Minal Patel, Global Head of Infrastructure, Schroders Capital

James Samworth, Co-head of Energy Transition at Schroders

Paul O'Donnell, Partner at Schroders

Why we believe mid-market platforms, data centre hyperscalers and other renewable power demand drivers, and emerging technologies such as green hydrogen will be valuable additions to energy transition infrastructure portfolios.

Energy transition investment is extremely important in the broader infrastructure landscape, with renewable energy alone accounting for between 50% and 60% of all completed transactions consistently since 2018, and in aggregate half of total infrastructure deal volume over the past 15 years (see chart).

Renewable energy consistently accounts for a majority of infrastructure dealflow

_{Source: Preqin Global Report: Infrastructure, 2025.}

Global investment in energy transition infrastructure has been increasing exponentially over the past five years, reaching €2 trillion in 2024. And the demand for capital to support the drive to a low-carbon global economy is only growing, with $28 trillion of investment implied over the next three decades under current government policies worldwide – and a need to invest more than double that to meet the target of reaching net zero by 2050 (see charts).

Investment in energy transition infrastructure has been growing – and more capital needed

_{Sources: BloombergNEF, Energy Transition Investment Trends 2025, and BloombergNEF, 2024.}

All of this speaks to a vast investment need and a very broad and deep universe.

This then begs the question; where within this universe might an investor concentrate their capital to most effectively capture the performance and portfolio resilience potential of the global energy transition?

Evolution, not revolution

From a top-down perspective, we see the investment need across the energy transition continuing to translate to a wide range of investment opportunities that can meet the needs of investors across the full spectrum of risk-return appetite. These include everything from core renewable energy assets that have become a fixture of the infrastructure investment and energy provision landscape, to the growing array of emerging adjacent and climate technologies.

This also speaks to a landscape that is constantly evolving. While the direction of travel is generally accepted, the path to realise the global energy transition is likely to be anything but a straight line. Navigating that path – and identifying and then executing on the opportunities it creates – will require specialist skills, understanding and expertise. Our belief and experience is that this specialism will both help to manage risks and, importantly, drive potential portfolio outperformance.

As we move into the next phase of the energy transition, there are several emerging areas that we believe offer compelling access points to maximise the future return opportunities across this dynamic and rapidly-evolving sector.

The three complementary and specialist opportunities around which we have especially high conviction within energy transition infrastructure are:

1. Lower and mid-market developer and platform investments that suffer from a shortage of growth capital, and which can be scaled through both organic expansion and strategic acquisitions:

Essentially, we have seen a dual trend of more capital from larger infrastructure funds flowing into low-risk, very large-scale, operational renewables assets; while at the same time capital from venture funds is flowing into start-up climate technology companies at the other end of the risk and scale spectrum. This has resulted in a "missing middle" where mid-market energy transition opportunities are overlooked. A compelling way to take advantage of this dynamic is investing in earlier-stage and lower or mid-market assets as ‘platform’ investments. Investment ‘success’ is achieved through scaling the platform, through both organic expansion developing and building new assets, as well as strategic bolt-on acquisitions of other operational assets. The end game is a wide array of exit options, ranging from a sale to larger infrastructure funds for which these platforms have reached a viable scale, to strategic purchases by global energy companies, or public listing.

2. Driving market growth of green hydrogen to support the development of this key fuel, as well as of nascent derived technologies:

The green shoots appearing in the market for green hydrogen – hydrogen produced from water using renewable energy-powered electrolysis – are driven by increasing government support and targeted regulatory initiatives around the world.

Specifically, the International Energy Agency (IEA) estimates that low-emissions hydrogen production has risen by than 50% since 2021, with all of that growth attributable to renewables-powered green hydrogen. Meanwhile, installed electrolyser capacity to produce green hydrogen was expected to reach 5.2GW last year, a 9x increase from 2021 and a threefold increase year on year.

The green hydrogen market previously experienced a ‘false dawn’ at the turn of the decade – when investment boomed on the back of market excitement but actual projects faltered of failed to materialise, which ultimately undermined investor confidence. But the difference this time, is that the specialist investors active in this space, and the governments that are now delivering promised support, are much more focused on actual end-use cases. This means projects are being linked more directly to specific demand, which is  expected to grow as the energy transition gathers pace.

Overall, to achieve the necessary expansion in the clean hydrogen market and meet global net zero targets, an estimated additional investment of roughly $150 billion will be required through 2030. Capital is needed to support the expansion of production capacity, as well as into projects that enable its end uses, such as those outlined above in hard-to abate industrial sectors, and so unlock the fuel’s full decarbonisation potential.

This creates significant opportunities for specialist investors. Notably, expansion in green hydrogen will also support demand for renewable energy capacity more broadly, given the symbiotic relationship between renewable generation and green hydrogen production.

3. Leveraging broader energy transition and power expertise to enable and grow new renewable energy demand drivers, including for example data centre hyperscalers:

While much of the discussion around the energy transition initially focused on how to expand renewable energy generation, the equally important next step in the journey is enabling demand drivers that will utilise the green electrons generated from renewable sources. Specifically, this relates to supporting and expanding new energy transition technologies that are driving the electrification of various sectors across the economy. Key examples include:

·       The heating of homes and businesses through heat pumps and district heating networks;

·       Electrification of transport though electric vehicles requiring charging infrastructure;

·       Delivering powered land for data centres hyperscalers; and

·       Building out new grid infrastructure to facilitate the transmission of green electrons, such as interconnectors, transmission and distribution networks.

This growth in power demand is coming at a time when there is fresh scrutiny on the role of renewable energy in the power mix, especially in the US under Trump 2.0. That said, companies are not likely to abandon their commitment to all their stakeholders – employees, customers, and shareholders in the US and abroad – to make their operations sustainable. This is especially the case for technology companies, since many of their users are among younger generations for whom climate issues are a more pressing priority.

Investment opportunities for energy transition infrastructure providers lie in direct investments in the assets and technologies themselves, sourcing and providing powered land for data centres hyperscalers, as well as in leveraging the demand for power to underpin the value of existing renewable energy assets. But understanding that there is a huge need for investment is one thing; being able to deliver on the promise to grow them is another. Success in these sub-sectors is therefore about more than just recognising the need for capital. Investors also need to be able to directly connect sites, often through co-location, with renewable power. They also need to navigate jurisdictional complexities to secure fast access to power grids, effectively utilise power storage solutions to ensure consistency of power, and negotiate PPAs to provide cost certainty, to name but a few attributes. In short, specialism is key.

We believe that investing in these specific areas provides compelling growth opportunities for investors. In the process, they can capitalise on the progressive stages of the journey to net zero: 1. decarbonising power generation, 2. electrification of power demand, and 3. enabling the decarbonisation of hard-to-abate segments of the economy (e.g. heavy industrial sectors).