Infrastructure lies at the intersection of investing and government spending. This includes electrification infrastructure.
Due to AI, electric vehicles and other disruptive technologies, energy demands are soaring. However, infrastructure investment isn’t following suit at an adequate enough pace. That sounds ominous, but that scenario points to opportunity with assets such as the ALPS Electrification Infrastructure ETF (ELFY).
ELFY is gaining traction with advisors and savvy investors. The ETF’s solid start makes sense when considering the domestic energy system isn’t where it needs to be. Unless government spending on this front rapidly increases, the expected shortfall over the next decade is $578 billion. Fortunately for investors considering, ELFY that fact isn’t lost on some policymakers and the need to bolster and securitize energy grids is gaining more attention among politicians.
History Provides Important Lessons
Generating the funds needed to drive more electrification investment and potentially lift ELFY holdings is another matter. Zane Kinsky, a Clean Energy Leadership Institute 2025 Fellow, proposes looking back at history. Specifically to the Federal Highway Program that was born in the 1950s, essentially creating a trust fund modernizing interstate transportation. He notes the U.S. energy system today is comparable to what transportation was in the 19th century.
“Our electrical system is currently facing the same inflection point, and will require a similar reckoning. The first U.S. power grids sprang up naturally to allow for economies of scale,” he wrote in an op-ed for Utility Dive. “From there, larger and larger regional grids grew and interconnected until they eventually formed the three U.S. regions we know and love today: the Western Interconnection, the Eastern Interconnection and the Texas Interconnection.”
One takeaway is that when elevated transportation systems were needed to boost the economy, the U.S. met that moment and it’s possible a similar scenario could play out with electrification infrastructure, potentially bolstering the case for funds such as ELFY in the process.
Investors considering ELFY should consider at least two points. First, patience will be required because improving electrification infrastructure in the U.S. will be a multi-year pursuit. Second, in better news, it’s going to be expensive, but it’s necessary.
“A federal trust fund is one way to do so, and would also provide the long-term certainty missing from other funding streams. That’s why it is high time to consider a trust fund, to once again, facilitate the next large-scale buildout of U.S. infrastructure,” concluded Kinsky.
For more news, information, and analysis, visit the ETF Building Blocks Content Hub.
