Odd Lots: How to Make Money From the Booming Demand for Energy

Date: January 15, 2026
Hosts: Joe Weisenthal & Tracy Alloway
Guest: Tyler Rosenlicht, Portfolio Manager, Cohen & Steers

Episode Overview

In this episode, Joe Weisenthal and Tracy Alloway explore the soaring global energy demand driven by tech (especially AI and data centers), the dynamic landscape of infrastructure investment, and how investors can profit from these massive secular shifts. Their guest, Tyler Rosenlicht, shares insights from his work at Cohen & Steers, an asset manager focused on real assets and infrastructure. The conversation covers how the energy and infrastructure sectors are changing, the balancing act between private capital and regulatory risk, whether the "picks and shovels" companies are the real winners, and what to watch out for amid technological and political flux.

Key Discussion Points & Insights

The Intersection of Technology, Infrastructure, and Energy

• The AI Effect:

  • The AI boom is driving unexpected demand across infrastructure, from power generation to cooling systems. However, rapid innovation (like more energy-efficient chips) can suddenly shift which infrastructure investments are profitable.
    • “[AI] is technology, but it has this huge infrastructure aspect attached to it.” – Tracy Alloway [01:14]
  • Traditional “reliable” infrastructure investments (like toll roads or airports) are now subject to the volatility and technological disruption previously common mostly to tech.

• Physical Assets Back in Focus:

  • Since COVID, and with major government spending worldwide, the value of physical industries—energy, infrastructure, materials—has massively increased.
    • “Physical things have just been in our face constantly since COVID…and it’s accelerated because of…public money pouring into the space.” – Joe Weisenthal [02:15]

How Infrastructure Investing Has Evolved

• Types of Assets and Sectors:
  • Rosenlicht describes investing in subsectors:
    • Communications (cell towers, data centers, satellites)
    • Utilities (electric, gas, renewables)
    • Transportation (toll roads, airports, marine, rails)
    • Energy (midstream pipelines, etc.)
    • “We try to look at everything and, and give investors exposure to what is really a dynamic and exciting place.” – Tyler Rosenlicht [04:09]

Supply, Demand, and the Investor/Company Power Dynamic

• Capital Needs in Utilities:

  • The investment required to meet new power demand is so great, some utilities may struggle with affordability, while others—as in certain areas with heavy data center demand—may benefit from lower consumer bills and healthier revenue.
    • “Today I actually think…dispersion in terms of outcomes and investment opportunities is as wide as it’s ever been.” – Tyler Rosenlicht [06:52]

• Data Centers & Energy Grids:

  • In some regions, data centers can actually lower average electricity bills by using up excess power capacity, while in other places, the cost burden falls on ratepayers.
    • “You bring a data center into that service territory…the data center itself might consume that power. And you as the rate payer are not actually going to be burdened by that cost in your monthly bill.” – Tyler Rosenlicht [07:24]
  • However, not all locations can support data centers due to resource constraints like water or generation capacity, and there's a risk of utilities over-investing in assets that become stranded if demand vanishes.
    • “It’s really actually bad in a lot of places and then it’s really good in some places.” – Tyler Rosenlicht [09:16]

How Cohen & Steers Picks Opportunities

• Boots-on-the-Ground Research:

  • The team invests heavily in firsthand research—touring assets, understanding local politics and regulation, identifying regional nuances, with a team of specialist analysts.
  • “We want to have this big team that is sector specialists…going and touring assets, talking to local professionals and trying to find where we can see unique insights.” – Tyler Rosenlicht [11:10]

• Public Markets Focus:

  • Rather than PE deals, they seek undervalued listed equities set to benefit from long-term secular trends.

Secular vs. Cyclical Winners: A Structural Shift

• Old Cyclicals Now Secular Growth Stories:

  • Companies usually tied to the economic cycle (e.g. Caterpillar) are now seeing persistent, above-average growth as key enablers of energy and industrial expansion.
    • “We’ve exited…the era of abundance and we’ve entered the era of scarcity.” – Tyler Rosenlicht [16:10]
  • Market consolidation means fewer players, less competition, sturdier profits for longer.

• But Cyclicality Never Disappears:

  • Overcapacity and commodity busts can’t be eliminated, just managed through smart positioning.

The Global Energy Demand Outlook

• Massive Secular Growth:

  • Even under optimistic assumptions for energy efficiency, global energy demand is set to explode by 25%+ by 2040, with electrification (data centers, EVs) a major driver.
    • “Global energy demand rising from about 178,000 terawatt hours…to 220,000 in 2040. That’s a big increase.” – Tyler Rosenlicht [21:00]
  • The scale of renewable buildout required is “basically recreating the entire global crude oil industry…in the next 16 years.” – Tyler Rosenlicht [21:50]

• Decarbonization’s Order of Priorities Has Changed:

  • Where “clean” used to come first, stability and availability now matter more in practical terms, both for companies and governments.
    • “Today it’s kind of flipped, right? We need more, it has to be stable and then we do want it to be clean but we can’t necessarily sacrifice the clean for the more and the stable…” – Tyler Rosenlicht [22:52]

Nuclear Renaissance: Reality or Hype?

• A Real But Nuanced Renaissance:
  • While skepticism abounds, Rosenlicht expects meaningful nuclear growth, but only with direct government risk-sharing and support.
    • “No utility will do it themselves…I think the cost overrun risk will get covered by the government.” – Tyler Rosenlicht [30:20]
  • Renaissance phases:
    1. Stop closing old plants (we’re nearing the end of this phase)
    2. Restart recently shut plants
    3. “Brownfield” (expanding at existing sites)
    4. New-gen SMR & advanced tech (later in the 2030s)

Why Market Signals Aren’t Sparking More Resource Supply

• Investor Discipline & Past Burn:
  • Despite soaring prices (copper, uranium), miners and producers are not spending to expand supply, still scarred by shareholder backlash for past overexpansion (as seen in the shale bust).
    • “Companies are still being penalized for increasing capex and increasing supply…investors just revolt, they say no mas, they want the discipline.” – Tyler Rosenlicht [32:47]
  • Government intervention and PP partnerships are becoming necessary to bridge that gap.

Regulatory and Political Risk: The Key Investment Wildcard

• Biggest Risk:

  • Regulatory surprise—especially for capital-intensive, high-fixed-cost infrastructure.
    • “For us, it’s regulatory risk…We worry about surprise.” – Tyler Rosenlicht [35:31]
  • Local backlash against data centers and data-hungry infrastructure is real, especially when electricity bills rise without clear local benefits.

• Bananas World:

  • From “Not In My Backyard” (NIMBY) to “Build Absolutely Nothing Anywhere Near Anything” (BANANAs), it’s been nearly impossible to build new energy infrastructure—though that’s starting to shift, especially for natural gas pipelines serving lucrative data centers.
    • “That world transitioned to a bananas world…Build absolutely nothing anywhere near anything…that does feel like it’s changing a little.” – Tyler Rosenlicht [37:58]

Underappreciated Areas & Where Opportunities Remain

• Utilities:
  • Some faster-growing utilities trade at only a modest premium to laggards despite the gap in future prospects.
    • “Best utilities are not trading at a lot higher multiple than the average utility. And their growth rate differential is way better.” – Tyler Rosenlicht [40:05]
• Picks and Shovels Companies:
  • Construction, materials, and engineering firms enabling the buildout of infrastructure are the “Levi’s” and “picks and shovels” winners of today, offering more stable risk/reward.
    • “Who made all the money in the gold rush? It was the Levi’s and the picks and shovels companies and I kind of think that’s where we are.” – Tyler Rosenlicht [42:21]

Notable Quotes & Memorable Moments

• "We’ve gone from the era of abundance to the era of scarcity. We just don’t have enough of all the stuff that we need for the economy to grow.”
  — Tyler Rosenlicht [16:10]
• “The cure for low prices is low prices. The cure for high prices, high prices…”
  — Tyler Rosenlicht [18:05]
• “We need more, it has to be stable and then we do want it to be clean, but we can’t necessarily sacrifice the clean for the more and the stable part of it.”
  — Tyler Rosenlicht [22:52]
• “No utility will do it themselves…I think the cost overrun risk will get covered by the government.”
  — Tyler Rosenlicht [30:20]
• “A decade ago, we had a NIMBY world…That world transitioned to a bananas world: Build Absolutely Nothing Anywhere Near Anything.”
  — Tyler Rosenlicht [37:58]
• “For us, it’s regulatory risk…We worry about surprise.”
  — Tyler Rosenlicht [35:31]
• “There’s a utility in the Midwest…currently has a system that’s about 11 gigawatts…[but] currently have data center demand to build 15 gigawatts.”
  — Tyler Rosenlicht [45:54]
• “The biggest risk is government, the regulatory risk…”
  — Tracy Alloway [48:21]
• On opportunity:
  “If you’re in the right place, government spending more money feels like you could stand in the right way of an absolute fire hose of money right now in this space.”
  — Joe Weisenthal [47:41]

Timestamps for Major Segments

• Intro, AI’s Infrastructure Challenge: 00:39 – 02:23
• What Is Cohen & Steers? 04:09
• Investment Flows and Capital Needs: 05:49 – 07:17
• How Data Centers Affect Power Grids: 07:17 – 10:38
• Cohen & Steers Team’s Research Process: 11:10 – 13:55
• Secular vs. Cyclical: The Shifting Landscape: 15:28 – 17:46
• Managing Overcapacity Risk: 17:46 – 19:11
• Global Energy Demand Math: 19:38 – 22:40
• Decarbonization, Stability, and Clean Energy: 22:40 – 24:12
• Coal & China’s Strategies: 24:29 – 26:32
• Nuclear Renaissance Debate: 26:32 – 32:24
• Market Signals, Capex & Government Role: 32:24 – 35:03
• Venezuela and Regulatory Risk: 35:03 – 37:20
• Bananas World (Infrastructure Build Challenges): 37:58 – 39:19
• Electricity as the Bottleneck: 39:28 – 41:43
• Opportunities in Utilities & Picks/Shovels: 41:43 – 42:57
• Operational Risks in Infrastructure: 42:57 – 44:14
• Local Backlash & Regional Growth: 44:14 – 47:03
• Wrap Up, Key Risks, and Final Thoughts: 47:26 – 51:33

Summary Takeaways

The next wave of energy infrastructure investment will not only be vast in scale but fundamentally different from the past. Rising demand for electricity, driven by technology (especially AI and data centers), is colliding with political and community constraints, unpredictable regulatory environments, and the reality that most supply growth—from copper and uranium mines to pipelines—won’t happen without government help. Investors with the ability to parse these nuances, and those who focus on “picks and shovels” enablers, are well positioned—but must remain vigilant about the ever-present risk of regulatory change and shifts in public sentiment.

For more Odd Lots content and discussion on these topics, visit Bloomberg Odd Lots.