ACES Positions for $1.4T Grid Upgrade Wave
•February 13, 2026
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Why It Matters
The unprecedented utility capex reshapes the power sector, delivering long‑term growth for clean‑energy equities and ETFs like ACES, while reducing reliance on short‑term policy swings.
Key Takeaways
- •$1.4 trillion U.S. grid upgrade projected by 2030
- •Utilities increased capex 12% in 2025, 6% in 2026
- •ACES holds 16.2% in grid‑modernization firms
- •Fund outperformed S&P 1000 with 36.2% return
- •Battery storage demand expands across 30+ states
Pulse Analysis
The United States faces a looming infrastructure challenge: nearly half of its transmission and distribution assets are older than 40 years. Rising electricity demand—driven by AI‑intensive data centers, electric vehicles, and broader electrification—has forced utilities to accelerate spending. Morningstar projects a $1.4 trillion investment wave through 2030, roughly double the previous decade’s outlay, with capital expenditures climbing 12% in 2025 and another 6% slated for 2026. This surge is less about temporary policy incentives and more about replacing aging hardware to meet future load growth.
For investors, the grid‑modernization trend translates into tangible opportunities across the clean‑energy value chain. ACES, the ALPS Clean Energy ETF, has strategically weighted its portfolio toward firms that supply smart‑metering, storage, and solar‑integration technologies. Holdings such as Itron’s smart‑grid equipment, Fluence’s battery systems, and Nextracker’s solar trackers have posted double‑digit gains as utilities sign multi‑year contracts. The fund’s 16.2% allocation to energy‑management and storage companies, combined with a 36.2% annual return, underscores the outsized upside relative to broader market benchmarks.
Looking ahead, the durability of this capital‑intensive wave offers a hedge against policy volatility. While regulatory scrutiny over rate impacts may introduce execution risk for specific projects, the multi‑decade nature of grid upgrades ensures a steady demand pipeline for clean‑energy hardware and services. Investors seeking exposure to the long‑term infrastructure renaissance should monitor utility capex trends, regional storage incentives, and the competitive positioning of ETF constituents, as these factors will shape performance well beyond the next election cycle.
ACES Positions for $1.4T Grid Upgrade Wave
The ALPS Clean Energy ETF (ACES) stands to benefit from a $1.4 trillion utility infrastructure buildout through 2030 as companies rush to modernize an aging grid struggling to meet rising power demands, according to recent Morningstar research.
The investment wave represents roughly double the spending of the previous decade, according to Morningstar. Utilities increased capital spending 12 % in 2025. Morningstar expects this to boost investment another 6 % in 2026 as they work to accommodate surging electricity needs while replacing decades‑old equipment.
Around 40 % of U.S. grid infrastructure is more than 40 years old. This has created a bottleneck. Utilities are now trying to connect new data centers and renewable energy projects, according to Morningstar analysts. This aging system is forcing an overhaul that benefits companies across ACES’ holdings. Among those that benefit are energy‑management and storage firms that supply equipment and technology for grid modernization. ACES holds a 16.2 % allocation to these companies.
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Itron (ITRI), which represents 4.9 % of ACES holdings, manufactures smart meters and grid‑management equipment that utilities need to modernize their networks, according to ETF Database.
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The fund also holds positions in renewable‑energy developers like Brookfield Renewable Partners (BEP), at nearly 5 %, and Clearway Energy (CWEN), at 3.9 %.
The fund holds positions across seven clean‑energy segments—including solar, wind, and energy storage—with total assets of $115.8 million as of December, according to SS&C Advisors. ACES returned 36.2 % over the past year, compared with 7.04 % for the S&P 1000 Index over the same period.
Storage Pairs With Solar Projects
Battery energy‑storage systems have become central to utility planning. Companies pair storage with solar projects to provide reliable power even when the sun isn’t shining, according to BioStar Renewables, a renewable‑energy developer. More than 30 U.S. states are expected to show strong market conditions for battery storage over the next five years, according to forecasts from Ascend Analytics cited by BioStar.
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Fluence Energy (FLNC), representing 1.5 % of ACES, surged 55.6 % in January after announcing contracts to supply battery technology for an Arizona clean‑energy center expected to include 1,200 megawatt‑hours of storage capacity, according to ALPS Advisors.
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Eos Energy Enterprises (EOSE), which holds a 3.8 % weight in the fund, gained 27.8 % last month following the launch of its new zinc‑powered battery architecture.
Solar‑equipment makers also participated in the grid‑buildout theme. Nextracker (NXT), the fund’s second‑largest holding at 6.2 %, jumped 34.4 % in January, while Array Technologies (ARRY), at 2.1 %, gained 22.8 % as sentiment improved around utility‑scale solar demand, according to ALPS.
Total electricity demand rose 2.3 % in 2025, with data centers expected to account for 10 % of the nation’s total electricity consumption by 2030, according to Morningstar. Forecasts show U.S. electricity‑demand growth at least quadrupling in 2026, driven by AI computing facilities and broader electrification of the economy.
“The clean‑energy sector is increasingly driven by multi‑decade capital expenditure tied to infrastructure needs rather than short‑term policy cycles,” said Roman Boner, senior portfolio manager at Robeco, in a January Morningstar report. “Utilities face regulatory pressure to balance massive infrastructure investments against customer‑bill affordability, creating execution risk for some projects.”
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