TRG | The Bottom Line – 6/30

TRG recently caught up within the Tennessee Valley Authority’s (TVA) economic development program. The TVA is a Great Depression-era quasi-government agency that is responsible for both managing flood risk in the Tennessee Valley while also providing electricity over a wide region.  Another important mandate for the TVA is to improve the lives of the people in its service area through economic development. Given the power-intensive nature of today’s economy (e.g., data centers, auto plants), this has put TVA at the forefront of the recent manufacturing boom. Our conversation broke down into two buckets, a positive outlook on the future but with a strong dose of caution. Positives driving demand include: 1) incidents of large in-bound power projects used to be rare, now they are seeing projects from 100 to 300 megawatts frequently being shopped within their network; 2) strong indicators that Germany and other EU countries may no longer be penciling out for some major manufacturers and that this is driving some of the uptick in interest in the TVA and the United States; 3) big projects requiring power & people, both of which TVA has; and 4) nuclear power in the early stages of making a comeback. Our contact cautioned, however, that projects may not actually be built or started for a variety of factors, from political risks (auto manufacturers waiting on the sideline to see how shifting political winds impact EV plants) to financial/economic factors.