Renewable energy and Digital: the only El dorados in infrastructure?

Based on the operation and development of real assets while encompassing the surrounding areas of these same assets, could such a model be a viable option for Europe? It is legitimate to wonder if this model could become an opportunity for investors seeking stable returns and portfolio diversification, especially at a time when many “infrastructure” asset managers are focusing more on renewable energies or digital assets, such as data centers.

This potential alternative yield opportunity, attached to infrastructure projects, could be considered by European investors as an additional argument to further stimulate interest in public-private partnerships (PPPs).

A prime example is Rail Baltica, the largest ongoing rail project in Europe. This initiative aims to connect the Baltic States (Estonia, Latvia, and Lithuania) to other EU networks, with financing that includes private loans and public-private partnerships, among other sources. If the concepts behind Rail Baltica were replicated and implemented across Europe, it could serve as a model for the entire continent.

In any case, this project presents undeniable advantages and could thus be a vector of interesting and innovative investment opportunities compared to historical private-public coalition initiatives that have been and will be necessary for the development of European infrastructure in the short, medium, or long term.

“No one can do it alone” – this is the motto of many managers handling infrastructure projects. The possible new dynamic attached to these projects, similar to the aforementioned American project, could stimulate investor interest in these public-private partnerships (PPPs). These PPPs will continue to play a crucial role in meeting the investment needs of European infrastructure.

These needs were – once again – highlighted by the European Commission, which estimated in its 2023 annual strategic foresight report that an additional €600 billion per year would be required to finance programs aimed at reducing the continent’s carbon footprint by 2030.

Finaly, beyond the financial interest for investors, this new possibility offered to market players, if they wish, only proves the significant need for public-private partnerships (PPPs) to enable the financing of these major projects for the old continent.