Capital for energy infrastructure (roundtable ‘From Energy Transition to Energy Security’ – part 2)

July 9, 2026

^{This report was originally written in Dutch. This is an English translation}  

In part 2 of the roundtable discussion ‘From Energy Transition to Energy Infrastructure’, the participants discuss how the enormous investment challenge for energy infrastructure can be financed. They examine the role of institutional investors, the expertise required, and the opportunities offered by networks, storage and batteries.

By Hans Amesz

Where does the biggest gap lie between the infrastructure Europe needs for energy security and what institutional investors can finance on a large scale?

Demyttenaere: ‘In the field of electrification and networks, we are seeing a very large and growing investment need in Europe. Governments are investing heavily to build strategic autonomy, for example in defence, but their fiscal scope is limited. Since the financial crisis, banks have been more cautious in utilising their balance sheets, and this is precisely where a clear role for the capital markets emerges: private investors can help bridge the investment gap, and pension funds can be a natural partner in this. The Savings and Investment Union, faster licensing procedures and less fragmented regulation are crucial to further stimulating this flow of capital. This combination could give Europe a real competitive advantage.’

Pim: ‘One of the interesting areas where I believe there is currently a gap is long-term storage. If you look at the overall European energy mix, this is an area where many breakthroughs are still needed. Government frameworks still have some catching up to do in this regard.’
 

The question is not only whether it is low-carbon, but also whether it is resilient and whether the costs are stable.

 
Dioux: ‘From a macroeconomic perspective, work must be done as quickly as possible to strengthen the electricity grids across Europe, in order to accommodate both the electrification of consumption and the increase in renewable energy. This could be financed through public-private partnerships, with strict regulation and government support. At present, we do not see many opportunities for private investment funds such as ours in this area in Europe, but that may yet change. What is immediately available and needed, however, is BESS. Financing BESS, using both equity and debt, is no simple matter, particularly as there is a wide range of investment scenarios, whether they involve standalone, hybrid, trader-exposed or tolling agreement-based projects. For investors, the aim is to strike the right balance and achieve diversification in terms of countries, the risks taken and how these are mitigated, the level of financing, and so on.’

Van de Geugten: ‘I think our clients are certainly willing to invest in the electricity grid, but on the European mainland this is really complicated. Many electricity grids here are (semi-)publicly owned.’

As energy systems become more complex, how should investors approach the in-depth expertise and analytical skills required to invest in infrastructure assets with confidence?

Vassileva: ‘We must ensure we target the right opportunities with the right capital in terms of risk-return. This also helps in managing the expectations of institutional clients. For example, if we say we are pursuing a core or core-plus strategy, this means we must stick to it, which entails focusing on a stable risk profile and investing, under controlled conditions, in renewable energy and storage projects, rather than in unproven technologies or generation in locations where it shouldn’t be.’

Van Merriënboer: ‘One of the crucial aspects from the LP’s perspective is selection – finding the right manager. Be prepared and ensure you have the right expertise in-house.’

Lukin: ‘When you look at the challenge ahead of us, I don’t think that we in Europe, as a society, will be able to mobilise sufficient capital within the current framework for the energy transition, and I believe that transferring some of the knowledge and experience from our usual infrastructure playbook could play an important role. Business models for the energy transition that are closer to the infrastructure sector would enable us to attract more capital by mitigating risks.’
 

Given what is happening in the world, we are increasingly realising that we must supply energy safely and at affordable prices

 
Bergsma: ‘One of the key risk factors that has changed over the past five to seven years is the revenue side. It is crucial to keep a close eye on that revenue risk. For onshore wind, solar energy and battery storage, our approach is to, let’s say, work backwards from the revenue.

We start with the revenue, we identify the customer, and then we find the right assets to meet the customer’s needs. We do this through very large platforms, including by combining different technologies across several countries. In this way, we try to find the right revenue mix and manage revenue risks.’

Dioux: ‘We take a balanced approach and do not take on excessive risk with debt financing. We have built up our internal strength in the electricity market with dedicated people who secure revenue and are proactive in hedging risks.’

Which types of energy infrastructure are currently most crucial to resilience, and to what extent are these assets suitable for long-term investment with institutional capital, given the current market structure?

Demyttenaere: ‘For us, it is crucial to consistently analyse how three megatrends interact: the rise of digitalisation and AI, geopolitical fragmentation with a stronger focus on national security, and the transition to a low-carbon economy. These megatrends clash and reinforce one another, and it is precisely at that intersection that we see the most interesting investment opportunities. Energy infrastructure in transition sits at that crossroads, and grids and storage in particular are uniquely positioned to support multiple long-term themes simultaneously: electrification, energy security, affordability and decarbonisation. In our view, these assets are structurally supported by these forces, rather than being merely exposed to the shocks they cause.’

Gilligan: ‘Over the next ten years, around six trillion will need to be invested in electricity grids worldwide – particularly in China, Europe and the United States. In China, this is straightforward due to the government’s full support and the ability to finance it within the Chinese capital markets. In Europe and the United States, it is more complicated, because we still have regulatory systems that were established in the twentieth century and were designed to regulate existing monopolies. We are now looking at a system that requires the actual Regulated Asset Base, or RAB, to be doubled in a very short space of time, and the regulatory frameworks are not really adapted to that. Regulators need to think deeply and engage in dialogue with the government and the electorate to make it clear that these are difficult issues, often involving significant sums of money.’
 

You need to examine much more closely how things might come back to haunt you later, because infrastructure is, by its very nature, a long-term endeavour

 
Pim: ‘In Ireland, an island with a fairly high penetration rate of renewable energy, we were already confronted some three to five years ago with many of the structural problems the rest of Europe is now facing. This has enabled us to gain experience with and a better understanding of a number of potential challenges, and to develop solutions. One of the lessons we have learnt is that it is vital to build relationships with all stakeholders, including the government, in order to develop the necessary infrastructure and thereby create resilience.’

Vassileva: ‘The costs of electricity grids in most countries need to be socialised. There is an enormous amount of physical infrastructure in the world. Much of it has been neglected and needs to be put to better use. If we truly want to move towards a world in which sustainable molecules are abundant, a great deal is required – sometimes even diverse physical infrastructure, ranging from ships to ports and moorings, and so on. This brings us back to the theme of also cherishing existing infrastructure and preparing it for the transition.

The energy transition also requires large quantities of rare-earth minerals, which must be extracted in a sustainable and ethically responsible manner and transported around the world.’

Van Merriënboer: ‘Batteries are the most important, especially those for the short term. They are affordable and, apparently, easy to implement and use to hybridise existing assets. They are used in brownfield projects but, these days, increasingly in greenfield projects as well. It’s all very promising.’
 

If you look at safety, affordability and sustainability, clean energy is in fact the winner on all three counts

 
Pim: ‘At the moment, we’re seeing many of the most attractive opportunities in batteries with a storage duration of two to possibly four hours. However, that will continue to evolve and change. In any case, the market for this is maturing: financing options are improving and, over time, we’ll see a wider range of solutions.’

Bergsma: ‘Batteries can relieve a large part of the load on the grid. Lithium-iron therefore seems to be the clear winner. The positives are a very extensive supply chain (in China there are at least ten suppliers offering high-quality batteries at low cost) and sound technology. The negatives are, of course, the risks involved. This is much less of an issue with a wind farm than with battery storage. Who knows what a battery will still be worth after, say, ten years? In five years’ time, there might be a cheaper battery that also performs better. Ideally, you’ll see your investment in batteries double within six or seven years.’

Dioux: ‘Whether you make the best investment in BESS depends on your risk appetite, whether it involves mature markets with lower IRRs but greater certainty regarding revenue thanks to fixed tolling agreements, or emerging markets where you can capitalise on the ‘pioneer premium’ through revenue from ancillary services.’

Vassileva: ‘We have also given careful thought to what the situation on the electricity market will look like in a few years’ time. Will volatility on the electricity market still be the same? Could there, technically speaking, even be some deterioration? With an infrastructure investment, it’s all about predictability and staying true to the risk profile that has been communicated to investors.’

Lukin: ‘We spent about three years assessing the best opportunities in the green hydrogen market before deciding to enter it. We wanted to gain an understanding of the prospects for mitigating risk in cash flows before it actually fitted into our investment strategy, because we didn’t want to do exactly what some players in the energy sector have done and are currently doing, such as a ‘gradual’ change of strategy or shift in investment style. For us, it was absolutely crucial to see that you can structure high-quality, long-term off-take agreements in the green molecules market.’
  

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