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.

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. 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, 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 US 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.

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. 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, Roman Boner, senior portfolio manager at Robeco, said 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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