Aligning the Stars:
Asset owners and energy investment toward Net Zero
Hitting Government Net Zero target presents £350bn investment opportunity over next 30 years.
Our new report jointly presented by the LCP Investment and Energy Analytics teams, reveals something really big is coming - an infrastructure build-out that few people have yet grasped the scale of. At the same time, we think that the oft heard “unlocking private capital” cliché frames the conversation around private investment the wrong way. We believe there is huge untapped investment potential if the energy industry thinks differently about the assets.
Analysis in the report highlights two different scenarios and the scale of investment that could play out in the coming years:
- A “business-as-usual” scenario would see UK asset owners extending their infrastructure investments over the next decade to £70bn, leaving a funding gap of c£100bn by 2030.
- A more optimistic scenario sees UK asset owners increasing their exposure alongside global asset owners and the government. With careful design and targeting of investments, up to £125bn could be invested over the next decade and the required £350bn by 2050.
Different investors look for quite different properties in infrastructure assets, from inflation-linked bonds, to secure income to higher returning equity. Matching up suitable assets to investors’ appetite gives the best chance at generating the investment that is needed.
There is a broad diversification in both the technologies and assets that will be required, from existing technologies such as wind and solar that will need to be deployed more widely, to emerging technologies such as hydrogen and carbon capture that are still in their infancy.
What else is inside the report:
- In assessing the future appetite and opportunities for investors and pension funds, the report identifies a number of key considerations including political will and emerging technologies.
- The report highlights that there is a huge amount of private capital seeking good long-term investments which are likely to be open to investing in UK energy infrastructure and explores how the industry can attract visitors.
- The report calls for government action around policy and financial mechanisms to encourage investment in energy infrastructure.
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