The Energy Transition Forum officially took place on the final day of Infrastructure Investor’s Global Summit, held in Berlin in March, but in truth that topic dominated the entire conference. Changes to the global energy mix, from energy transition in growth markets to achieving net zero through new nuclear plants, were the source of endless debate.
That is not so surprising, perhaps, when one considers the abundant investment opportunities that the energy transition offers, the urgent need to tackle the climate emergency and the energy security issues which were brought into focus by Russia’s invasion of Ukraine, which was a month old when the summit was held. Here are seven key takeaways from the conference, including one that may be particularly surprising: the difficulty in agreeing on exactly what we mean by energy transition.
1. There is less consensus than you think
The first challenge of the energy transition is agreeing on what it includes, what it does not and when it started.
“For the last 40-plus years the energy ecosystem has been in a constant state of change, going from a large utility-based, fossil-centric ecosystem moving to a natural gas-dominated ecosystem – or at least an effort to – and then in the last 10 years moving to renewables. The energy transition is not something that is new to those investors who have been in this market for a long time, it has been a constant state of change,” said Andrew Pike, partner and co-head of infrastructure and power at Ares Management Corporation.
“What makes the energy transition different today is how it is being defined and what we are assigning to it. From our perspective, it is all things climate. It is not necessarily how we produce or distribute electrons, but rather how we consume electrons.”
That would mean a definition that would encompass not only the power ecosystem but also sustainable agriculture and digital infrastructure. In this reading, the energy transition has been going on for a long time; what is new is how it is defined.
“We are firmly in the second stage of the energy transition,” said Chris Leslie, executive director and global head of sustainability at Macquarie Asset Management.
“Much as infrastructure has seen transitions from toll roads and utilities into renewables into digital, we are moving into the second phase of the energy transition now. The sort of strategies we are giving some focus to are those investment opportunities that are enabling decarbonisation of the world: battery storage; electric vehicles and charging; clear fuels, particularly green hydrogen; carbon capture and sequestration; waste to value; and potentially infra tech.”
Rhianydd Griffith, senior vice-president at Hermes Infrastructure, noted that even defining the energy transition “is almost a misnomer or red herring because it is impossible to strictly define all of the interdependent things” that need to happen to transition an entire economy across energy networks, users, heat and transport, and to decarbonise it all in a simple way.
She added: “The better question for investors and for managers is, if you are talking about executing a net-zero strategy or an energy transition strategy, then what role is your capital going to play in that transition?”
If energy transition or a net-zero strategy can mean whatever you want, then energy is the thread running through all of it. The most commonly accepted definition is the push to decarbonise any sector of the economy.
Decarbonisation is all part of the drive to reach net zero. But again, understanding this is more complicated than you might think. The energy transition entails a great many unexpected challenges.
“One of my biggest challenges is explaining that this is a transition, not an overnight snap of the fingers,” Pike said.
“There are assets you can buy and repurpose, but there may be an interim period where there is an existing carbon footprint that is status quo.
Griffith agreed with the need for the energy transition to be handled by managers and investors with the right knowledge. “You need experts,” she said. “ESG is not one thing. Energy transition is not one thing. You need the right skills for the right situation.”
2. The time for commitments has passed
Regardless of how we get there, or what we include on our journey, the most commonly accepted goal is net zero. For all the wrangling over the best way to achieve that goal, COP26 is seen as having been a waypoint.
“COP26 was quite interesting because it was the homework for the next 12 months that was the most momentous,” said Hajir Naghdy, senior managing director at Stonepeak Infrastructure Partners. COP26 included an aim to meet at the end of this year with clear 2030 targets.


“COP26 is a very important step in the long-term trend to fight climate change through increased decarbonisation and moving towards more sustainable energy sources, which is probably the biggest challenge of our time,” agreed Gijs Voskuyl, head of infrastructure at DIF Capital Partners. “But it is also a major opportunity and will create many investment opportunities in the coming decades.”
This goal setting is valuable and important, but it is no substitute for action. That is why infrastructure industry behemoth Macquarie has been putting wheels into motion.
“By the end of this year we committed to have business plans in place for all of our 160 portfolio companies globally to be on a net-zero pathway for [our] 2040 commitment,” said Maquarie’s Leslie, referring to the firm’s commitment to hit net zero for 2040, 10 years earlier than most peers.
“The first step was to go through the governance process with boards and management teams to put those business plans in place, to establish those pathways, then to monitor that and be on those pathways by 2030 and then to meet the final 2040 commitment. The work involved has been pretty significant.”
He estimated that those 160 companies employ about 150,000 people, underlining the extent of the reach that Macquarie’s efforts can have.
3. Money talks (but you already knew that)
Those portfolio companies and others like them need to be brought around, and fast. In fact, it is probably fair to say that we all need to move quicker. How, then, should we incentivise good behaviour?
“It is great to have frameworks, but how do you embed the right incentives? One of the things we are rolling out at the moment on our latest product offering will be ESG-linked performance incentives,” said Stonepeak’s Naghdy.
“We are specifically looking at three KPIs which will be third-party-verified: firstly around greenhouse gas emissions, secondly around gender diversity and thirdly around work health and safety. We are also looking at discretionary compensation at both portfolio company and firm level. There have to be rewards for getting it right and consequences for not.”
4. EVs are on the right road
One sector that is getting it right is electric vehicles. Like battery storage, another great hope for the energy transition, electric vehicles and charging have come a long way in a short time to reach a point where it is no longer fanciful to think of them as being at commercial scale.
Electric vehicles present an existential threat to oil and gas companies, which must reinvent themselves as power utilities and invest in the electrification of the transport sector, according to one lively debate on the shift from internal combustion engines.
“One of my biggest challenges is explaining that this is a transition, not an overnight
snap of the fingers”
Andrew Pike
Ares Management Corporation
Jan Zenneck, associate director of renewables and distributed energy at Boston Consulting Group, highlighted that it is a strategic battle for fossil fuel firms. Many have already started the process of decarbonising their portfolio, shifting to electrification, and investors need to be aware of the potential competition. “They have a position in the market, with gas stations everywhere, and access to sites, which makes them a fierce competitor for infrastructure investors,” Zenneck said.
While the asset class may be highly competitive, there are still plenty of opportunities for institutional investors. “Everything is positive for a private equity story,” said Massimo Resta, partner at infrastructure fund manager Zouk Capital. “There are higher barriers to entry than for example solar, which has plenty of supply, and there is an exit market.”
Electric vehicles save consumers time by allowing them to charge while out working, shopping or even staying at home. “The asset that you’re really buying is the real estate and the position of your chargers,” explained Resta. “What is important today is securing the right locations as there will be spots that demand a premium.”
5. Batteries are hard to beat
On the topic of premiums, battery material costs have soared in the last year, with significant price pressures on metals including lithium, nickel and cobalt. Surging demand for stationary storage and batteries in the mobility sector is adding to the friction.
But longer term, the energy transition will fuel an immense amount of capital that should make batteries even more efficient. “No matter where you look, there are big plans announced in Europe and in the US for battery production,” said Marek Wolek, senior vice-president, strategy and partnerships, at energy storage firm Fluence. “Innovation, production capacity is enormous and will ultimately match the demand/supply situation.”
The flexibility of storage also makes the asset class particularly attractive. “We are making much more money than we had forecast and supply has not met demand,” said Alex O’Cinneide, the founding chief executive of renewables and private equity investor Gore Street Capital. “Ten percent on leverage for an infrastructure asset in an OECD country is an excellent return and will mobilise plenty of capital.”
6. Nuclear may play a role after all
Capital is also being mobilised for new nuclear energy production, which has surprised many in the industry. As Bruno Candès, partner at InfraVia Capital Partners, put it: “I am flabbergasted we are discussing energy transition and nuclear on the same panel. Who would have believed that 10 years ago?”
A lot can change in 10 years. Or, with events in Ukraine developing so quickly during the conference, in just 10 weeks. Energy security has shot up the agenda, and many countries are rethinking their energy policies. In the UK, Hinkley Point C is the first new nuclear plant in a generation. Sizewell C will be a replica of Hinkley Point C.
“The role of Sizewell C will be to give the UK greater energy security and provide electricity whatever the weather, and it is going to contribute to both net-zero goals and to social benefit, employing a lot of people and developing a lot of skills,” said Julia Pyke, financing and economic regulation director for Sizewell C.
The UK opened its first civil nuclear plant back in the 1950s, and nuclear has since then always been an important part of the country’s energy mix. However, it had appeared to be on the way out. “Historically the UK has had 20 percent of its power from nuclear,” Pyke said. “That is closing down this decade as the advanced gas-cooled reactors, which came on in the 1970s and 1980s, reach the end of their lives.”
Nuclear energy is a long-term game. Construction on Hinkley Point C started in 2016 and will only come online in 2027. The long construction time is one of several reasons to be sceptical, but there are advantages to nuclear.
“Sizewell C can be the servant of the UK system,” said Pyke. “It will put out electricity day in, day out, whatever the weather. It will put electricity onto the grid but also to non-grid uses, so making sure it can work with our future renewables-dominated system, which means putting electricity out to make green hydrogen.
“We are going to be able to put out heat. We are including valves that will let us take heat out before it hits the turbines and up to around the first 400MW thermal we don’t impact electrical output, so it is a lot of low-carbon heat which is actually very cheap.”
Cheap, reliable energy is a priority for most governments, and the UK is no exception. Declan Burke, director of nuclear projects and development for the UK government’s department for business, energy and industrial strategy, leads the nuclear push for the state. He thinks the UK must double its energy generation by 2050.
“We get about half of our energy from low-carbon sources right now; to double it overall and make it all low-carbon means we need to increase that by four times,” said Burke. “We need a diversified mix with sources of secure, firm low-carbon power as well. That is what nuclear plays well to.”
How this will fit into investors’ portfolios is interesting. As well as the long construction times, nuclear plants are also obviously orders of magnitude different to solar or wind farms.
“Traditionally, investors have not thought about nuclear because it has not been relevant and to the extent they have thought about it, they put it most emphatically in the ‘too difficult’ bucket,” noted Stephen Vaughan, vice-chair of energy and power at Rothschild & Co.
“If we think about the main obstacles that have put investors off,” Vaughan added. “I would pick out the very large quantum, because nuclear power stations are very big, the very long lead time of construction, which is typically around 10 years, and the very patchy track record in terms of cost overruns, particularly recently.
“What is changing is that government has really put its shoulder to finding a solution. It wants to get private money into nuclear, and that is a real departure from the past where traditionally this has been territory for government-owned or government-linked corporates. To get this majority-financed by private equity, and all of the debt coming from the private sector, is new.”
7. There is a dark side to the energy transition
Much of the discussion in Berlin this year centred on the Russian invasion of Ukraine. Even before the war, high energy prices triggered by the pandemic were shifting energy security policy and causing decarbonisation to become a government priority.
“The fact that we have high energy costs, I think, has put a spotlight on how much [the energy transition] costs,” said Philip Kent, director of alternative asset management firm Gravis Capital. “Do people really understand what it costs, and are they willing to pay? I think that’s a massive question.”
Despite the many macroeconomic uncertainties, renewables will continue receiving strong government support and funding. Others at the Global Summit also pointed to rapid advances in technology across battery storage, hydrogen, electric vehicles and data centres. Karim Nassif, director of project finance and infrastructure at Kroll Bond Rating Agency, highlighted that while technology is evolving and the transition accelerating, “it would be a real shame if we stopped and said we need hydrocarbons ad infinitum and lost sight of the opportunities”.
Events in eastern Europe are also likely to impact the attractiveness of natural gas as a bridging fuel. “Gas was supposed to be the answer to all of the issues in the transition,” added Alastair Hall, senior managing director, Europe, at Canadian asset manager OMERS infrastructure. “It was supposed to solve cost and security, and I think it is clear that, at least from a European perspective, it does neither.”
Imported gas will likely play a role filling intermittent renewables supply, but high-cost fossil fuels will certainly incentivise more low-carbon energy supply. “You will need baseload capacity from predictable sources,” admitted Nassif, but securing energy security will make low-carbon energy more attractive as a hedge against volatile prices.