meanwhile, New Zealand authorities have been openly seeking foreign direct investment to develop their National Infrastructure Plan and approximately NZ$204 billion project pipeline, but with insufficient population density and limited propensity to pay, the economics of such projects remain uncompelling.

For Australian-listed infrastructure investors, the key area of opportunity remains the United States, where toll-road assets continue to benefit from strong traffic growth and pricing power. Brownfield preference remains, but is in short supply, as increasing scarcity of on-market assets combined with heightened cost of capital and rising market risks has led to a clear preference toward lower-risk brownfield expansion opportunities versus acquisitions or greenfield development. Notable brownfield projects include West Gate Tunnel expansion and Auckland Airport's domestic terminal development, demonstrating continued investor appetite for lower-risk, contracted expansion projects with cash flow visibility.