Rising electricity demand, geopolitical tensions, and rapid technological advances are reshaping how energy is produced, delivered, and financed.
To deepen its expertise in these areas, William Blair Investment Banking recently expanded its energy and power technologies capabilities, reflecting the growing importance of sectors that sit at the intersection of energy, infrastructure, and innovation.
William Blair’s Jim Conniff, partner, managing director, industrial growth products, and Jayant Dey, managing director, industrial growth products, recently discussed the forces reshaping global energy markets, including surging power demand and grid constraints, the effects of conflicts in key energy-producing regions, and emerging technologies that could help meet future energy needs.
The Relationship Between Energy and Geopolitics
Energy markets have long been influenced by geopolitics, and recent tensions in the Middle East resulting from the escalation of conflict in Iran highlight that connection. Much of the region’s ability to impact energy prices centers on the Strait of Hormuz, one of the world’s most critical energy shipping corridors.
“About 20% of global liquified natural gas (LNG) and roughly 20% of the total global oil consumption pass through that corridor,” Dey said. “If traffic slows or insurers pull back from providing coverage, fleets can, effectively, pause. That’s a big contributor to volatility in global energy markets.”
While global prices react quickly to geopolitical events, the impact on U.S. producers can vary—even creating positive results in some areas. Dey noted that higher prices can translate into stronger free cash flow for upstream producers.
Given the long history of volatility in global energy prices, Conniff stressed the importance of investors maintaining a long-term perspective.
“Over the last few decades, geopolitical disruptions have created short-term spikes in energy prices,” Conniff said. “But markets tend to stabilize over time.”
‘The Electrification of Everything’
Beyond short-term volatility, a more structural shift is underway. While energy demand has been relatively flat in the U.S. for the past 30 years, it could increase by about 30% by the end of this decade, Dey said. Much of that can be attributed to data center expansion related to artificial intelligence, but there are other factors.
“It’s also electrification more broadly,” Conniff said. “Electric vehicles and industrial activity stemming from reshoring of manufacturing are shifting toward electric power.”
This trend is commonly referred to as the “electrification of everything,” Dey said, and it is prompting extreme load growth. Electricity demand is set to increase steadily over the next several years, which will necessitate significant investment, not only in generation capacity, but in infrastructure needed to deliver electricity.
“More power generation needs to be built,” Dey said. “We also need to invest in transmission and distribution to deliver that power.”
Securing Reliable Power
In many cases, the biggest challenge is not producing electricity—it’s delivering it through an aging grid that’s fragmented and not always well suited to handle rising demand, extreme weather, or modern power flow.
“You can generate a lot of power,” Dey said, “but you can’t feed it into the grid unless the grid has sufficient capacity.”
Much of the U.S. transmission infrastructure was built decades ago and wasn’t designed to handle today’s rapidly rising electricity demand, especially from data centers, electrification, and advanced manufacturing. At the same time, the grid has multiple regional operators and regulatory frameworks that can slow and complicate distribution expansion.
These structural constraints are making it harder to move power from where it’s generated to where it’s needed most.
As a result, companies are exploring ways to secure reliable power. To Conniff, localized and distributed power solutions are becoming more important as demand rises.
“You’ll hear people talk about ‘behind-the-meter' generation,” Conniff said. “Companies are trying to figure out how to generate power on-site or nearby instead of relying entirely on the grid.”
New Technologies Reshaping the Landscape
Technological innovation will play an important role in meeting future energy demands. One area drawing growing attention is small modular reactors (SMRs), a next-generation form of nuclear power.
“Instead of a large utility-scale nuclear plant, these reactors can be designed for specific applications or customers,” Conniff said.
But nuclear is just one technology with the potential to help reshape energy, Dey explained. Advanced geothermal, which is cleaner than some technologies, is seeing strong investment. Long-duration energy storage, which stores energy for extended periods of time, could play a major role—especially amid the increasing adoption of renewables.
“Most lithium-ion batteries today provide about four hours of storage,” Dey said. “If we want to eliminate the intermittency of solar and wind to provide 24/7 power, we’ll need storage technologies that can last 20 hours or more.”
Natural gas will likely serve as a bridge to the energy transition. If technologies like SMRs are still several years away from large-scale deployment, we need reliable power sources today.
JIM CONNIFF, Partner, Managing Director, Industrial Growth Products
Traditional Energy Sources
Still, traditional energy sources remain critical to meeting growing demand.
“Natural gas will likely serve as a bridge to the energy transition,” Conniff said. “If technologies like SMRs are still several years away from large-scale deployment, we need reliable power sources today.”
The U.S.’s abundant natural gas supply gives it a competitive advantage. As a result, gas-fired power generation will likely remain an important part of the energy mix.
“It can help fill the gap until next-generation technologies scale,” Dey said.
Opportunities Across the Energy Ecosystem
For investors, opportunities extend beyond energy producers. Conniff noted potential for companies that provide the equipment for improvements and expansion, specifically to the country’s electricity grid, and emphasized the significant scale of investment required across U.S. energy infrastructure.
“Whether it’s connecting new data centers, upgrading the grid, or supporting reshoring manufacturing, there’s a huge amount of work ahead,” Conniff said.
Private markets could play an essential role in financing emerging technologies, Conniff added, pointing to work to fund advanced nuclear and battery storage. When asked how investors can best navigate the energy landscape, he emphasized one principle above all: diversification.
“Energy markets are cyclical,” Conniff said. “Diversification across energy sources, technologies, and geographies remains one of the best ways to manage that risk.”