Energy transition report
It’s all in the service agreement
On Asia, Macquarie Capital’s John Walker calls renewables the continent’s “biggest [investment] opportunity of the century”. He’s spot on and, likewise, it’s no exaggeration to call the ongoing energy transition the biggest global investment opportunity of the century.
Historians will look back on this as a pivotal period, when the world weaned itself off fossil fuels and started on a sustainable energy path – though whether that will be enough to counteract the worst effects of climate change remains to be seen…
What is entirely certain, is that the energy transition is, at heart, very much an infrastructure story – one anchored by renewable energy generation. Familiarity with the latter, however, should not breed lassitude. As you can read in our roundtable, renewables are undergoing important changes, as they move from feed-in tariffs to power-purchase agreements and merchant exposure.
They are also cheaper than ever, yet not quite ready to take over baseload generation duties – although InstarAGF makes a strong case for the baseload abilities of bioenergy. But as KGAL Investment Management underlines, renewables are investments that need to be managed. The idea that you can just buy well and then expect your renewable assets to generate a steady revenue stream is pure fiction.
“It’s no exaggeration to call the ongoing energy transition the biggest global investment opportunity of the century”
That’s important to keep in mind because it applies to pretty much every other investible asset that makes up the energy transition. And while renewables are, in a way, very much a known quantity, storage and energy efficiency investments are very much not.
Storage, in fact, is the subject of hot debate as to its investibility, with frontrunners such as SUSI Partners and Foresight Group already busy clinching deals, while the majority of industry participants sit on the sidelines waiting for some of the sector’s kinks to be ironed out.
But investibility is not just about sectors, it’s also about different markets, as highlighted by Mirova, Partners Group, IFM Investors and Actis, which deliver expert views on Europe, Asia, Australia and the world’s developing markets. We also did our own digging on how Australia’s National Energy Guarantee threatens to affect the risk profile of the country’s renewables, which you can read here.
Whether you are already heavily invested across the whole energy transition spectrum, or are a renewables investor wanting to dip your toes into other sectors, or maybe preparing to take the plunge for the first time, you will find much to inform you in our energy transition coverage.