Future green investments

Renewable energy has been one of the most popular target sectors for infrastructure investors in recent years. With the rising maturity of renewables, returns of traditional projects such as wind and solar have compressed significantly, typically offering single digit Internal Rate of Returns (IRR). Investors that are looking for higher returns, especially in this rate environment, are keen to explore other technologies. For example, energy storage has become increasingly popular among investors, which we explored in a previous paper¹, and is also maturing rapidly as an asset class. The natural question for energy transition investors is – what’s next?

Beyond renewables such as energy storage and even traditional grid infrastructure, there is a world of clean energy investments that sits in non-electricity industries. The electricity and heat sectors only account for 32% of global greenhouse gas (GHG) emissions, which means there are many other sectors, such as industrials, transportation, agriculture, and buildings that could potentially attract USD 2 trillion of annual investments in the future to enable a full energy transition, according to the International Renewable Energy Agency (IRENA)².

This paper will provide an overview of promising technologies to reduce Green House Gases (GHG) at each of these industries. We will touch on the business case for carbon, capture, utilization and sequestration (CCUS), hydrogen, fuel cells electric vehicles (FCEVs), clean transportation fuels, renewable natural gas (RNG), energy-as-a-service (EaaS), and more. Most importantly, we will discuss the possibilities in these new segments where infrastructure investors can allocate capital.

1 Energy storage: At a tipping point; March 2022 link
2 World Energy Transitions Outlook 2023; June 2023 link