By Neil Ford
Industry Insight from Reuters Events, a part of Thomson Reuters.
- Investment funds are seeking out clean power and grid projects that can meet booming U.S. power demand and the need for diversified electricity supplies.
November 4 – While President Trump has rolled back support for clean energy, investment funds are continuing to see value in projects, driven by soaring power demand from AI and electrification and long-term reductions in renewable energy costs.
Trump has slashed clean energy funding, accelerated the expiry of tax credits, and slowed down clean energy permitting, dampening the soaring growth outlooks established under the Biden administration. Last month, the International Energy Agency (IEA) cut its U.S. wind growth forecast for 2025-30 by nearly 60% and its solar forecast by almost 40%.
But investment funds are still buying U.S. renewable energy assets, driven by specific market fundamentals and the growing need to expand and upgrade grid infrastructure. Last month, Ares Management Corporation bought a 49% stake in an EDPR portfolio comprising 1,030 MW solar, 402 MW wind and 200 MW battery storage systems across four U.S. power markets, all with power purchase agreements (PPAs). Asset manager TPG bought commercial and community solar developer Altus Power for $2.2 billion in April 2025.
“Despite recent policy shifts, there is robust demand for renewable energy in the U.S., driven by the growth in AI and digital infrastructure,” Luba Nikulina, Chief Strategy Officer for global investment group IFM Investors, told Reuters Events.
Last month, New York-based asset management group Brookfield announced it had raised a record $20 billion for its Global Transition Fund II alongside $3.5 billion of co-investments into its portfolio.
Brookfield has already deployed $5 billion by investing in U.S. clean power developer Geronimo power, France-based developer Neoen and Indian group Evren, the company said. Brookfield has also signed giant clean energy supply deals with tech giants Microsoft and Google that will supply their U.S. facilities.
“Energy demand is growing fast, driven by the growth of artificial intelligence as well as electrification in industry and transportation,” Connor Teskey, President of Brookfield Asset Management and CEO for Renewable Power & Transition said in a statement. “Against this backdrop we need an ‘any and all’ approach to energy investment that will continue to favor low carbon resources.”
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Globally, data centers, electric vehicle charging networks, smart meters and battery storage are priorities for investors looking for exposure to long-term trends, according to IFM’s Private Markets 700 report published in September.
“This demand for clean energy is being driven by a range of factors, including improving economics, changing geopolitical factors and an increasing view that energy security goes hand in hand with national security,” Nikulina said.
US demand hikes
New data centers, onshoring of manufacturing and the electrification of the economy is driving up U.S. power demand for the first time in decades. U.S. power demand is forecast to increase by 2.5% in 2025 and by 2.7% in 2026, the U.S. Energy Information Administration (EIA) said in September.
As a result, “massive and sustained investment will be needed across the energy sector to satisfy rising energy demand,” Todd Fowler, KPMG U.S. Energy, Natural Resources and Chemicals Sector Leader, told Reuters Events.
CHART: Forecast US data center electricity demand
Most investment funds continue to focus on mature or proven technologies and projects that have “well contracted offtakes and competitive Capex and Opex deployment against revenues,” Nick Smith, Managing Director of Global Decarbonisation Advisory, said.
Funds have been attracted by long term reductions in the cost of solar, onshore wind and battery storage, while technologies that integrate a diverse range of power sources, such as energy storage and power grid systems, have become critical components of investment strategies, Fowler said.
Market forces continue to be the leading determinant of where U.S. investments are made, he said.
Rising renewable energy capacity and falling battery prices have spurred demand for utility-scale energy storage that can provide power at peak times or when solar or wind supply drops. There is also growing interest in new nuclear plants to provide low carbon baseload power day and night.
U.S. grid investments are also on the rise as power demand grows and network operators seek to upgrade and expand grid infrastructure to accommodate clean power and strengthen grid reliability.
CHART: Forecast investment in US transmission, distribution grids
Globally, electrification ranging from industrial processes to transport and household heating, is stirring some interest for emerging technologies such as advanced nuclear reactors, green hydrogen and carbon capture, Fowler said.
“Growth in emerging energies is no longer solely being driven by government policy or environmental mandates,” he said.
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Relatively novel sectors “will continue to require policy certainty, effective and efficient regulatory frameworks, and concessional funding support,” said Smith. In one example, the Trump administration has launched a flurry of initiatives and funding programs to accelerate the development of small modular reactors (SMRs).
Given uncertainty created by international conflicts, “investors in the energy transition are expected to continue to focus on relatively low risk options,” which could constrain the deployment of some new technologies, Smith said.
Global view
A reduction in U.S. federal support for clean energy under Trump has “naturally” led investors to consider projects in other regions such as Europe and Asia while also adjusting which jurisdictions and technologies they focus on within the U.S. to gain the best returns, Smith said.
CHART: Global forecast electricity production by source
A slowdown of U.S. clean energy deployment is sure to have a significant impact on the country’s path to net zero. Following the policies implemented by the Trump administration, the U.S. is facing a 76% shortfall in the investment needed to reach net zero by 2060, Prakash Sharma, Vice President, Head of Scenarios and Technologies at Wood Mackenzie, told Reuters Events.
This compares with shortfalls of 36% in Europe and 29% in China, he said. President Trump has withdrawn the U.S. from the 2015 Paris climate agreement which sets a goal of reaching net zero global carbon emissions by 2050.
While a faster energy transition raises capital costs in the short term, delays to reaching net zero would “lock in higher long-term costs to manage the physical risks of a warmer planet,” Sharma said.
Neil Ford is an energy reporter for Reuters Events, part of Reuters Professional. He also provides news and analysis to a number of energy and African business publications and writes reports on Africa for the United Nations and the African Development Bank.
This article was published on November 4, 2025 at Reuters.com.