Energy Infrastructure 2026 Outlook

The past year expanded the imagination around energy infrastructure possibilities that seemed out of grasp in recent memory. Driven by market volatility, trade disruptions and rising energy demand, ideas of significance surfaced, or in some cases resurfaced, that many would have dismissed in previous environments. While sentiment toward large-scale energy infrastructure projects may be shifting on a political level, referencing the MOU between Alberta and the federal government (here), the concerns from the private sector to pursue new projects must be considered given the scale of capital, commercial underpinnings, environmental opposition, cost overrun risk and political cycles.

We expect 2026 to bring further discussions around Canada's market position in energy but the focus to remain on smaller, short-cycle, brownfield investments. Within the midstream sector, we expect strengthening fundamentals with TMX, LPG and LNG filling white space. The outlook for power demand continues to be driven by significant AI capital deployment, augmented by onshoring of manufacturing, population growth and electrification.

We expect the winners in 2026 to be names with irreplicable asset portfolios with expansion/optimization opportunities that can extract high-returns while maintaining cash flow quality. Our top picks for the year are ALA, CPX, ENB and PPL, given their respective scale, ability to deploy capital and exposure to strengthening fundamentals.

Highlights: 
Singles and Doubles
Market and regulatory uncertainty has pushed large-scale investment in the space toward abstinence, with many opting toward smaller projects to spread risk and improve the efficiency of existing assets. With pipelines in particular, government and First Nations involvement is proving necessary to move projects into construction. The private sector has found ample opportunities to grow cash flow at ~5-7% through brownfield investments, avoiding the inherent risk of major projects. While it doesn't mean that the private sector won't invest in large opportunities, we expect it would require appropriate risk sharing to attract investment. We would also flag the value of "steel in the ground", which implies the existing infrastructure provides opportunities while avoiding supply chain and inflationary pressures.  

Volumes on the Up and Up
The WCSB is now long crude pipeline capacity with the addition of TMX and the outlook for LNG exports is providing optimism for improved economics. The midstream playbook typically doesn't take a stake in commodity pricing but many cash flow streams are underpinned by volumes and asset throughput. The focus of upstream spending and consolidation has surrounded the Montney and Duvernay, a trend supported by liquids-rich production and ability to meet condensate and LNG demand. We view names like ALA, KEY and PPL to be structurally well positioned to benefit from these basin fundamentals. 

Power Play
The appetite for AI infrastructure has been a global phenomenon with close to home impacts. Alberta has been touted as an attractive market and we have seen the first phase of the AESO large load allocation find success through two agreements for data centre development. The second phase details are likely to come in 2026, with what we expect will include a "bring your own power" narrative.

Rating and Price Target Changes
We are increasing our price target for ALA to $49.00 from $48.00 and lowering our target for NPI to $22.00 from $23.00. We are revising the RGSI rating to Sector Perform from Outperform. We are coming off restriction on TA with this update, resuming coverage with a $27.00 price target and Outperform rating. 

Request the Full Report