Following the Democratic sweep of Congress in the US midterm elections overnight, a lot of people are focused on the reaction to the US stock market. However, there are several UK shares that will be impacted by the result. In fact, there’s one I’ve already scanned that could do well from what’s going on across the pond.

A political boost

I’m talking about SSE (LSE:SSE). The FTSE 100 energy giant has already been enjoying a good year, with the stock up 36% in this period. Yet the election result could provide an unexpected catalyst for SSE. With Democrats taking control of both chambers of Congress, there’s a strong likelihood of greater political support for renewable energy and fewer threats to existing clean-energy incentives.

This has already triggered a rally in renewable energy stocks overnight. SSE is up 2% today (4 November).

SSE does have operations in the US, although it’s true that UK operations are much larger. Despite this, improving sentiment towards renewable energy in general could help support its valuation. Investors might believe that the shift in political stance could be mirrored in Europe in the coming year. Therefore, buying shares in companies with significant exposure to the energy transition could be seen as a smart play.

Another appeal for SSE is that even though it can benefit from this theme, it’s not the only thing going for the business. In fact, there are plenty of other reasons to also consider owning the UK stock.

Why the shares have surged

A big reason behind the 36% rally has been growing confidence in SSE’s investment strategy. The company recently outlined a £33bn investment programme running to 2030, with around 80% directed towards electricity networks. These regulated assets provide relatively predictable earnings, making the business attractive to long-term investors.

Another positive has been the accelerating demand for electricity. The expansion of data centres, electrification of transport and wider transition away from fossil fuels all require substantial investment in grid infrastructure.

Despite the funding needed in this area, finances are still looking strong. For example, the company delivered £2.24bn in adjusted operating profit for its latest financial year, alongside record investment of £3.6bn.

Not all rosy

I think the outlook is encouraging, although there are several risks. SSE’s enormous investment programme requires substantial funding. Even though that’s manageable right now, if the company experiences higher borrowing costs going forward could reduce returns and put pressure on the share price.

Also, offshore wind projects remain exposed to construction delays and other factors. These are multi-year projects; it’s not like they can be up and running in just a few months.

Nevertheless, I think SSE could do well from global momentum around renewable energy stocks, driven by the results last night. When you add in other factors, I’m seriously thinking about buying it, and I believe other investors can consider doing the same.

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Jon Smith has no positions in the shares mentioned.