Gold prices have increased by nearly 50% in the past year, but that’s not the only gold rush in town these days. The other gold rush is for a piece of the supply chain action that enables access to the grid for power generation assets, powering the upcoming AI-driven data centers.
The grid infrastructure gold rush is seeing assets related to substations, interconnections, testing, and commissioning commanding EBITDA valuation multiples around 20x. Leading contractors like Quanta Services have been trading near a 20x EBITDA multiple, a premium valuation framework that was recently validated by its Dynamic Systems acquisition, which was cited at approximately 20x EBITDA.
The AI-led electricity demand shock
There is an unprecedented demand for grid assets because of the colossal power needs of the emerging AI and data center economy. Hyperscaler capital expenditure is estimated at over $400 billion in 2025 and growing toward $500 billion in 2026. Utilities are racing to keep up with this demand shock:
- Exelon is tracking a 17+ GW high-probability large-load pipeline, with expectations that 75% of this load will be energized by 2034.
- Oncor in Texas is planning a $36 billion capital program (2025–2029) to accommodate an estimated 38 GW of high-confidence load by 2031.
The cost of grid constraints
The core reason for the 20x valuations is the severe constraint across the entire system, making businesses that can solve these bottlenecks exceptionally valuable.
Exhibit 1: Equipment lead times across the electrification stack (Years).
- Interconnection delays: ADI is seeing 3–4 year grid connection waits in select PJM areas, validating the premium paid for specialists in testing, commissioning, and compliance. Interconnection studies and permitting are now cited as the primary gating variable for U.S. power deployment.
- Equipment scarcity: Equipment bottlenecks are critical (see Exhibit 1), with large power transformer (LPT) lead times stretching to 36–60 months and average lead times around 130 weeks. The U.S. relies on imports for over 85% of LPTs, giving vendors up to three years of order visibility and pricing power. This constraint allows manufacturers, such as GE Vernova, to achieve margins of 14-15% EBITDA and organic growth of +25% due to tight capacity and direct hyperscaler orders.
These constraints are so severe that hyperscalers are actively involved in procurement today, with some prepaying and co-funding grid equipment to accelerate schedules, a move that provides immediate capital and long-term security to grid-oriented partners.
Aiding the natural gas super cycle
To meet the speed and reliability requirements of this load, there is a clear pivot toward natural gas as the de facto AI transition fuel. ADI is forecasting incremental U.S. gas demand from data centers at 5-8 billion cubic feet per day (bcfd) by 2030. This is a key driver in the natural gas super cycle that ADI has been forecasting in its research over the past year.
This is driving utilities to procure firm capacity, with one example being Xcel securing 10 natural gas turbines for new plants serving expected AI load. This uplift in power demand creates multi-year rate-base visibility for regulated utilities and reinforces the asset premium for companies that can enable dispatchable capacity and extra-high-voltage transmission.
M&A to consolidate the electrification stack
Leading specialty contractors are utilizing M&A to rapidly acquire the necessary capabilities, shifting their focus from greenfield development to integration and solutions. Quanta Services has a long track record of over $21 billion in lifetime M&A, with recent acquisitions explicitly targeting modular electrical systems and data center infrastructure to broaden scope inside large load facilities.
This velocity, coupled with higher financing costs that have lifted investor return targets, is pushing infrastructure capital toward regulated wires and contracted/gas-linked infrastructure with clear load visibility. Evidence of this capital rotation includes Sempra’s $10 billion sale of a minority stake in its infrastructure unit to KKR/CPP to fund Oncor’s growth and the development of Port Arthur LNG Phase 2.
In sum, the confluence of AI demand, grid constraints, and equipment scarcity has created a structural premium for every asset and service that unlocks power capacity and ensures reliability. ADI’s work across the electrification stack with various private equity investors shows that the grid and its specialists are becoming the most highly valued players in the new energy landscape.
– Uday Turaga
About ADI Analytics
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