top of page
android-chrome-512x512.png

Strategic Advisors

ShadowHornet LLC logo_edited.png

An Investor's Guide to Companies and Opportunities in the Electrification/ Power / Grid Modernization sector

An Investor's Guide to Companies and Opportunities in the Electrification/ Power / Grid Modernization sector

This guide provides an overview of the electrification / power / smart grid / grid modernization sector, and the investment opportunities associated with segments of the industry. It walks through the electric supply chain, then breaks it into segments, outlines innovations and disruptions happening in each, and identifies the CAGR and TAM associated with several segments of the electrification market. It then outlines the firms associated with R&D and product market share in each segment. It can be used by investors to evaluate investment opportunities and better understand what publicly traded companies operate in certain segments of the electrification / power / smart grid / grid modernization market. It suggests the best investment opportunities by forecasted growth into 2030.

Electric Power Subsector Market Opportunities

As of late 2024, the Electric Power subsector is forecast to increase by a 28% CAGR through 2032, largely driven by global decarbonization efforts, EV transport growth, AI-based power demands, and changing consumer needs. The stage is set for investors to achieve above average to high returns in this sector, and for market entrants and existing players to rapidly gain share in the early innings of the electric modernization market.


The industry will start to exhibit signs of faster decentralization as residential consumers continue to experience increasing rates amidst a downturn in personal incomes. The cost of modern electric infrastructure (and thus capital and operating expense) is simultaneously increasing, and for now, the residential and commercial consumers subsidize that cost. This trend is unsustainable and creates the need for new power modulation and demand gating/sharing technology, fueling the 28% CAGR associated with this market.


Demand for electric power will be accelerated by robust global governmental funding and support for electrification, modernization, and decarbonization efforts. However, some segments of this market could be very challenged in 2025 by US Federal policy that strongly de-emphasizes offshore wind and the domestic EV market. 


Regardless of administration change, the electric power market offers several subsegments for potential entry, each with their own barriers, characteristics, and market structure. The following pages will outline a framework for assessing these opportunities, the players in each market segment, and growth areas to help investors and firms evaluate the best entry point for the Electric Power market.


Overview of the Electrification and Modernization Market

Investors need to understand the market and its various segments to make better informed decisions. The exhibit below illustrates the six components of the electric power supply chain at a very high level.



At the most basic level, the electric supply chain consists of:

  1. Generation facilities and their inputs (e.g. natural gas, coal, nuclear, solar, wind, hyrdoelectic, biomass/biofuel)

  2. Substation infrastructure, which includes power modulation assets and facilities

  3. Transmission infrastructure, which includes power transmission and monitoring

  4. Step-down substations which include inverter and transformer infrastructure to prepare power for lower voltage distribution

  5. Distribution networks (transformers, pole assets, lines, connections)

  6. Customer consumption (residential/commercial/industrial usage)


Innovation and Disruption Affecting the Electrification / Power / Grid Modernization Supply Chain

Each of these supply chain areas is seeing innovation and disruption from new technologies and approaches. The US electric grid is based largely on 19th and 20th century concepts and has remained largely unaltered as demand for electricity has surged, and new sources of energy came online at scale in the first two decades of the 2000's. Below are areas in which the supply chain is changing - these areas represent market opportunity for investors:





The Best Investment Opportunities: Total Addressable Market (TAM) and CAGR (Compound Annual Growth Rate) By Electric / Power / Grid Modernization Market Segment



Opportunity Analysis

The largest opportunities in electrification / power / grid-modernization lie in Grid Re-Architecture (20.5% CAGR), Sensor-based Phasor Measurement and Remote Monitoring (20%), Distributed Energy Resource Management or DERM (18.3%), EES or Electrical Energy Storage (11.2%), and Carbon fiber line replacement (8.8%).


Dwarfing all of these opportunity areas, combined, is Offshore Wind Power Generation, forecast to be an astonishing $140B market by 2036. However, this TAM seems unrealistic given the failure of offshore wind to compete effectively with all other forms of power generation due to substantial capital investment, environmental regulation, and maintenance costs. Additionally, US Presidential candidate Donald Trump has targeted offshore wind as a priority to de-emphasize through his administration's policy. Since the offshore wind segment is largely burgeoned by the US Federal government, it is highly unlikely that this market segment will perform as currently forecast by the DoE because of an increasing likelihood that Trump will win the 2024 US election.


Why the Opportunity Exists

For over 100 years, the entire business model of the electric utility was architected around central power generation by regional monopolies, supported by state and Federal government. This model resulted in a largely centralized grid design with materials available in the 1920s-1940s (copper wire) stringing transmission lines to houses across wide expanses in the rural US, and with mazes of overhead lines crisscrossing in cities.


In the past, electric generation was limited to coal, then coal + hydroelectric power. Over time, nuclear power became a viable source of generation. Thanks to R&D advancements and successful demonstration projects, the early 2000's ushered in an era of viable renewable energy, mainly solar and wind, but also including biofuel and biomass. Since the electric grid is based on a centralized model and one way (Direct Current - DC) power, and legacy technology, the grid needs to adapt to incorporate these new sources, and increase its distribution and transmission capacity.


Firms are leading the way in development of new products, services, materials, and software, much of it AI-enhanced, to meet the energy needs of the next American generation.


Market Players by Segment

Below are the major players in each segment, as well as a list of all companies involved in next generation electric power technologies.












All Market Players Comprehensive List

https://docs.google.com/spreadsheets/d/1m8WuhbHwqgcNPhE46hF0C6cSFyChwtmlDEBQ3BqElSA/edit?usp=sharing


Publicly Traded Opportunities

The following firms are publicly traded entities, and represent consideration for future investment. In a subsequent guide, we will provide more detailed analysis on these companies and their unique positioning in the market.

Player

Subsector

Is Publicly Traded

Analyze Further

Stock Symbol

Current Price

Lockheed Martin Corporation

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

LMT

468.58

Exelon Corporation

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

EXC

35.52

Tesla

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

TSLA

256.56

Toshiba Corporation

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

6502.T (Tokyo Stock Exchange)

#N/A

Honeywell International, Inc.

Microgridding / Grid Integration and Re-Architecture

TRUE

TRUE

HON

218.47

ABB

Microgridding / Grid Integration and Re-Architecture

TRUE

TRUE

ABBNY

57.94

Caterpillar

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

CAT

360.58

Schneider Electric

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

SU.PA (Euronext Paris)

#N/A

Siemens

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

SIEGY (OTC), SIE.DE (Frankfurt Stock Exchange)

#N/A

Eaton

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

ETN

332.46

General Electric

Microgridding / Grid Integration and Re-Architecture

TRUE

FALSE

GE

162.85

Hitachi

Sensors / PMU / Remote Monitoring

TRUE

TRUE

HTHIY (OTC), 6501.T (Tokyo Stock Exchange)

107.43

Itron (U.S.)

DERM - Distributed Energy Resource Management

TRUE

FALSE

ITRI

142.61

Oracle (U.S.)

DERM - Distributed Energy Resource Management

TRUE

FALSE

ORCL

#N/A

Enel (Italy)

DERM - Distributed Energy Resource Management

TRUE

FALSE

ENLAY (OTC), ENEL.MI (Milan Stock Exchange)

#N/A

Mitsubishi Electric Corporation (Japan)

DERM - Distributed Energy Resource Management

TRUE

FALSE

MIELY (OTC), 6503.T (Tokyo Stock Exchange)

#N/A

Doosan Heavy Industries & Construction (South Korea)

DERM - Distributed Energy Resource Management

TRUE

FALSE

034020.KS (Korea Stock Exchange)

#N/A

Vivint Solar + Sunrun

Electrical Energy Storage - EES

TRUE

FALSE

RUN

17.28

GE Vernova

Electrical Energy Storage - EES

TRUE

FALSE

GEV

182.74

AES

Electrical Energy Storage - EES

TRUE

TRUE

AES

17.65

Johnson Controls

Electrical Energy Storage - EES

TRUE

TRUE

JCI

72.18

Energizer

Electrical Energy Storage - EES

TRUE

FALSE

ENR

30.33

Enphase Energy

Electrical Energy Storage - EES

TRUE

TRUE

ENPH

116.17

Albemarle

Electrical Energy Storage - EES

TRUE

FALSE

ALB

97.71

Panasonic

Electrical Energy Storage - EES

TRUE

FALSE

PCRFY (OTC), 6752.T (Tokyo Stock Exchange)

#N/A

Tesla

Electrical Energy Storage - EES

TRUE

FALSE

TSLA

256.56

Conclusions

This is meant to be a guide for investors trying to learn more about the electrification / power / grid modernization vertical. The space presents several compelling opportunities for analysis and potential investment/market entry. However, many policy risks in 2025 may temper the outlook for specific areas like offshore wind and non-domestic (US) produced EV's, solar components, and materials.


For more information, contact us at ShadowHornet - info@shadowhornet.com, or access our Energy/Utilties research archive at: ShadowHornet.com/IndustryResearch.


July 17, 2024

bottom of page