Transformation in Infrastructure: Accepting Continuous Evolution as the Norm
The infrastructure sector is undergoing a significant transformation, with the development of new assets like hydrogen, battery storage, sustainable aviation fuel, artificial intelligence, EV charging, new rail operators, and nuclear energy rapidly evolving. This shift is particularly evident in the United States, where the sector has remained strong in 2024 due to the Inflation Reduction Act.
One of the challenges facing the data center market is the increased power demand, questions regarding the efficient use of air cooling, potential use of refrigerant gases, and water consumption. Despite these challenges, companies specializing in new infrastructure assets are thriving.
For instance, EVgo, a pioneer in public EV fast-charging networks, has seen revenue growth of 60% in 2024, thanks to partnerships with major automakers. New Era Energy & Digital, on the other hand, is pivoting towards AI infrastructure, with projects like the Texas Critical Data Centers. Established data center operators like Equinix, Digital Realty, and CoreSite are also expanding their hyperscale data center capacity to meet global demand.
Key investors in these companies include those listed on the NASDAQ and private equity firms focusing on data centers and AI infrastructure growth, as well as strategic partnerships with automakers and retail chains for charging infrastructure expansion.
The proliferation of new technologies, applications, and markets in the infrastructure sector poses significant challenges. However, there is a growing trend to broaden the spectrum of deals and sectors that can potentially be considered with an infra perspective.
The infrastructure sector requires a re-evaluation of risk assessments and long-term perspectives to seize the opportunities presented by this transition. One of the main challenges is finding ways to finance these new technologies, as the inherent risks associated with these innovations are not traditionally managed by banks.
Global investments in the green transition total $2 trillion annually, with $2 invested in renewables for every $1 in coal. In the past year, a record 560 gigawatts of renewable energy were connected worldwide. However, adaptation finance remains the neglected stepchild of infrastructure finance due to the absence of universally accepted impact metrics.
The infrastructure sector is driven by huge investment needs related to energy, social, and digital transition. Europe, for example, needs to invest 800 billion euros a year in infrastructure. The sector is navigating uncertainties and delivering essential and sustainable projects, particularly in the area of Climate Change Adaptation (CCA).
CCA presents a compelling business case for investment, with a benefit-cost ratio ranging from 2:1 to 10:1. Data consumption is expected to triple by 2025 compared to 2020 levels, and electricity consumption for data centers in the EU is anticipated to grow at about 9% per year.
In this transformative environment, the infrastructure sector is also adapting, with infrastructure funds gaining flexibility in Core+ sectors and introducing new infra-like assets into their strategies, such as electric vehicle charging networks and railway networks.
The 14th edition of the event focuses on Climate Change Adaptation (CCA), particularly water issues, which require private investments. The sector is delivering essential and sustainable projects, navigating uncertainties, and embracing the challenges and opportunities of this transformative period.
