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) in mature markets.
Investors that are looking for higher returns in this rate environment are keen to explore other technologies. For example, energy storage has become increasingly popular among investors, and is also maturing rapidly as an asset class. The natural question for energy transition investors is – what’s next?
Beyond traditional renewables, energy storage and 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 will attract USD 2 trillion of annual investments in the future to enable a full energy transition, according to the International Renewable Energy Agency (IRENA).
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