A new report from Lane Clark & Peacock (LCP) suggests a total investment of £350 billion across the next 30 years will be needed for the government to fulfil the net zero transition outlined in last year’s energy white paper.
The report states that £12 billion of new investment per year until 2050 in renewable technologies such as wind and solar, alongside innovative technologies such as hydrogen, will enable the UK to meet its aims.
It proposes two scenarios through which the investments could unfold. The first is a more guarded approach, which predicts UK asset owners only extend their investments to £70 billion by 2030, which would leave a £100 billion funding gap. The other is a more optimistic prediction that could see £125 billion invested by 2030, making the £350 billion target more achievable.
LCP’s research states that established renewable energy technologies such as wind and solar will lead the way for investment in the mid-term, making emerging markets such as battery storage and carbon capture more attractive to investors in the long-term.
The report calls for government action around policy and finance to incentivise investment in energy infrastructure. It highlights the need to avoid ‘crowding out’ private sector lending and to become more open to modern approaches to private and public partnerships from interested investors.
Dan Mikulskis, Investment Partner at LCP, commented: “We think there is huge untapped investment potential if the energy industry thinks differently about the assets.
“The doorway between private investment and infrastructure has been wide open for the last decade, with UK asset owners investing £45 billion in infrastructure assets from offshore wind, to biomass, solar and sewers, alongside asset owners from the Netherlands, Australia, Canada and more.
“To increase this appeal, the energy sector will need to work with investors to bring forward enough of the right assets at the right risk/return levels and quantity to interest global asset owners. The current levels of investment are often framed as a lack of demand from investors but the problem has in fact been a lack of supply, with assets at the right risk-return levels.”