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POWER • INFRASTRUCTURE BOTTLENECKS • INTERCONNECTION
For decades, electricity was treated as a solved problem. Power was reliable, relatively inexpensive, and largely invisible to most businesses and investors. That assumption is now breaking down.
The rapid rise of artificial intelligence, data center expansion, electrification of transportation, and domestic manufacturing reshoring are colliding with an electric grid that was never designed for this level of load growth. Global electricity demand is accelerating meaningfully, with data centers alone expected to more than double their share of consumption over the coming decade. In the United States, certain regions are already seeing power constraints become a gating factor for economic growth.
At Citizen Mint, we view this moment as a structural inflection point. Power is no longer just a utility expense. It is becoming a strategic asset. The markets that enable power to be generated, moved, and connected efficiently are where we believe long-term value will increasingly concentrate.
AI workloads are uniquely energy intensive. Training large models requires massive bursts of power, while inference demands constant, reliable electricity close to population centers. At the same time, electric vehicles, heat pumps, and industrial electrification are adding steady baseline demand. These forces are layering on top of each other.
The challenge is that grid infrastructure has not kept pace. A large portion of transmission and distribution assets in developed markets are more than twenty years old and were built for a centralized, fossil fuel-oriented system. Today’s grid must accommodate intermittent renewables, distributed generation, and highly sensitive digital infrastructure, all while maintaining reliability.
Permitting timelines compound the issue. Large transmission projects often take seven to ten years from planning to completion, while data centers can be built in under two. This mismatch is creating bottlenecks that cannot be solved simply by building more generation.
This is where interconnection becomes critical.
Interconnection is the physical and contractual link between a power project and the broader electric grid. It includes the studies, upgrades, and infrastructure required to safely deliver power from a generation asset into homes, businesses, and data centers. Without interconnection, even fully permitted and financed projects cannot operate.
Across the U.S. and globally, interconnection queues have grown dramatically.
In many major markets, projects now spend years waiting for studies, approvals, and grid upgrades before they can come online. The queue itself has become a scarce resource.
Interconnection deposits exist to manage this congestion. Utilities require developers to place refundable deposits once system impact and facility studies are completed. These deposits fund future grid upgrades and serve as a filter against speculative projects, ensuring that only developers with real commitment and capital advance through the process.
For smaller and mid-sized developers, these deposits can be a meaningful constraint. Capital that could otherwise be used to expand a project pipeline becomes locked up for extended periods. This dynamic has created a compelling opportunity set around financing interconnection capital in a structured, risk-aware way.
Interconnection deposits are not typical development capital. They are held by utilities in restricted accounts governed by federal regulation, including oversight from FERC. Until a project is constructed and the funds are used for grid upgrades, deposits are generally refundable if a project is withdrawn due to economic or technical barriers.
This structure creates several important characteristics:
First, capital is secured by utility held cash rather than project level execution risk. Second, deposits are tied to regulated infrastructure processes, not merchant power exposure. Third, refundability provides a defined downside profile that is uncommon in early-stage energy development.
At Citizen Mint, we believe this combination of scarcity, regulatory structure, and capital constraint is precisely what makes interconnection such a compelling area to study closely.
Regulatory reform is also reshaping the interconnection landscape. In 2023, FERC implemented sweeping changes designed to address queue backlogs, improve transparency, and enforce stricter study timelines. These reforms introduced clustered study windows, gated readiness deposits, and penalties for missed deadlines.
While these changes are intended to improve system efficiency, they also increase the capital intensity required to advance projects through the queue. In practice, developers with access to flexible capital are better positioned to move forward, while others are forced to sell or slow development.
We see this as a reinforcing loop. Rising demand increases congestion. Congestion increases capital requirements. Capital constraints create opportunities for specialized solutions.
Interconnection is not a standalone theme. It sits at the intersection of several structural forces we find compelling:
• The electrification of everything
• AI driven load growth
• Grid modernization and resilience
• Regulatory driven infrastructure investment
Across these areas, we consistently see the same pattern. The bottleneck is rarely generation alone. It is the ability to connect power reliably, quickly, and at scale.
We believe the most attractive opportunities are often found one layer below the headlines, in the enabling infrastructure that allows megatrends to materialize. Interconnection is a clear example of this dynamic at work.
None of this eliminates risk. Grid policy evolves. Technology changes. Project timelines can extend. That is why discipline, structure, and downside awareness matter more than ever.
Our approach at Citizen Mint is grounded in understanding how capital behaves under stress, not just how it performs in ideal conditions. We spend significant time evaluating where protections exist, how incentives are aligned, and what happens when assumptions break.
In a world where power is becoming a limiting factor, we believe thoughtful exposure to the infrastructure that enables electricity to flow will remain increasingly relevant. Interconnection is not flashy, but it is foundational. And in markets like these, foundations tend to matter.
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