Goldman Sachs Sees Utilities Earnings 'Super Cycle' As Europe Data Center Build-Out Drives Power Demand

According to CNBC, Goldman Sachs said the rapid build-out of data centers in Europe is creating an opportunity for electricity companies able to meet the region's rising power demand. In a Wednesday note, the firm argued that utilities could be entering an earnings "super cycle" after its research found European electricity bill increases are likely to be much lower than expected. Goldman estimated electricity bills will rise between 2% and 4% a year over the next decade, below current market expectations and under the 5% annual increase seen by European consumers over the past 10 years. The bank said its preferred wind-related picks include Danish group Ørsted, Portuguese renewables company EDPR and German onshore wind provider Nordex. Goldman said Ørsted could benefit as Europe shifts energy policy toward offshore wind, while a softer stance by the U.S. administration on wind farms could allow projects already under construction to be completed. It also said EDPR's U.S. renewable business is an overlooked part of the market and expects Nordex margins, cash returns and orders to improve.