Historically, investment in infrastructure entailed putting billions into huge energy supply plants, but technological change means that power supply is more decentralised and the individual investment required can be of a more manageable size.
There have been attempts to quantify the total investment needed as the switch to renewable energy gets underway in response to the need for decarbonisation.
There have been suggestions that about €200 trillion of investment could be needed for the transformation of the energy sector, according to Thomas Veith, leader, real estate/real assets, PwC Germany.
“It’s a wide range so there are many new opportunities in the market,” he added. Talking to Real Asset Insight’s Richard Betts, he said that these range from more venture capital-type opportunities such as wave, tidal or hydrogen projects that offer 20%-plus returns. However, more mature technologies such as electric vehicle charging and batteries are still fast growing opportunities where 10% to 20% returns are the target while larger scale investments in mature markets like wind and solar, LNG (liquefied nature gas) infrastructure or energy from waste “is something where the typical infrastructure fund is looking at target returns of 5% to 10%,” Veith noted.
“But you need special expertise to understand the different techniques,” he warned.
Click on the video above to watch the full interview or listen to the podcast below.