CAPTURING THE INVESTMENT OPPORTUNITY
Energy is undergoing a major transformation
The amount of global energy capital investment required from 2020 to 2040 is estimated to be over US$42 trillion on the supply side, averaging US$1.9 trillion per year from 2031 to 2040. Meanwhile average annual investments (incorporating power supply and energy efficiency) are expected to rise by more than one-third compared to the last decade to almost US$2.7 trillion over the next 20 years.” (The International Energy Agency)
Demand
Global demand for energy sources is one of the key drivers for the growth of infrastructure capital spend over the last century. It is expected to continue to form part of the main contributors to global growth, largely driven by rising incomes in developing economies, where the population is heading towards 9 billion by 2040.
Sustainable Energy Growth
“With the improvement in cost-effective renewable sources of energy, led by solar and wind technologies, the world can target a 2/3rds contribution of Net Zero carbon energy by 2050. More specifically the power sector can expect over 50% of its supply to come from renewable sources, ending a dominance of fossil fuels”. (Bloomberg New Energy Finance)
The Need for Further Investment
“It is expected that over US$13.3tn will be invested in new power generation assets over the next 30 years of which 77% will go to renewable energy alone. This is roughly equivalent to over US$416 billion of new investment per annum to 2050. In order to support this growth, over US$11.4 trillion is expected to be required in grid and transmission systems over the same period.” (Bloomberg New Energy Finance)
Private Capital Investment is a Facilitator in Achieving Greater Renewable Penetration
“The electricity sector is experiencing its most dramatic transformation since its creation more than a century ago. Electricity is increasingly becoming the “fuel” of choice in economies that are relying more on lighter industrial sectors, services and digital technologies. Its current share in global final consumption is approaching 20%, yet this is set to rise further.” (The International Energy Agency)
Middle Market Developers can be a Powerful Catalyst for the Energy Transition
“Middle market companies are vital contributors to most developed countries’ GDP. As an example, in Germany, “Mittelstand” companies are responsible for more than 60% of jobs. In the United Kingdom, middle-market businesses are responsible for over 30% of all private-sector revenues and jobs. In the United States, there are roughly 200,000 companies with revenues from US$10 million to US$1 billion, most of which are closely held or family controlled. Such businesses produce roughly one-third of United States GDP.” (World Economic Forum)
Market Liberalisation
The liberalisation of energy markets