Should investors focus infrastructure exposure on the energy transition?
Energy-transition infrastructure provides differentiated exposure to rapidly evolving subsectors with attractive competitive dynamics and is remarkably uncorrelated to traditional infrastructure portfolios.
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For more than 200 years, the global economy was dependent on fossil fuels for its energy needs. This is now rapidly changing.
Renewable energy, driven by the power trio of decarbonisation, affordability and energy security, is becoming a critical factor in meeting future power needs. As such, the global energy transition represents a potentially unparalleled and attractive investment opportunity
Investors recognise this opportunity, but often assume that an investment into a wider infrastructure mandate, including exposure to energy-transition assets, as well as utilities, transport and digital infrastructure, would offer a broader opportunity set.
Yet, given that investors’ capacity to allocate to alternative assets is finite (on average representing around 14 percent of portfolios, according to Schroders research), and is therefore a scarce resource whose value must be utilised to its full potential, we believe maximising investment in the energy transition is crucial for a high-performing portfolio, for three key reasons:
- Energy-transition allocations are highly differentiated compared to all other investments held in a portfolio.
- Energy investment is a growing, primary focus in infrastructure.
- Beyond economic and portfolio gains, the energy transition offers vital sustainability benefits.
In this paper, first published in the March 2026 issue of Institutional Investing in Infrastructure and based on a report from Schroders Greencoat published previously in January 2025, we examine each of these three themes to explain why investors looking to allocate to infrastructure should consider concentrating their allocations in the energy transition.
In doing so, we believe they can benefit from potentially enhanced portfolio diversification, resilience and return potential.
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