‘We try to be open-minded about new tech’: MIRA’s head of innovation

Peter Durante talks to Infrastructure Investor about his role and how the fund manager thinks about technology.

Peter Durante, Managing Director, Technology & Innovation, MIRA

Macquarie Infrastructure and Real Assets created the new role of head of technology and innovation last year. Peter Durante has a team of five, spread across three geographies, working on implementing technology for the firm’s existing assets – as well as focusing on business development and providing input into due diligence and asset sales. He tells us how his role works in practice.

What’s your remit at MIRA and why was an innovation and technology team established?

I joined Macquarie in May 2018 to set up the technology and innovation team and we are now a team of five around the world.

Our team’s purpose is to bring together some of the work that was already being done on technology and innovation within MIRA globally. We wanted to identify what best practice was at an asset level through a specific technology and innovation lens.

Our role is mapped against the lifecycle of a portfolio investment: we raise money, invest that money in an asset, manage the asset and then at some point we sell the asset. We work across that value chain, on asset management, due diligence, asset sales and on thought leadership.

How is your team’s time divided between those parts of the business?

Most of our time is spent on asset management, working with the companies we already own. Our remit here is everything from the immediate, tangible and, frankly, not particularly exciting stuff that can be done now to add value – like basic energy efficiency – all the way through to helping our portfolio companies assess their business plan through things like digital transformation and process automation.

We also spend a fair amount of time on due diligence and business development, and trying to come up with new business ideas. Lots of things have come out of our research where we’ve looked at areas that we might not have before, new applications for existing technology or using assets in unconventional ways. We do due diligence on the types of assets that we normally invest in, as well as looking at new ideas.

We also spend time around selling our assets. Compare one wind farm, say, that has basic performance data in the form of a PDF report that says how much energy it produced and what maintenance has been carried out on a regular basis, with another that has a full digital twin. The latter is a fully digitised asset where you can see the full real-time performance over time and understand exactly how this thing’s been operated. You’ll have much better transparency on its use and the health of that asset. Which one would be less risky? And, therefore, which would be more valuable?

We are also, together with people across the broader Macquarie Group, doing a lot of research into mega-trends. That’s on everything from electric and autonomous vehicles to the potential for artificial intelligence, to hydrogen in energy.

How are you connecting the dots between MIRA’s different business units and has this been a challenge?

We’re using working groups where we bring the portfolio companies together. They’ve been really well received and we’re getting ideas generation which people at those assets hadn’t thought of before. And we’re seeing groups of companies and people organically forming connections.

At these working groups we bring in tech providers like data analytics or visualisation or robotic process automation. We want to move our assets up the learning curve, and in some cases look at where, at a portfolio level, if we want to start doing big-data analytics on preventative maintenance for compressor pumps in pipelines, for example, could we work together on a joint project across six or seven assets we own in Europe, getting bigger datasets and better results? We’re trying to take a portfolio approach to things that you wouldn’t assume are digitally or even data-driven, like maintenance on gas valves.

Does the way you implement technology differ from region to region? Is it easier in certain regions?

How long’s a piece of string? It varies by region, by country and by asset. There are definitely different approaches you have to take by market – that’s one of the reasons it was so important the team is based in different locations. It depends on the technology you’re trying to implement, it depends on the sector you’re in and it depends on how disruptive that technology is or isn’t.

We use this geeky quote by William Gibson, the sci-fi writer, that says: “The future is already here – it’s just not evenly distributed”. For us, that means you have to have a global understanding of this as no two deals are the same, let alone two regions. There’s no rule of thumb to say this area loves tech and this area doesn’t.

How do you assess the energy transition and the potential for battery storage technologies?

Battery storage is the topic that everybody gets excited about in power and the electric vehicle industry is driving down the cost of lithium ion batteries. In certain geographies in the world, when that storage gets cheap enough, especially where they don’t have access to pumped hydro and where they don’t have extreme seasonal variations, that might be enough on its own to get to really deep decarbonisation.

Somewhere like the UK, where our delta between summer and winter is really big, you have to start looking at seasonal storage – at least days and weeks, and maybe even months of storage. That’s why they’re building interconnectors to Norway for hydro, and that shows there remains a big future for electricity transmission assets in certain areas.

We try to be open-minded about new technologies and make sure to keep re-visiting them. Just because something was true five years ago, or even five months ago, it doesn’t mean it’s still valid. You have to keep reassessing things, even if you don’t necessarily think they’re going to happen yet.