Flash Note: Defense Production Act

We have long spoken about how power is the most obvious intersection between our two largest themes of the decade. This is a brief update on the longstanding trend.

As a reminder, those themes are Fiscal Primacy and Artificial Intelligence. Fiscal Primacy is our core view that government priorities and spending are increasingly driving equity performance and crowding-in of capital. AI, of course, needs no explanation.

On April 20, the President signed the Presidential Determination 2026-10, a Defense Production Act (DPA) Section 303 determination for grid infrastructure, equipment, and supply-chain capacity.

“On January 20, 2025, I issued Executive Order 14156 (Declaring a National Energy Emergency), under the National Emergencies Act. That order found that America’s inadequate energy production, transportation, and infrastructure constitute an unusual and extraordinary threat to the Nation’s economy, national security, and foreign policy

The Nation’s capacity to design, produce, and deploy large-scale grid infrastructure, including transformers, high-voltage transmission components, advanced conductors, power electronics, substations, and grid-supporting manufacturing equipment, is dangerously limited.”

The text formally classifies transformers, transmission lines, conductors, substations, high-voltage circuit breakers, power control electronics, protective relay systems, capacitor banks, and electrical core steel as essential to national defense.

We have been long this supply chain in various forms since 2023. We expanded on the idea in The Utility of Bubbles: The Intersection of Fiscal & AI in June 2024. And the market has been pricing in this thesis since transformer lead times first crossed eighteen months.

The reality though, is that even after years of upward revisions, the grid backlog only continues to grow. In 1Q26, the quarterly net addition to GE Vernova’s (GEV US) electrification segment backlog was nearly as large as the annual additions…