Morgan Stanley: Global electricity demand growth may exceed expectations, with about half of the new demand not yet priced in by the market.

October 27 - Morgan Stanley's latest research report points out that the "Three A" forces comprising AI agents, growing air conditioning demand, and industrial reshoring are collectively driving global electricity demand into a super cycle. The bank has raised its forecast for global electricity consumption growth from 2025 to 2030 by 10%, projecting that global electricity consumption will reach 36.3 trillion kWh by 2030, about 15% higher than market expectations. Among this, approximately half of the electricity demand from AI agents, Asian industrial expansion, and new air conditioning and heat pumps has not yet been reflected in relevant corporate valuations.

Morgan Stanley believes that electricity demand growth is no longer driven solely by AI data centers. Global industrial electricity consumption is expected to rise from 11.1 trillion kWh in 2025 to 13.1 trillion kWh in 2030; global cooling electricity consumption is projected to increase from 2.9 trillion kWh to 4.1 trillion kWh over the same period, with a compound annual growth rate of about 7%, higher than the overall growth rate of global electricity demand.

Regionally, Asia is expected to contribute about 64% of global incremental electricity demand from 2025 to 2030. The U.S. electricity supply gap is equally severe; Morgan Stanley expects a data center electricity shortfall of about 43GW in the U.S. by 2028, with some demand potentially spilling over to Asia, driving local power infrastructure investment.

On investment strategy, Morgan Stanley believes that pricing power in the electricity market is shifting from equipment suppliers to power generators, grid operators, and natural gas infrastructure owners. The bank is bullish on names including Bloom Energy, Solaris Energy, and China Yangtze Power, and has placed Korea Electric Power Corporation (KEPCO) and Tata Power on its avoidance list.