高盛-美国电网相关智库会议要点0722

21July2024|10:01PMEDT

AmericasEnergy

DCPowerTrip:Takeawaysonthegrid,power&renewablesandtradepolicyinanelectionyear

OnJuy18,wehostedannvestofiedtptoWashngtonDCtomeetwthagoupofpowe/gdthnktanks,obbysts,andtadepocyexpets,amongotheswthou

meetngs’takeawayscenteedaound:(1)tansmssonbottenecks,(2)IRAuncetanty,(3)nceasngtaffs,and(4)nuceaganngmomentum.

Theviewscontainedwithinthisreportarethoseoftheintervieweesexcepttheimpacttoourcoveredstocks.

ThreekeytakeawaysfromourDCPowerTrip

FoowngoumeetngswthGdStateges,theGSOfficeofGovenmentAffas,theDOELoanPogamsOffice,theNuceaEnegyInsttuteandawfimOck,Hengton&SutcffeLLP,outheekeytakeawaysaeasfoows.

1.Transmissionisthekeybottlenecktobothloadgrowthandrenewables

deployment.Thscanbeaddessedntheneatemvadepoymentofmoe

soa/stoageeatvetownd,whchequesesstansmsson,asweasthe

adoptonofgdenhancngtechnooges,whchweehghghtedbybothGd

StategesandtheDOELoanPogamOffice,ncudngdynamcneatngs,

advancedconductos,andstoageastansmsson.Thisreinforcesour

constructiveviewonutilitiesthatallocateasignificantportionofcapitaltotransmission,includingBuyratedFE,AEP,SRE(onCL),andXEL.

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2.IRAremainsakeyuncertaintyaheadoftheelection.Thepotenta

mpcatonsfohowtheIRAcoudevovenanewadmnstatonhasa

sgnficantnumbeofpemutatons,avewshaedbyneayaspeakeswemetwth.Intemsofpocess,taxefomsakeyfocusfoRepubcansandwoud

keybeenactedthoughsomesotofbudgeteconcaton.WhetheIRAs

moesusceptbetobengcappedvs.epeaedemansakeynvestodebateanddebeatonsnDCaoundactuachangestokeyIRAncentves(e.g.45X,ITC/PTC)thatcoudbetagetedaequteeaystage,accodngtoobbysts.

Gventhsuncetanty,theeaedatapontsthatsuggestgovenmentagences

aeookngtofinazefundngdeas,npatcua,aheadoftheNovembeeecton.

BranLee,CFA

+(97)343-30|brianlee@gscomGoldmanSachs&CoC

BranSnger,CFA

+(22)902-8259|briansinger@gscomGoldmanSachs&CoC

CaryDavenport

+(22)357-94|

carlydavenpor@gscom

GoldmanSachs&CoC

TyerBsset,CFA

+(22)357-550|ylerbisse@gscomGoldmanSachs&CoC

GretaDrefke

+(22)357-5567|greadree@gscomGoldmanSachs&CoC

GodmanSachsdoesandseekstodobusnesswthcompanescoveedntseseachepots.Asaesut,

nvestosshoudbeawaethatthefimmayhaveaconflctofnteestthatcoudaffecttheobjectvtyofths

epot.Investosshoudconsdethsepotasonyasngefactonmakngthenvestmentdecson.FoRegACcetficatonandothempotantdscosues,seetheDscosueAppendx,ogoto

/eseach/hedge.htm.Anaystsempoyedbynon-USaffiatesaenotegsteed/quafiedaseseachanaystswthFINRAntheU.S.

GoldmanSachsAmercasEnergy

3.Tariffsarelikelytoincrease.Thetendtowadpotectonsttadepocyappeastobebecomngamoebpatsanssueastheesnceasngunanmtyaound

estctvetadepocynD.C.acossbothpates,accodngtotadepocyexpetsatOck.Wthnpowe,thenea-temmpactspehapsmostacutenthesoa

antdumpngandcountevang(AD/CVD)taffpettonthattheDeptofCommeceandITCaecuentynvestgatngandwheetheeappeastobepecedentfo

moetaffstobentoducedatethsyea.Additionaltariffs,ifintroduced,

wouldbemostbeneficialtoBuy-ratedFSLRinoursolarandenergystoragecoverageuniverse,whiletariffuncertaintyismostnegativeforforeignpeerslikeJKSandCSIQ.

4.Momentumtowardsextendingandexpandingnucleargenerationcapacity

continuestoexpand.Thsscomngfomexstngopeatngpants(cense

extensonsanddebotteneckng),bngngbackonnesomepevousy-mothbaedpants,emegngsmamoduaeactoandmco-eactostatups,and

consdeatonfoage-scaeexpansontomeetnewy-expecteddemandgowth.Thsspostvefondustasandenegycompanesnthenuceasuppychan,ncudnguanum.

TakeawaysfromGridStrategies

WemetwthRobGamch,FoundeandPesdentofGdStategestodscussthefutueoftheeectcgdntheUS.

Theoutlookfortransmission

GridStrategiesremainsbullishonfuturetransmissionassets.GamchnotedthatnewFERCcommssonesaepo-tansmsson,andathoughsomeegaandpemttng

ssuesaenownquestonfoowngtheovetunngofChevondefeence,Gd

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StategessoptmstcsomeofthemoempotantegsatonkeFERC1920w

emannpace.Thegdhastopepaefobothnea-temchaengesasweseepowedemandnceasenthecomngyeas,andongtemaswetanstongeneatonawayfomfossfuestoenewabes.Theeaenooneszefitsasoutons,andeachegonoftheUSwhavetodeveoptsownshot-andong-tempantotackethese

chaenges.

GridStrategiesnotedthatwithinthetransmissionspacetheyareseeingdifferentbusinessmodelsfortransmissiondevelopmentemergeintheUS.Onesahybdmode,wheeanndependentdeveopehandesthepemttnganddeveopment

befoetunngoveowneshptotheutty.Thshybdmodehasbeguntogan

popuatyntheegonsoftheUSwheetheesnotanRTOtohepgudetansmssondeveopment.Addtonay,theycontnuetohopefoapemttngbthatcontans

po-tansmssonpocesoutsdeofjustthepemttngaspect,addessngchaengessuchascostaocatonandmnmumtansfe.Boththesenewbusnessmodesandapotentapemttngbcoudgoaongwaytopepangthegdongtem.

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Transitioningtocleanenergy

GridStrategiesexpectspowerdemandintheUStogrowbyroughly2%annually,wthabouthafofthatgowthcomngfomdatacentes.Apotonofthsncementa

demandwequenewgeneaton,andmostcompaneswooktoaddenewabestosuppott.Thechaengesthatenewabesequenatuaesoucesthataeoften

ocatedfafomwheethepowedemandsandtansmssoncanbesowtopemt

andbud,ceatngabottenecktoenewabesdepoyment.GdStategesbeevesthattheeaesomewaystoaddessthspotentachaenge.

nFst,buildingoutmoresolarplusstoragerelativetowind,whchoftenequesmoetansmsson.

nSecond,GdStategesbeevesthatcapacitypriceswillhavetorisegoingforward,especayasenewabescontnuetobebutout.

nThd,theeaegridenhancingtechnologiesthatcanincreasethethroughput

ofanexistingline,suchasdynamcneatngtechnoogyoeconductong.

Dynamcneatngcanaddupto20%-30%moecapactytothenentheght

ccumstances,andeconductongwthadvancedconductoscouddoubene

capacty.Soutonskethscanhepaddessconstantsntheneatem,andGd

Stategesnotedthatmostofannuatansmssonspendsgongtowadsneatemsoutonskeths.FERCdoesnothavethecapactytoevewoadupgadesto

tansmsson,sothepocesssesscompcated.Thatsad,wenotethattheecoudbephyscaconstantstompementngthesesoutons,gvenneswoudneedtobeboughtoutofsevcefoapeodtonstathetechnoogy,whchcoudbe

dfficutncongestedaeas.

HowareRTOsapproachingthechallengesahead

MISOandCAISOhavesomeofthemoreambitiousplansfortransmission

planningacrosstheRTOs,inGridStrategies’view.MISO’snexttanchesfoupto$27bnoftansmssondeveopment,foowng$10bnnthefisttanche.CAISOs

_

ookngbothwthnthestateandoutsdethebodetobngpowen,smatoNYISOwhchhasookedtobngpowentothestatefomCanada.GdStategesnotedthatPJMandERCOTaeeatveysownpoactvetansmssondeveopmentcompaedtootheRTOs,butthattheERCOTCEOsveymuchfocusedontansmsson.OutsdeoftheRTOsookngtouttyIRPscangveanndcatonofhowthategonwappoach

gdpannnggongfowad.TheemegenceofdatacenteswmakeRTOsjobevenmoedfficutgongfowad,andtheoutcomeoftheAEP/EXCpotestofthedata

centeISAwbeanmpotantpecedent.

TakeawaysfromGSOfficeofGovernmentAffairs

WemetwthStevePastck,VP,ntheGodmanSachsOfficeofGovenmentAffas.

Election

StrongshiftinfavorofTrump.Ovethepasttwoweeks,pongesutsshowashftn

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GoldmanSachsAmercasEnergy

maketexpectatonsfavongTumpntheupcomngeecton.TheacefotheHouseappeastghtbutcoudseemoeofashftnfavoofthepatythatwnstheWhte

House.WththeSenateeanngRepubcan,Repubcanshavethepotentafoaceansweep,whchcoudaowthemtopusuetaxefomvabudgeteconcaton.

Republicansmorepreparedthanlastterm.M.PastckvewsthatRepubcan

woknggoupsaekeytohaveawhtepapeofpotentafiscaandtaxefomseadybytheendofSeptembe,whentheyeavefoecess,wthpubcatonkeyaten

Octobe.Keytemsncudetaxefomasweasenegypocy.ThsstategydffesfomTump’sasttem.

Policyreform

Taxreform.Tumphascamedhewantstotakethecopoatetaxatedownto15%fom21%.OtheGOPmembeshaveaguedfodoppngthetaxateby1%-2%.

IRA.RegadngtheInflatonReductonAct,anenteepeasunkey,buthecoudookfondvduapogamstocutocapspendng.KeyaeasoftheIRAthatseemmostnfocusemaneectcvehcesandbattees.Howeve,theesesspubcyavaabe

detaegadngspecficIRAcedtsthatcoudbetageted.

Chinatariffs.M.Pastckbeevest’skeythatfeected,TumpwoudmposetaffsonChnawthnhsfist100daysnoffice.Addtonay,hesmostkeytousea

boad-basedtaff,smatohsasttem,athethanmoetagetedtaffs,whchwoudbehadetoaccompsh.

TakeawaysfromNuclearEnergyInstitute

WemetwthJohnKotek,SVPofPocyDeveopmentandPubcAffas;andBentonAnett,SenoDectoofMakets&Pocy.

_

USretirements,de-mothballing,debottleneckingandlicenseextensions

Licenseextensions.NEIndcatedtexpectsfutheextensonsofexstngUSnucea

pantcensetems—84censeenewashavebeenappovedto60yeasfom40

yeas(wth6undeevew),and6censeenewashavebeengantedto80yeas(wth11undeevewand12futueappcatonsexpected).NEIsadthendustys

conductngtechncawokegadngpotentaextensonsto100yeas.Thsextendsthepateauofbasecapactyntofutuedecades.

USnuclearretirementsandunretirements.In2018-22,wesaw5-6GWofnuceapantcapactyetedntheUS,ageynNewYok,Massachusetts,Mchgan,NewJeseyandIowa.OftheseandeaeetementstheNEIbeevesthees

consdeatontobngbackonnecapactynMchgan,IowaandPennsyvana.Ou

basecaseoutookcasfoanothe5-6GWofetementsbetween2029-32,ageynCafona,Mnnesota,InosandNewYok—someofwhchcoudbepushedoutwth censeextensons.

“Up-rates.”NEIseespotentafodebotteneckngatexstngnuceafactesthathave

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GoldmanSachsAmercasEnergy

potentafomodestnceasesncapacty—owsngedgtpecentofcapacty.

CompanesaeawatnggeatecatyontheappcatonofIRA-dventaxcedtstomovefowad.

Large-scalenuclearexpansionsintheUS.PojectdeaysandbudgetoveunsfomSouthenCompany’sVogtepoject(twountsof1GWeach)ntaymtedndusty

nteestnpusungage-scaenewbudsobownfiedexpansonsntheUS.Howeve,atoumeetngNEIndcatedtheesnowgeateconsdeatonfoage-scae

expanson(1GWunts)tomeetsngdemand(oad)gowth.Tofinanceths,theNEI

hashghghtedthatuttesaeookngtocontactwththdpatesfotheconstuctonandthenasthepantbecomesopeatona,takethecompetedpojectonbaance

sheet.

SMRandMicroreactors:Technology,timingandcost

Timing.NEIseessomemcoeactos(<50MW)ntaycomngonnenthe2Hofthedecadewthsmamoduaeactos(SMR,<300MW)demonstatonpantscomng

onnentheeay2030s.

Costandfinancialstructure.NEIhghghtedthattseesactventeestfomtechnoogycompanesnsuppotngSMRs(powepuchaseageementsat

above-maketpces),andsomenteestfomoandgascompanesnmcoeactos.NEIndcatedtseesntacostofSMRsat$8k-$10KpekWbutseespotentafothstodecneto$3.5KpekWfofutuepantsdependngonefficences,suppychanandnflaton.

Permitting

Whepemtshavehstocaytakenongethanexpectedfoappovas,theeaeattemptstosteamnepemtpocesses,andcompaneshavevaousstategeson

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pusungacombnedconstuctonandopeatngcenseodongthesesepaatey.NEIexpessedoptmsmfo6-yeapemtpocess.NEIexpectsthatsuppotfonuceas keytoemanegadessofUSeectonesut.NEIssuppotveofbehnd-the-meteco-ocatoncontactswheeeguatoyfamewoksaow(.e.capactymakets).

Uraniumsupplysourcing

NEIseesuanumenchment,notuanumsuppy,asthepotentageopotcask.NEIexpectsgeateabtyfotheUStosouceow-encheduanumfomdomestc/aedsoucespost-2028,thoughcapactyexpansonswbeneeded.

TakeawaysfromOrrick,Herrington&SutcliffeLLP

WemetwthHayCak,PatneandeadeofOck,Hengton&Sutcffe’sIntenatonaTadeandInvestmentteam.

Existingfrictionbetweenrenewablebuild-outandsupportofdomesticindustry

Clarkcharacterizedthecurrentenvironmentforrenewablesasonewithbotha

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GoldmanSachsAmercasEnergy

focusontheimportanceofcleanenergyadoptionintheUSandincentivizing

domesticindustrygrowthingeneral.Gventhatamajotyofthesoasuppychan,patcuaysoaces,occusnChna/SoutheastAsa,CakemphaszedthattheUS

cannotfeasbyeyondomestcpoductonoftheseequpmentsystemsatpesent.

Secton201safeguadtaffsweedesgnedtopotectndustesfacngsgnficantnjuyandnneedofextenasuppotfogowth,andtheefoepovdessometade

compettoneef.FocushasgownaoundAD/CVDeguatonsfosoapanesfom

Chna/SoutheastAsa,howeve,CakaguedthatthebggestssueswhethetcovessoacesbecausetheUSdoesnothaveasgnficantsoacepoductonndusty.

Thus,theewoudnotbenjuytodomestccepoducton.Ovea,CakemphaszedthattheWhteHouse(ncusveoftheOfficeoftheTeasuy)hasboaddscetonto

admnsteandadjustSecton201safeguadng.

OutlookforfurthersupportoftheUSrenewablesindustry

ClarkexpectsthefocusonprotectionisminCongresswillcontinuetoincreaseassecutyofUSndustygansbpatsansuppotasdemonstatedbythedeceasngszeandnumbeofpatcpantsntheCongessonaPo-TadeCaucus.Asaesut,Cak

seessgnficantpotentafoaddtonataffsnpusutofpotectngvaousUS

ndustes.Cakemphaszedthat,nhsopnon,thescopeandspecficatonsofSecton201coudmeanngfuyexpandfoowngaRepubcanwnntheupcomngeecton.Aspanepoductonhasgownsgnficanty,Cakbeevesthatthenatonatyofthe

owneshpofthesecompaneswbecomenceasngympotantndetemnngtaffsonpoduces.InaRepubcaneectonwn,CakbeevesthattheecoudbeaddtonaappcatonsofSecton301,whchcovesweove50%ofpoductsfomChna,but

doesnotendtseftoagobageneazaton.Howeve,theadmnstatonwoudhavetodemonstatethattheChnesegovenmentsexecutngunfatademeasues.OnthesoaAD/CVDpetton,CakvewstaskeythattheCommeceDepatmentwfindevdenceofdumpng.Howeve,theITCdetemnesftheesnjuytothe

domestcndusty,andheemphaszedessconvctonntheITCmakngsuchafindng.

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IfaRepubcannomneeweetobeeectedPesdent,Caknotedthatthees

sgnficantpotentafomtatonstobeputnpaceonIRAfundng—ethethoughexecutveodeocongessonaegsaton.

Outlookforpowermorebroadly

OnnuclearenergyandthempcatonsoftheRussanuanumbanpassedthough

Congess,Cakhghghtedthatbecausetheessgnficantpotcapessueto

dstancetheUSfomRussanfuesouces,uttesandnuceapowepantswbe

dsncentvzedfomappyngfothewavesthatastunt2028.Howeve,Caknotedhedoesnotbeevetheewbeastuatonnwhchnowaveswbeganted,andheemphaszedthattheewneedtobesomeaccommodatonbefoeafubanofthefuesoucegventheUScannotcuentyensuesecuesuppyfo100%oftspesentdayuanumdemand.

OnLNG,becauseseveaothecountesaedependentontheUSfuesouce,Cakbeevestheewoudnotbeanncentvefothesecountestoappyatafftothe

cheapeUSgas.

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OnUStariffsmoregenerally,Cakdoesnotexpectannceasedwngnesstomposeestctonswthaednatonsntheneafutue,andthepotentafotaffexpansonswoudbetagetedageyatChna.

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DisclosureAppendix

RegAC

WeBraneeCFABranSngerCFACaryDavenportTyerBssetCFAandGretaDrefkeherebycertfythataofthevewsexpressednthsreport

accurateyreflectourpersonavewsaboutthesubjectcompanyorcompanesandtsorthersecurtesWeasocertfythatnopartofourcompensatonwassorwbedrectyorndrectyreatedtothespecficrecommendatonsorvewsexpressednthsreport

UnessotherwsestatedthendvduasstedonthecoverpageofthsreportareanaystsnGodmanSachs’GobanvestmentResearchdvson

GSFactorProfile

TheGodmanSachsFactorProfieprovdesnvestmentcontextforastockbycomparngkeyattrbutestothemarket(eourcoverageunverse)andtssectorpeersThefourkeyattrbutesdepctedareGrowthFnancaReturnsMutpe(egvauaton)andntegrated(acomposteofGrowthFnancaReturnsandMutpe)GrowthFnancaReturnsandMutpearecacuatedbyusngnormazedranksforspecficmetrcsforeachstockThe

normazedranksforthemetrcsarethenaveragedandconvertedntopercentesforthereevantattrbuteTheprecsecacuatonofeachmetrcmayvarydependngonthefiscayearndustryandregonbutthestandardapproachsasfoows

Growthsbasedonastock’sforwardookngsaesgrowthEBTDAgrowthandEPSgrowth(forfinancastocksonyEPSandsaesgrowth)wthahgherpercentendcatngahghergrowthcompanyFinancialReturnssbasedonastock’sforwardookngROEROCEandCROC(forfinanca

stocksonyROE)wthahgherpercentendcatngacompanywthhgherfinancareturnsMultiplesbasedonastock’sforwardookngP/EP/Bprce/dvdend(P/D)EV/EBTDAEV/FCFandEV/DebtAdjustedCashFow(DACF)(forfinancastocksonyP/EP/BandP/D)wthahgherpercentendcatngastocktradngatahghermutpeTheIntegratedpercentescacuatedastheaverageoftheGrowthpercenteFnancaReturns

percenteand(100%Mutpepercente)

FnancaReturnsandMutpeusetheGodmanSachsanaystforecastsatthefiscayearendateastthreequartersnthefutureGrowthusesnputsforthefiscayearateastsevenquartersnthefuturecomparedwththeyearateastthreequartersnthefuture(onapersharebassforametrcs)

ForamoredetaeddescrptonofhowwecacuatetheGSFactorProfiepeasecontactyourGSrepresentatve

M&ARank

AcrossourgobacoverageweexamnestocksusnganM&Aframeworkconsderngbothquatatvefactorsandquanttatvefactors(whchmayvaryacrosssectorsandregons)toncorporatethepotentathatcertancompanescoudbeacquredWethenassgnaM&Arankasameansofscorngcompanesunderourratedcoveragefrom1to3wth1representnghgh(30%50%)probabtyofthecompanybecomnganacqustontarget2

representngmedum(15%30%)probabtyand3representngow(0%15%)probabtyForcompanesranked1or2nnewthourstandarddepartmentagudeneswencorporateanM&AcomponentntoourtargetprceM&Arankof3sconsderedmmateraandthereforedoesnotfactorntoourprcetargetandmayormaynotbedscussednresearch

Quantum

QuantumsGodmanSachs’propretarydatabaseprovdngaccesstodetaedfinancastatementhstoresforecastsandratostcanbeusedforndepthanayssofasngecompanyortomakecomparsonsbetweencompanesndfferentsectorsandmarkets

Disclosures

Ratingandpricinginformation

AmercanEectrcPower(Buy$9349)CanadanSoarnc(Neutra$1670)FrstSoarnc(Buy$21358)FrstEnergyCorp(Buy$3946)JnkoSoarHodng(Se$2136)Sempra(Buy$7777)andXceEnergync(Buy$5578)

Distributionofratings/investmentbankingrelationships

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GodmanSachsnvestmentResearchgobaEqutycoverageunverse

RatingDistributionInvestmentBankingRelationships

ByHodSeByHodSe

Goba48%35%7%64%57%4%

AsofJuy12024GodmanSachsGobanvestmentResearchhadnvestmentratngson2925equtysecurtesGodmanSachsassgnsstocksasBuysandSesonvarousregonanvestmentsts;stocksnotsoassgnedaredeemedNeutraSuchassgnmentsequatetoBuyHodandSefor

thepurposesoftheabovedscosurerequredbytheFNRARuesSee‘RatngsCoverageunverseandreateddefintons’beowThenvestmentBankngReatonshpschartreflectsthepercentageofsubjectcompaneswthneachratngcategoryforwhomGodmanSachshasprovded

nvestmentbankngservceswthntheprevoustwevemonths

Regulatorydisclosures

DisclosuresrequiredbyUnitedStateslawsandregulations

Seecompanyspecficreguatorydscosuresaboveforanyofthefoowngdscosuresrequredastocompanesreferredtonthsreportmanagerorcomanagernapendngtransacton;1%orotherownershp;compensatonforcertanservces;typesofcentreatonshps;managed/comanagedpubcofferngsnprorperods;drectorshps;forequtysecurtesmarketmakngand/orspecastroeGodmanSachstradesormaytradeasa

prncpandebtsecurtes(ornreateddervatves)ofssuersdscussednthsreport

ThefoowngareaddtonarequreddscosuresOwnershipandmaterialconflictsofinterest:GodmanSachspocyprohbtstsanaystsprofessonasreportngtoanaystsandmembersoftherhousehodsfromownngsecurtesofanycompanyntheanayst’sareaofcoverage

Analystcompensation:AnaystsarepadnpartbasedontheprofitabtyofGodmanSachswhchncudesnvestmentbankngrevenuesAnalystasofficerordirector:GodmanSachspocygenerayprohbtstsanaystspersonsreportngtoanaystsormembersoftherhousehodsfrom

servngasanofficerdrectororadvsorofanycompanyntheanayst’sareaofcoverageNon-U.S.Analysts:NonUSanaystsmaynotbeassocatedpersonsofGodmanSachs&CoCandthereforemaynotbesubjecttoFNRARue2241orFNRARue2242restrctonson

communcatonswthsubjectcompanypubcappearancesandtradngsecurteshedbytheanaysts

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