Prioritising The Future of Infrastructure, Today

Prioritising investment in sustainable infrastructure is critical for fostering economic resilience and tackling climate and environmental challenges. Empirical evidence supports this shift: global investment in renewables reached a record $1.8 trillion in 2023, demonstrating a robust commitment from both government policies and private sector initiatives.¹

Notably, the renewable energy sector accounted for 70% of all new power capacity additions worldwide in 2023, underscoring the world’s growing preference for cleaner energy sources.² In the transportation sector, investments in EVs have surged, with global EV sales surpassing 14 million units in 2023 (3.5 million higher than in 2022), an increase of 35% year over year.³ Governments are playing a pivotal role, with the U.S. committing $550 billion over the next decade to modernise its physical infrastructure, including significant allocations for sustainable initiatives.⁴ The EU has earmarked over €250 billion for green initiatives under its NextGenerationEU recovery plan.⁵ In data infrastructure, investments in energy-efficient data centres and smart grid technologies are transforming how information is managed and distributed. Social infrastructure, including schools and hospitals, is increasingly designed with sustainability in mind, incorporating green building practices and renewable energy sources.

In this blog, we explore four critical sub-sectors driving the growth and development of sustainable infrastructure. We also highlight key companies making significant strides in these areas.

Environmental Infrastructure

The energy transition is now seeing significant investment not only in renewable energy generation but also in energy storage and grid modernization. According to projections, global investment in grid infrastructure is set to reach $400 billion in 2024, driven by strategic policies and funding initiatives in Europe, the United States, China and parts of Latin America.⁶ This financial commitment is essential for integrating renewable energy and enhancing energy efficiency across power networks. The International Energy Agency (IEA) underscores the necessity of adding or refurbishing over 80 million kilometers of grids by 2040 to support the transition, equivalent to the current total global grid length.⁷

Let’s delve into specific examples of how leading public companies are contributing:

Acciona SA, a Spanish company, is making significant investments in grid infrastructure. Acciona is involved in developing one of Australia’s largest green power grids, a project valued at AU$10 billion (€6.2 billion). This project, part of the Central-West Orana Renewable Energy Zone in New South Wales, will initially deploy 4.5 gigawatt (GW) of grid capacity, growing to 6 GW by 2038. The project will also create 5,000 jobs during its construction phase. Acciona has extensive experience in designing, financing, and constructing transmission networks and electrical substations globally, including in Spain, Kenya, Mexico and Peru.⁸

Terna Rete Elettrica Nazionale SpA, an Italian company, is making substantial investments in Italy’s grid infrastructure. Terna’s 2023 Development Plan includes a €21 billion investment over the next decade, aiming to double the power exchange capacity across Italy. This plan incorporates five new electricity backbones to integrate renewable energy sources more effectively. The Hypergrid project is a key component, focusing on modernising existing power lines and constructing new high-voltage direct current (HVDC) connections to enhance grid resilience and efficiency.⁹

Redeia Corp, a Spanish company, is another example of significant investment in grid infrastructure. Redeia is implementing a comprehensive plan to modernise Spain’s electrical grid, integrating advanced technologies to improve grid reliability and flexibility. This includes the development of smart grids and digital infrastructure to better manage energy flows and incorporate a higher share of renewable energy sources. Redeia’s efforts are crucial for ensuring a stable and efficient energy supply in Spain, supporting the country’s transition to a sustainable energy future.¹⁰

These investments highlight the diverse strategies essential for meeting global climate targets, enhancing energy security, and promoting economic resilience and job creation.

Data and Telecom Infrastructure

AI is rapidly revolutionising data centers. Hyperscale data centers are expected to triple in capacity over the next six years. Companies like Amazon Web Services are investing $10 billion in new data centers in Mississippi, while also committing to renewable energy sources to power these facilities. Amazon has announced over 500 renewable energy projects globally, aiming to power 100% of its activities with renewable energy by 2025, five years ahead of its original target. This includes investments in wind and solar projects in the U.S., Europe and Asia.^11,12

However, Big Tech companies are not only expanding their data infrastructure investments but are also investing heavily in clean power. Amazon’s investment in nuclear energy, exemplified by the purchase of a nuclear-powered data center from Talen Energy, and Microsoft’s development of green hydrogen technology for backup power, highlight Big Tech’s dual focus on growth and sustainability.¹³ Microsoft successfully demonstrated the use of hydrogen fuel cells to power data centre servers for 48 hours, marking a significant step.¹⁴ This initiative is part of Microsoft’s broader strategy to become carbon negative by 2030​​.¹⁵

Meanwhile, Vodafone, BT Group and Verizon are enhancing their telecommunications infrastructure to support growing data demands while reducing energy consumption. Vodafone, for instance, has been actively upgrading its network infrastructure with energy-efficient technologies, while BT Group aims to power its operations with 100% renewable electricity by 2026.¹⁶ Verizon has also committed to significant reductions in its carbon footprint, investing in solar and wind projects to power its extensive network infrastructure sustainably.¹⁷

These examples demonstrate the vital role of clean energy investments in supporting the rapid growth of digital infrastructure. By leading in AI and renewable energy, these companies are setting benchmarks for integrating sustainability into modern technology, driving innovation and environmental responsibility.

Transportation Infrastructure

Transportation infrastructure is crucial for reducing emissions and improving mobility efficiency. Despite an overall decline in emissions, transportation emissions in Europe have increased by 29% since the 1990s, and they are projected to constitute nearly half of Europe’s greenhouse gas emissions by 2030.¹⁸ This increase is primarily due to the growth in road transport and aviation emissions, which have rebounded significantly following the COVID-19 pandemic.

Companies like Ferrovial SE are leading the way in developing sustainable transportation solutions. Ferrovial, a Spanish multinational, is heavily investing in EV charging infrastructure and smart traffic management systems. These initiatives are part of broader efforts to decarbonise transport by promoting EVs and optimising traffic flows to reduce congestion and emissions.¹⁹

ComfortDelGro Corporation, a Singapore-based transportation company, is making significant strides in sustainable transport. Recently, ComfortDelGro secured a S$100 million green loan from DBS to decarbonize its UK bus fleet. The funds were used to purchase 135 electric buses, comprising 77 double-deck and 58 single-deck buses, for its wholly-owned subsidiary, Metroline. These new electric buses will replace internal combustion engine-powered buses and are projected to avoid approximately 9,900 tonnes of CO₂ equivalent tailpipe emissions annually. This initiative is part of ComfortDelGro’s broader effort to transition 50% of its global bus fleet to cleaner energy vehicles by 2030 and achieve 100% by 2050.²⁰

Through electrification and infrastructure improvements, these initiatives are crucial for addressing global inequality and promoting economic growth, while significantly reducing transportation-related emissions in Europe and beyond.

Social Infrastructure

Sustainable infrastructure is not solely about environmental benefits; it also includes a strong social component. Ageing demographics represent one of the most significant global megatrends, with many developed countries, including China, experiencing a rapidly aging population. By 2040, for example, 28% of even China’s population is expected to be over 60 years old, posing significant challenges and opportunities for public health and socioeconomic development.²¹ Companies like Welltower are at the forefront of developing senior living facilities and healthcare properties designed to be energy-efficient and environmentally friendly. In 2023, Welltower certified 135 properties as ENERGY STAR, completed energy efficiency upgrades across 20 properties, and increased the number of properties powered with on-site solar energy to 25​.²² On the healthcare front, HCA Healthcare is expanding its services to meet the growing demand for healthcare in aging populations. In 2024 alone, HCA is investing more than $5 billion in capital improvements, which includes constructing new facilities equipped with the latest sustainable technologies and expanding its existing operations to enhance service delivery to ageing populations.²³

Conclusion

Investing in sustainable infrastructure not only meets current demands but also prepares economies for future challenges like climate change, demographic shifts, and technological advancements. The growth in AI and renewable energy is driving significant expansion in data, telecom, and environmental infrastructure. At the same time, transportation and social infrastructure investments are ensuring sustainable and equitable growth. These initiatives are vital for long-term economic resilience and prosperity. And while infrastructure might not be the most exciting topic, that’s precisely its strength. In your portfolio, it stands as a stable and essential megatrend, offering calm and steady growth, well-buffered against downturns due to its indispensable nature.