Bhel, Adani among key gainers of $5.5-trn Asia energy capex: Morgan Stanley

Asian economies are likely to invest $5.5 trillion ($1.2 trillion in fresh investment in addition to $4.3 trillion worth of investments underway) in the energy sector over the next five years, according to Morgan Stanley, as governments and companies work to strengthen supply chains, support economic growth and meet rising power demand.

 

For investors, Morgan Stanley believes this surge in energy capital expenditure (capex) could create as much as $9 trillion in opportunities across the value chain – from power generation and infrastructure to fertilizers and materials critical to artificial intelligence (AI).

 

“We expect power, including coal, to take up more than two-thirds of the investment share, followed by fuel, energy storage and natural gas. The 'Powering AI' theme will drive a new investment cycle in energy systems, particularly storage, coal plants and grid flexibility, as exponential AI infrastructure growth collides with physical-world limitations,” the note said.

 

 

Indian beneficiaries

 

Bhel, Adani Power, NTPC, Tata Power, JSW Energy are the five companies in the power generation and the power generation equipment providers in India that could gain over the next few years as countries increase energy capex, Morgan Stanley said.  

Investment in energy sector

 

Their optimism stems from rising demand for power, driven by economic growth, the electrification of end-use sectors, emerging loads such as electric vehicles (EVs), and green hydrogen back home.

 

Large data center players, Morgan Stanley said, have been aiming at clean power sourcing, and therefore commensurate investments in storage will become inevitable to manage intermittency and variability issues.

 

“We assume the share of RE in power supply will gradually increase from 25 per cent in FY27 to 35 per cent by FY31, with the balance met through thermal. Data center and AI growth in India appears underappreciated, given the rate of change since FY24,” the Morgan Stanley note said.

 

In the Indian context, Morgan Stanley expects the total power demand to rise 6.75 per cent between 2025 and 2030 to 668 terawatt-hour (TWh). Of this, datacenter will see a demand of 68 TWh, while the non-datacenter demand is pegged at 600 TWh. 

 

“Datacenters currently account for ~2 per cent of global power consumption and we forecast they will add 1.2 trillion units to global power consumption, accounting for 5 per cent of power demand by 2030. While there will be varied adoption rates globally, about 45 per cent of these units will be consumed in Asia, 45 per cent in US, with Europe largely accounting for the rest," the Morgan Stanley note said. CLICK HERE FOR A GRAPHIC ON DATACENTERS

 

The research and broking house sees a 25 per cent CAGR in power consumption from data centers in 2024-27 and a 20 per cent CAGR in 2027-30. 

 

It expects data centers to account for 75 per cent of US power demand growth through 2030, while in Europe they will account for 40 per cent and in Asia 13 per cent.