Electron Capital Partners rebounded sharply from its 9.8 percent loss in 2023, posting a 21.5 percent gain for 2024, according to the firm’s fourth-quarter letter, obtained by Institutional Investor. As a result, the energy-focused hedge fund had its best year since 2020, when it surged 37.75 percent.
Last year’s strong performance was mostly unrelated to the surge in energy demand from the artificial intelligence boom. Rather, Electron has long emphasized three broad sectors: infrastructure, transitioning and clean utilities, and alternatives and clean energy. In early 2023, II reported that Electron considered energy transition its No. 1 focus going forward.
“After a challenging year (2023), the majority of the energy transition industry (infrastructure and utilities) executed a strong recovery in 2024, while clean energy continued to struggle,” Electron told clients in its letter.
Of course, the fund is now facing an energy environment being reshaped by the Trump administration’s initiatives to encourage fossil fuel use and harsh limits on clean alternatives.
The firm noted that in anticipation of 2024 volatility in the clean energy sector, the firm reduced its gross and net exposure to the subsector at the beginning of the year and maintained less than 10 percent exposure throughout 2024. At the same time, “to ensure a more balanced portfolio,” the firm reallocated primarily to infrastructure (traditional and electrical grid), which accounted for half of the total portfolio, and renewable developers and utilities, which made up 40 percent.
Sure enough, in 2024 infrastructure was responsible for 20.9 percentage points of performance and transition and classic utilities kicked in 3.8 percent, according to a January investor update obtained by II. Currency and refinancing and rebates on shorts added an additional 1.8 percent. This was offset by a 5 percent detraction by alternatives and clean energy.
Electron also said that it repositioned the portfolio early in the year to “mitigate the impact of interest rate volatility and credit market concerns” and implemented what it called “a more dynamic approach to managing regulatory and political risks,” enabling the fund to “better navigate delays in clean energy policy implementation and capitalize on clarity as it emerged.”
Electron Capital was founded by Jos Shaver. The investing strategy was launched in 2005 as a stand-alone fund; it moved in-house to Steve Cohen’s former hedge fund, SAC Capital, in 2008. In 2012, Shaver and his partners spun out of SAC to relaunch Electron as a stand-alone hedge fund.
In 2023, Shaver resigned as chief investment officer and managing partner but still owns the firm. Ran Zhou now serves in Shaver’s former roles.
At year-end, Electron managed $2.9 billion. It stressed in the letter that heading into 2025, it is focused on certain key areas where it believes it is uniquely positioned to deliver value. One example is taking advantage of surging power demand in the U.S. because of AI.
“The expansion of hyperscaler data centers by companies like Amazon, Google, and Microsoft is driving unprecedented electricity demand,” Electron explained in the letter, adding that 2024 can be called “the year of discovery. As we transition into 2025, the focus will shift to solidifying these advancements through tangible announcements, clearer regulatory frameworks, and scaling operations to support future growth.”
Electron said these data centers, which consume 10 to 50 times more energy per square foot than traditional office buildings, are expected to add capacity at a 19 to 22 percent annualized rate. To sustain this growth, substantial investment in grid infrastructure is required.
The firm also asserted that electrification is revolutionizing the way energy is consumed across sectors, creating new opportunities. “From homes to transportation and industrial applications, electricity is becoming the dominant energy source,” it noted. “Electron’s investments in utilities, renewable developers, and power grid modernization projects position the portfolio to benefit from these critical growth drivers.”
Electron also points to what it calls a manufacturing revival, driven by policy initiatives such as the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act. “This reindustrialization trend provides Electron with significant investment opportunities in infrastructure and supply chain projects critical to the domestic economy,” it said.
And it is still bullish on renewables and clear energy “despite challenges in 2024. The renewable energy sector remains a cornerstone of the global energy transition,” Electron wrote. “Solar and wind continue to lead as the most cost-efficient sources of new energy generation, driven by corporate and government commitments to decarbonization.”
