If you haven't already, you should take a few moments to read Elon Musk's Master Plan, Part Deux , the Tesla founder's grand vision for the next decade. It's a great read, full of humour, some bluster and a few truly ground breaking ideas on the future of infrastructure.
Perhaps unsurprisingly given Tesla's recent acquisition of SolarCity , Musk opens with his pitch for the future of solar power. The idea is to combine solar and storage to “create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility and then scale that throughout the world”.
There are two key concepts in that paragraph: one is the creation of an Apple-like solar and storage product that “just works” (note the Jobsian turn of phrase there); the other is the empowerment of individuals (and why not businesses also?) to become even less dependent on the grid. Both are important because if – and that's a significant if – Musk gets his way, then demand for storage should accelerate appreciably.
That's significant for infrastructure investors because storage is very much an infrastructure play. It might not be a mainstream infrastructure play just yet ( though pioneers like SUSI Partners are already having a crack at it ), but revolutionary products that crank up demand and drive down prices can quickly change that.
Fully integrated solar plus storage solutions are also an asset-optimisation play. Just look at Australian manager Palisade Investment Partners , which is using solar to power 85 percent and 35 percent of its respective Alice Springs and Darwin airports. It's not hard to imagine those figures going up to 100 percent through the kind of product Musk is promising. Now take a moment to contemplate the savings you could net from taking large-scale assets off the grid.
Part deux of Musk's masterplan is all about transportation and, while some of the stuff he's proposing seems a bit further down the line, it would be foolhardy to dismiss it as belonging in a Jetsons cartoon – especially for holders of 99-year toll road concessions.
Unsurprisingly, automation plays a big part in Musk's vision of an electric-powered transportation future: “With the advent of autonomy […] traffic congestion would improve due to increased passenger areal density by eliminating the centre aisle [in buses] and putting seats where there are currently entryways, and matching acceleration and braking to other vehicles, thus avoiding the inertial impedance to smooth traffic flow of traditional heavy buses.”
Less congestion sounds great, but if it leads to a significant decrease in the number of vehicles on roads, how does that affect the business case for your average toll road concession? Would it render high-occupancy vehicle lanes obsolete, for example, with a super-efficient, automated traffic system doing away with peak congestion? Or would automation open up further tiered pricing opportunities, with drivers being able to pay to use lanes that would determine exactly how long it would take to get them to where they want to go?
Finally, there's Musk's go at disrupting the disruptors, like Uber: “You will be able to add your car to the Tesla shared fleet by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation.”
If you're a car park operator you might not like the sound of that sentence, because if you can turn your car into an income generator while you're not using it – which Musk estimates to be 90 percent of the day for average car owners – then who needs car parks?
Even if Musk doesn't turn out to be the herald of all the change he's outlining that doesn't mean others won't make some or all of it come true. Whatever happens in this brave new world, one thing is certain: infrastructure investors can't say they didn't see it coming.