New risks, digital woes and other takeaways from our Women in Infra Forum

The IRA has excited the industry but even optimists were a bit wary about inflation, supply-chain issues and Europe's lacklustre grid.

Infrastructure Investor’s Women in Infrastructure Forum, held last week in London as part of the Women in Private Markets Summit 2022, gathered more than 700 industry participants over its two days.

But while there was some discussion about gender issues in the workplace, the focus was mostly on – drumroll! – investments in infrastructure. Specifically, on how the ongoing macroeconomic turmoil is affecting the market, and what to look out for in the future.

Conference chair Laurie Mahon of CIBC initiated the proceedings by taking a hard look at all the issues left to tackle apart from interest rates and supply chain woes, including sourcing, transport, and labour – in particular child labour, which Mahon brought up more than once in connection with mining.

The risks to the industry, according to Mahon, would be not knowing where, how and by whom components and raw materials in, say, batteries, had been sourced, as well as not understanding and accounting for the pollution inherent in shipping, air- and train-freight. The smart investor should pay attention now.

Support for the IRA

It’s taken a little while to get used to this particular abbreviation, and it may still not sit right with everybody, but The Inflation Reduction Act of 2022 is doing more than challenge established vocabulary – it has excited the industry. Assia Belkahia, investment director at Antin Infrastructure Partners, spoke for many when she pointed out the law has moved well beyond what anybody had expected in terms of support for renewables, and it has done so in a politically very challenging environment.

Belkahia also reminded the audience that more focus was needed to support nascent technologies and back earlier-state platforms that could grow into infrastructure investments. Chantale Pelletier, global head of infrastructure, Schroders Capital, agreed, adding a local, broader perspective was needed and that, generally, operational aspects of infrastructure were becoming ever more important as supply chains were disrupted.

Digital infra’s inflation woes

In the wider private markets sphere, real estate was where the pain of inflation seemed to be most keenly felt. In infrastructure, the worries were digital.

Digital demands energy, and energy is now quite costly, said Pascale Labrecque, vice-president, InfraRed Capital Partners. She added that consumers might not be willing to pay for digital services if these were to increase in price in line with inflation.

Phoebe Smith, senior director at Patrizia, agreed that it was a good question whether inflation could be passed through. But on the upside, there should be a need for more towers as, regardless of the market cycle, the demand for data should grow.

Europe’s lacklustre grid

Grid, and the lack thereof, were central themes when attention turned to how energy security could be aligned with the energy transition. In what may have been the understatement of the day, Federica Cristina, managing director at Macquarie Capital, declared that “the regulatory story in Europe may be difficult to understand outside of Europe”.

She also pointed the finger at construction capacity issues, which she said would slow down the grid build-out. It may come as a surprise to some that the build-out could possibly be any slower than it is at the moment.

Devina Parasuraman, director at Igneo Infrastructure Partners, said that in the medium to long term, the current crisis would accelerate the energy transition. She saw no slowdown in investments but tempered her optimism with a call to reduce the demand for electricity.

That is one call that will be answered in Europe this winter.

*AWARDS VOTING DELAYED* We are now due to open our annual awards for voting on Monday, 12 December – not today. We apologise for the delay but you have spoiled us with submissions, so it’s taking us a little bit longer to sift through them.