Midstream an Overlooked Beneficiary of the AI Boom

The buzz around artificial intelligence continues unabated heading into the second half of 2024. A potentially overlooked area of opportunity to harness the impact and increased adoption of AI lies within midstream.

AI is arguably one of the most prominent investment themes to emerge in the last year. Heralded as a significant technological innovation, AI forecasts call for broad-reaching disruption and adoption in the coming years. Alongside increased adoption lies an equal rise in power demand to fuel the data centers necessary for AI.

Renewable energies will likely account for a fair amount of the power required by the proliferation of AI data centers. However, the technological capabilities of renewable energies and grid capacities remain limited for now.

“When you see more deployment of solar and wind, you also typically need more natural gas with that as well, just to deal with intermittency issues,” explained Stacey Morris, CFA, Head of Energy Research at VettaFi.

This is due to a number of factors, including an inability to efficiently and reliably store renewable energy over a sustained period of time in the current grid. That coupled with the sometimes-sporadic nature of solar or wind power underscores the need for a reliable back-up fuel supply. Natural gas, with its reduced emissions output compared to coal, oil, and other sources, makes it an obvious choice in this interim energy transition period.