Oct 1, 2026 · 43 min
AI and electrification push infrastructure into a new growth era
The Infrastructure Behind AI, Electrification and Energy Security with Shane Hurst
The episode examines whether essential networks can meet surging demand while preserving the stable, regulated cash flows investors expect.
- 1AI expands infrastructure demand beyond data centres into generation, transmission and distribution networks.
- 2Electrification, decarbonisation, ageing assets and energy security create investment needs that predate the AI boom.
- 3Active global selection can broaden opportunity and avoid unsuitable infrastructure assets, but regulation and execution remain material risks.
Don't miss
The discussion connects AI’s growth directly to the physical bottlenecks of data centres, electricity generation and grid networks.
The brief
Infrastructure investing may be entering a structural growth era as AI, electrification, decarbonisation, ageing assets and energy security drive demand for essential networks.
Shane Shurmer defines infrastructure as essential services with contracted or regulated cash flows, while warning that volume exposure and fixed pricing can weaken inflation protection.
The future electricity system requires investment across generation, storage and transmission, with batteries, renewables, gas, nuclear and bidirectional electric-vehicle charging all in the mix.
AI adds a new layer of physical demand: data centres need enormous amounts of power, while construction delays, cost overruns, regulation and local opposition threaten the buildout.
The investment case extends beyond AI into water, transport and utility upgrades, making global active exposure more important than a narrow infrastructure index.
What was said on this episode
27 statements · 21 positive · 6 negative
Utilities delivering 12% EPS growth for ten years will be rerated.
“structurally it's the best I've ever seen. I've never seen a utility grow its EPS at 12% for the next 10 years. If they can deliver on, on that, they will get a rerate.”
Listen at 0:05
Infrastructure returns have been more stable than broader equities over 25–30 years.
“you can get those characteristics out into the returns you ultimately deliver to clients. And you just have to look at the last 25, 30 years of infrastructure returns have been far more stable than broader equities.”
Listen at 4:04
Regulation assures stable returns on regulated infrastructure assets.
“regulation is such a beautiful thing because it really assures you get a regulated, stable return on a regulated asset base”
Listen at 6:24
Ninety percent of the portfolio passes inflation through to customers.
“when you think about our portfolio, we talk about 90% directly or indirectly passing through inflation.”
Listen at 8:17
Electrification, AI, energy security and resilience are decade-long infrastructure themes.
“they're decade-long themes and it's very, very, very, very structural.”
Listen at 11:57
Average US utility EPS growth is 9%, with some holdings growing 12%.
“Now the average US utility grows its EPS at 9%. We have some in the portfolio at 12% with yields of 3 to 4%”
Listen at 12:41
Grid optimization will make electricity grids more stable and lower costs.
“we're going to have far more stable grids, electricity. The cost, I believe, should be lower because of the way we're able to optimise it.”
Listen at 15:07
Nuclear power will be increasingly built worldwide.
“nuclear power is definitely coming back into vogue and will be increasingly built around the world”
Listen at 15:49
Data-center electricity demand will grow about 20% annually for four to five years.
“Data's demanding electricity at kind of 20% per annum over the next 4 or 5 years.”
Listen at 16:09
Wind-farm operating utilization has increased to about 60%.
“a wind farm would operate 30% of the time, 40% of the time. Now they've got them up to 60%.”
Listen at 17:24
Infrastructure is central to delivering AI services.
“infrastructure is very much at the core of AI.”
Listen at 19:49
Infrastructure bottlenecks will continue causing AI data-center delays.
“there are definitely bottlenecks out there which are causing and will continue to cause delays over time.”
Listen at 21:56
AI spending poses limited earnings-delivery risk for infrastructure companies over seven to ten years.
“there is very limited risk over the next, I'd say, 7 to 10 years of their earnings delivery based on AI spend.”
Listen at 23:07
A sharp CapEx decline would probably not slow infrastructure growth for five to seven years.
“even if CapEx falls off a cliff, cliff, which conceivably it may, even though I think it's very unlikely, but it may, that won't slow growth in the next 5 years, 6 or 7 likely.”
Listen at 23:24
Local opposition is the biggest risk to AI data-center infrastructure.
“I think the biggest risk is NIMBYism.”
Listen at 24:32
Space-based data centers are currently uneconomic because launch costs are too high.
“at the moment, launch costs are just way too much.”
Listen at 26:00
AI has raised the portfolio's highest utility EPS-growth rate from 9% to 12%.
“They've just now been supercharged with AI. So now it's moved up to the highest EPS grow within our portfolio is 12 rather than what it would've been 5 years ago, which would've been 9.”
Listen at 28:04
The UK government lacks the funds to nationalize the water sector.
“The single structural problem is the UK government does not have the money to nationalise the water sector.”
Listen at 30:10
UK water utilities face minimal nationalization risk because nationalization is costly and political.
“there's been minimal to no risk of any type of nationalisation just because of the cost and because it's really all about politics.”
Listen at 32:19
Active infrastructure management adds significant value versus passive indices.
“that tells you you're adding significant value.”
Listen at 34:23
Direct-asset investment vehicles rarely provide access to the world's best infrastructure assets.
“Very rarely are they the best assets in the world. That's my opinion.”
Listen at 36:39
Accessible unlisted infrastructure funds tend to hold lower-quality assets than listed investments.
“most unlisted funds that people can access tend to have lower quality assets than what we invest in in the listed sense.”
Listen at 37:12
The income strategy has 0.46 downside beta and 0.64 upside capture.
“our downside beta is I think 0.46 for the income strategy. So 1% fall in global markets, 0.46 fall in the strategy, and then the upside captures 0.64”
Listen at 37:39
Transurban is a global toll-road leader and APA Group is exceptional.
“Transurban is a global leader in toll road operations. APA Group, exceptional, right?”
Listen at 38:59
Utilities delivering 12% EPS growth for ten years will be rerated.
“I've never seen a utility grow its EPS at 12% for the next 10 years. If they can deliver on that, they will get a re-rate.”
Listen at 40:33
Successful utilities will trade at smaller discounts to global equities.
“they won't be trading at such large discounts. Versus global equities. People will acknowledge they are more structural growth companies.”
Listen at 40:49
Utilities are the most attractive infrastructure area because they are growing quickly.
“utilities are probably number one. I mean, people think utilities are boring bond proxies, right? But they are growing so quickly”
Listen at 41:22
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Featuring
Anthropic
OpenAI
ClearBridge Investments
United States
Strait of HormuzListen to the full episode and explore every guest, topic, and moment on PodLume.