Creative Director & Co-founder at TMI Digital
Introduction: Unrelenting Energy Demand Growth
Global and North American energy needs are poised to rise steadily over the next two decades, providing a robust foundation for long-term investments in the sector. Despite improvements in efficiency and efforts to curb emissions, overall energy consumption continues to increase. The U.S. Energy Information Administration projects that world energy use will climb in all modeled scenarios through 2050, driven by population growth and higher living standards – even moderate cases show global primary energy consumption about 16% higher in 2050 than 2022, with high-growth cases up over 50%. In short, more people and a larger global economy will outweigh efficiency gains, pushing demand to new records. The result is record-high energy consumption in coming decades. The United States reflects this trend as well: total U.S. energy consumption is expected to rise between 0% and 15% by 2050, as economic and population growth offset efficiency improvements. This persistent demand trajectory underscores why energy assets – from oil wells to wind farms – are positioned as safe and lucrative opportunities for long-term investors. An increase in population and economic activity is driving up energy usage worldwide, necessitating major investments in power infrastructure.
Description: A pie chart illustrating the global energy consumption by source in 2023, highlighting the dominance of fossil fuels.
Artificial Intelligence: Powering Data Centers and Driving Demand
One of the most exciting new demand drivers for energy is the explosive growth of artificial intelligence (AI) and cloud computing, which is fueling a construction boom in power-hungry data centers. Every chat with an AI assistant or query to a large language model like ChatGPT might seem virtual, but it triggers electricity use in a physical data center packed with servers. As AI adoption soars, those data centers are expanding rapidly – and consuming ever more energy. Analysts forecast an almost exponential rise in data center power requirements this decade. Goldman Sachs projects that global data center electricity demand will increase about 50% by 2027 and by as much as 165% by 2030 (compared to 2023 levels).
Description: A bar chart comparing the electricity consumption of data centers to that of entire countries in 2020.
The International Energy Agency (IEA) likewise finds that data center consumption is climbing sharply: by one estimate, worldwide data centers used around 415 TWh in 2024 (roughly 1.5% of global electricity), and usage is on track to double to ~945 TWh by 2030. This equates to about 3% of all electricity by 2030 in the IEA’s base case, up from ~1% in 2020 – a staggering growth rate far outpacing other sectors.
Importantly, the rise of AI is a major factor, as running AI workloads requires specialized, power-intensive hardware (GPUs and other accelerators) that significantly boosts data center energy use. The IEA notes electricity demand from these AI-centric servers is growing ~30% annually, much faster than conventional IT equipment.
Immigration and Demographics: Population Growth Fuels Energy Needs
Another powerful tailwind for energy demand in North America is population growth, especially growth driven by immigration in the United States and Canada. More people means more homes, workplaces, schools, and travel – and thus higher consumption of electricity, heating fuel, gasoline or electric vehicle charging, and all other forms of energy. Unlike many developed regions, the U.S. and Canada are expected to see their populations expand significantly in the coming decades, thanks largely to robust immigration policies. This demographic vitality underpins a long-term baseline demand for energy that is difficult to erode, even with efficiency improvements.
Description: A population pyramid depicting the distribution of the U.S. population by age and sex in 2024.
The United States population surpassed 340 million in 2024 and is now growing at its fastest rate in over two decades – about 1.0% annual growth, a sharp rebound from the near-stagnant 0.2% rate in 2021. Notably, 84% of U.S. population growth from 2023 to 2024 came from net international migration (immigrants), according to the Census Bureau.
Oil & Gas: Persistent Opportunities in a Changing Landscape
Despite the widespread narrative of an impending energy transition away from fossil fuels, the oil and gas sector is set to remain a cornerstone of the energy mix for decades, offering significant investment opportunities along the way. Indeed, many credible forecasts suggest that global oil and natural gas demand will continue at near-record levels well into the 2040s, even as renewables expand. For investors, this means that the cash flows and returns from hydrocarbons are far from yesterday’s story – they will likely remain robust over the next 20 years, especially for well-positioned projects and companies.
Global demand for oil is not disappearing anytime soon. The Organization of the Petroleum Exporting Countries (OPEC) projects that world oil consumption will actually rise about 23% by 2045, reaching around 110 million barrels per day (up from roughly 90 million in 2020). In OPEC’s view, population growth, economic development, and rising middle-class incomes (especially in Asia and Africa) will keep oil use on an upward path.
Renewables: Growth, Support, and Cost Competitiveness
On the other side of the energy coin, renewable energy is undeniably the growth engine of the future, and it presents a compelling investment case anchored by rapid expansion, government support, and dramatic cost declines. Over the next 20 years, renewable sources – primarily solar and wind – are projected to capture the majority of new energy investment globally, scaling up to meet climate goals and rising electricity demand.
Description: A chart depicting the net global renewable energy capacity additions by year, showcasing the growth in renewable energy sources.
For investors, the renewables sector offers high growth rates and improving economics, with many projects now cost-competitive or even cheaper than fossil alternatives. Coupled with stable policy incentives and the push for decarbonization, this creates a favorable landscape for long-term returns in renewables.
Nuclear: Reliable Clean Energy and a Resurgence Ahead
Nuclear energy is re-emerging as a critical piece of the long-term energy puzzle, valued for its ability to provide large-scale, reliable power with zero greenhouse gas emissions. After a lull in new development (especially in Western countries) over the past few decades, nuclear power is poised for a renaissance driven by both technology innovations and shifting policy attitudes.
Description: A chart showing the number of operational nuclear reactors by country in 2022.
Grid Infrastructure: Modernizing for Rising Demand and Resilience
All of the trends discussed – booming data center loads, population growth, electrification of transport and heating, proliferation of renewables, and new nuclear – ultimately converge on one critical foundation: the electric grid. The power transmission and distribution networks are the highways of the energy system, carrying electrons from generators to consumers.
Description: A bar chart depicting the investment in power grids and storage by region from 2017 to 2024.
Risks and Mitigation: Navigating Policy and Price Volatility with Diversification
No investment thesis is complete without examining the risks. In the energy sector, two prominent risks stand out: policy/regulatory risk and commodity price volatility. Policy decisions – from environmental regulations to subsidies – can significantly impact the profitability of various energy investments. Likewise, energy commodity prices (oil, gas, electricity) can be highly cyclical and unpredictable, affecting revenues for producers or costs for consumers. However, a key insight for long-term investors is that the energy sector’s breadth provides natural hedges. By maintaining a diversified exposure across different energy sub-sectors and asset types, investors can mitigate these risks, as adverse conditions for one segment often coincide with favorable conditions for another. In essence, diversification in energy – across fuel types, geographies, and along the value chain – can smooth out the bumps of policy shifts and market swings, yielding a more stable overall return profile.
Conclusion: Powering Portfolio Growth in the Energy Transition
As we look ahead to the next 20 years, the energy sector stands out as a domain where essential demand meets transformative innovation. The long-term trends are clear: a growing global (and North American) population seeking higher living standards, a digital economy hungry for power, and a worldwide drive to expand energy access and clean energy solutions. This means that, barring a cataclysmic change, society will require more energy in 2045 than it does today – and likely much more electricity – even as it simultaneously works to reduce emissions. For investors, this dual reality translates into a wealth of opportunities across the energy spectrum. Energy investments can indeed be both safe and lucrative in this environment. “Safe” in the sense that fundamental demand for energy is inelastic and rising, providing a reliable underpinning – people will heat homes, charge cars, run factories, and stream data regardless of economic cycles, and even more so with each passing year. And “lucrative” in the sense that the sector is evolving and innovating, creating avenues for growth, high returns on new technologies, and strong cash flows from well-positioned assets. The performance of energy assets often transcends that of other sectors during inflationary times or geopolitical turmoil, as seen when commodity producers generated outsized profits during recent supply shocks. At the same time, new energy tech companies have shown growth stock-like returns when innovation and policy align (for instance, solar manufacturing or EV charging firms during periods of favorable policy announcements). An investor constructing a long-term energy portfolio might consider a balanced allocation across several buckets:
Traditional energy (oil & gas) and related infrastructure – to capture cash flow from fuels that will remain critical and potentially under-supplied if underinvestment occurs. These assets can throw off dividends and serve as a hedge against inflation and geopolitical risk. As noted, even by 2045 oil and gas are expected to be major energy sources, and companies are optimizing to be profitable even in low-price environments. Furthermore, many oil & gas companies are themselves diversifying into cleaner energy, thus evolving their business models (e.g., investing in biofuels, hydrogen, carbon capture), which could provide new growth within the traditional sector.
Renewables and clean energy technology – to harness the high growth of the energy transition. This includes not just owning solar/wind projects or stocks of renewable developers, but also supply chain elements like battery manufacturers, rare earth mineral miners (for wind turbines and EVs), and clean energy yield vehicles. Government support is strong here (with long-term tax credits in the U.S. and elsewhere), reducing downside risk. As renewable penetration grows, the companies leading this build-out stand to secure significant market share of global energy supply.
Utilities and power networks – often the steady anchor of an energy portfolio, providing stability and income. Regulated electric and gas utilities earn allowed returns delivering essential services, and many are expanding earnings by investing heavily in their grids and owned clean generation. Utilities also typically pay healthy dividends. Over the long term, a utility serving a region with growing population or data center expansion is a direct beneficiary of that growth, with low default risk. Grid infrastructure investments, in particular, will expand utilities’ regulated asset bases, supporting dependable returns.
Emerging opportunities (nuclear, storage, hydrogen) – a smaller but potentially high-reward allocation for innovative growth. This could involve early investment in SMR developers, companies building out hydrogen electrolysis and fuel cells, or firms deploying utility-scale battery storage. These are riskier, but a modest exposure can provide a venture-like upside if the technologies achieve scale. Given nuclear’s comeback (global nuclear investment is nearly double what it was five years ago and strong policy support for hydrogen and storage), this segment could yield the next generation of energy leaders.
By combining these elements, investors can enjoy robust income, growth, and hedging benefits within their energy portfolio. The high cash yields from pipelines or utility dividends can finance new investments or provide downside protection, while growth in renewables or hydrogen can drive capital appreciation. Diversification across fuels and technologies will buffer against policy or price shocks, as discussed in the prior section – for instance, weakness in oil prices might be offset by strength in renewables, or vice versa. In a sense, an “all-of-the-above” energy portfolio mirrors the all-of-the-above energy strategy the world will adopt to meet demand sustainably. In conclusion, the next two decades represent a historic opportunity for energy investors. The world is undergoing an energy evolution – expanding supply, cleaner sources, smarter infrastructure – but it cannot flip a switch and run on new systems overnight. The transition period will require massive investments in both legacy and novel energy assets, with ample rewards for those who provide capital. Energy demand’s inherent resilience makes the sector a relatively safe harbor (people need energy in good times and bad), while the transformational upgrades underway inject growth and dynamism. Few sectors offer this mix of defensive characteristics and offensive upside. By staying informed, diversifying wisely, and focusing on quality assets and companies, accredited and retail investors alike can position themselves to not only preserve wealth, but grow it by powering the world’s energy future.
References
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