Shelby Tucker

TD Cowen Research Spotlight

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In this spotlight, we hear from Shelby Tucker, Senior Analyst and Managing Director, U.S. Utilities, TD Cowen.

What excites you most about the Power and Utilities sector?

We have entered a new world for Power and Utilities. The sector is one of the key enablers of the AI revolution. The demand for electricity is growing at rates that we have not seen since the 60s, when I was born. Instead of the suburbanization of society (mass use of refrigerators, televisions, etc.) that drove growth back then, it is now data center and hyperscalers that lead the charge. Furthermore, we are only at the beginning of this extraordinary demand for power.

But with this demand comes greater challenges. There is a mismatch between when the data centers need the power and when utilities can provide the power. There is also a challenge with avoiding passing of building these assets to existing customers, thus creating affordability concerns. This forces me to spend more time on public policy and maintain dialogs with federal and state regulators, as well as political figures.

What sets TD Cowen apart from its competitors?

Teamwork is part of TD Cowen's DNA. Data centers and hyperscalers are driving enhanced demand growth for electricity. This has naturally led me to communicate frequently with our Communication Infrastructure team who cover many of the data center REITs. Being able to cross-check their data (as users) with ours (as providers) provide a valuable reality check. The importance of regulation for the utility sector has naturally led to a daily dialog with our Washington Research Group, who are steeped in the minutia of public policy. The industry's need to build out new power plants, particularly 24/7 assets like nuclear and natural gas, leads to collaboration with our Electric Equipment, Clean Energy, Engineering & Construction, and Midstream teams, as we survey the magnitude of the power expansion while identifying where the bottlenecks may reside. None of these topics could be properly tackled without the active engagement of all these teams working together.

What is a common misconception people have about the industries you cover?

The most common misconception of the utility industry is that it is a slow, boring sector, characterized by high dividends, making the stocks akin to bonds. That might have been true over 30 years when I started covering the sector, but the dynamics of the industry are anything but boring these days. Gone are the days when the term GW mentioned at a cocktail reception is met with glazed-over eyes and quick retreat from the conversation. The new attention carries some drawbacks, as I am more likely to receive complaints about the affordability of electric bills. But, overall, the level of engagement about an industry critical to societal progress – for the most part invisible due to its monopolistic nature – has been gratifying.

How do you see your role evolving as the market changes?

The knowledge-based economy is on the brink of a radical transformation. Some of the tasks that were tedious will be substantially simplified, if not outright eliminated. This will free up time to focus on more profound analysis to help clients gain even greater insight. In my opinion, this will also highlight the need to connect with client on a human basis. Empathy and relatability will become more important than they have been historically. Future success will be a combination of technical know-how and interpersonal interaction. Ultimately, my role will be defined by how well I can establish trust with clients.

If you could cover any company, real or fictional, which would it be?

Many years ago, I was talking to a former associate who had become a gaming analyst. He turned out to be one of the best analysts in his sector. His success partially stemmed from his intellect and his hard work, but his edge was that he was avid consumer of the products of the companies that he covered. He would play video games during large stretches of time, getting a "feel" for the games and the likelihood of their successes.

While I love covering utilities, it is not pleasant to stick your fingers in electric outlets. One of my passions is travelling to remote areas, not resorts. The fictional company would require successful analysts to become permanent "safari" tourists, traveling the world to gain insights into the mores and culture of different places. Absent that choice, the compromise would be to follow hotel chain stocks, but the bulk of the research would focus on occupancy rates, which does not require travelling to multiple locations, and would lead to a disappointing experience.