Decarbonisation requires decades of hard work, and while significant financial support has been pledged by governments around the world, plenty of room remains for the private sector, Sarah Lau said on a recent webcast hosted by Pinnacle.
To date, Europe has directed around €1.45 trillion towards renewables and decarbonisation, while the US has allocated US$440 billion to its net zero effort.
However, according to Ms Lau, combined, this sum doesn’t meet the required decarbonisation capex.
“There is clearly a role for the private sector,” Ms Lau said.
Investing in decarbonisation usually takes one of three paths, through manufacturing, technology and infrastructure.
According to Ms Lau, Resolution Capital is focused on the latter due to its lower risk profile.
“We are not interested in taking manufacturing and supply chain risk for very slim margins in equipment supplier, we’re also not interested in the more speculative technology and development risk.
“What we’re focused on is generating good risk adjusted returns and capital preservation, that’s why we’re focusing on the electrical utilities and renewables,” Ms Lau explained.
Decarbonising the grid to net zero will require investments in the trillions. But according to Ms Lau, the leading renewables players will get a share of this sizable pie.
“They [electric utilities] have a good track record of delivering strong returns from their projects and also proven execution ability,” Ms Lau explained.
“The electric utilities are key beneficiaries of this investment in electricity grids. They have a natural advantage because of their existing assets, and they have that capability to upgrade these assets.
“The frameworks are set in terms of establishing a fair return, about every dollar invested into either power generation or the electricity grids generates about $1.5 of value,” she noted.
“We’re clearly excited about the electric utility sector.”
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