Energy Transition & Renewables
An opportunity of significance
With over USD 4.5 trillion in annual investment needs to 2030, the energy transition is the largest investable theme today.
Regulatory frameworks provide a supportive backdrop to the energy transition. However, the momentum is largely driven by market dynamics, such as the need for enhanced energy security and efficiency, and innovations that are redefining the energy landscape. For example, due to increasing scale and technological advancements, renewable energy sources like wind and solar competitive with traditional energy sources.
Similarly, the circular economy sector, albeit still in a maturing phase, in response to regulatory and market pressures, particularly the need to reduce the reliance on finite resources and the opportunity to produce new sources of economic value. Many value chains are now being assessed through a circular lens – often with supportive regulatory regimes, evolving technologies, and supply chain demands. This is materially boosting demand for infrastructure investment.
We believe the investment gap is larger than ever before.
A selective approach
The scale of infrastructure that needs to be developed is vast. Having invested in energy transition infrastructure for nearly two decades, we draw on our experience and sector knowledge to be highly selective in terms of the investments we pursue.
Opportunities for growth
The sectors presenting opportunities are numerous. For example, as variable renewable generation capacity grows, so does the challenge of stabilising the grid. This has created additional opportunities in sectors like battery storage and flexible generation capacity, in which InfraRed was an early investor.
Similarly, as the focus shifts beyond generation to transport, heat, and longer-term decarbonisation, we are pursuing opportunities in a variety of other areas where we see value potential, such as the electrification of transport, heating and cooling. And with an established presence in key geographies like the US and Europe, we are well-positioned to capitalise on the current and future growth potential.
Navigating complexity
Although this sector is rich with opportunity, there are risks that need to be mitigated – as the opportunity set broadens, supply chains are changing and the macroeconomic environment remains uncertain, a thorough approach to identifying real assets with no technological risk and a prudent approach to financial leverage are essential, in our view to protect the downside. For more than 25 years, we have proven our ability to navigate complex market environments and take full advantage of emerging investment themes, investing with conviction, to create and preserve value.
Case study
Other areas
* As at 30th June 2024
** Our renewable energy portfolio as at October 2022
