GIC sees investment opportunities in energy transition infrastructure

Financing for energy infrastructure is increasing, driven by cheaper RE and rising electrification.

Singapore’s sovereign wealth fund GIC has laid out its efforts to expand its investment portfolio, including leveraging opportunities in the energy transition.

In a new report, GIC said the declining costs of renewable energy and the rising electrification driven by artificial intelligence adoption are attracting more government support.

The rising share of renewable energy in the global energy mix and the ageing grid infrastructure also call for the need to invest more in power equipment supply chains and grid infrastructure.

“GIC is constructive on regulated electric networks and utilities, as continued investments in their asset base will mean additional earnings growth opportunities,” it said.

GIC said it specifically favours assets benefitting from stable and transparent jurisdictions, with regulatory frameworks that support high cashflow predictability by providing inflation and volume protection. It also sees solutions such as dispatchable baseload generation and battery storage as integral to resolving grid congestion.

The transition to a net-zero economy also requires new technologies, such as green fuels and long-duration energy storage, to decarbonise “hard-to-abate” sectors.

Whilst these have yet to reach maturity, GIC said it has backed companies with the right attributes to succeed, such as having a differentiated technological or cost advantage. This includes its investment in green ammonia projects, which benefit from access to cheap renewable electricity inputs or insourced supply chains.

In terms of energy efficiency, GIC has injected funding into smart metering companies which enable energy monitoring, optimisation and reduction for both residential and commercial customers.

Another focus for GIC is companies that provide energy efficiency solutions across end-user markets.

“With the number of data centres growing rapidly, we have invested in companies that provide energy management and cooling solutions to data centres to lower both their power consumption and carbon footprint,” GIC said.

“For example, in the construction sector, companies specialising in insulation help to reduce power needs for heating and cooling. In the manufacturing sector, we see value in industry leaders in steam and compression technologies offering products that reduce customers’ total lifetime energy needs,” it added.