Unlocking the ‘missing middle’: Investing for growth and powering the energy transition
We share real-life examples of mid-market platforms in which we have invested – and that represent a key opportunity to capture the resilience and high-return potential of energy transition infrastructure.
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In a world increasingly shaped by the converging imperatives of decarbonisation, affordability and energy security, infrastructure investors continue to seek differentiated, resilient ways to deploy capital – and to source potentially premium returns.
Our previous white paper explored high-conviction themes that we believe offer compelling access points to energy transition infrastructure, maximising future return opportunities across this dynamic and rapidly-evolving sector.
Among these, the paper highlighted how Schroders Greencoat is addressing the so-called “missing middle” – the overlooked segment of infrastructure investment that sits between very large-scale, de-risked operational assets favoured by mega-funds and the early-stage (and generally more risky) technology investments typically targeted by venture capital.
This article builds on that analysis, focusing on how we bring this thesis to life in energy transition infrastructure specifically. We do this through backing and growing mid-market platforms: scalable companies operating, developing and deploying assets that are primed to expand into new segments and markets.
These investments are grounded in asset backing and existing operational assets, with a clear path to expansion and growth – a powerful combination that we believe can deliver long-term value for investors.
Filling the gap in the market
Over the last decade, the infrastructure investment landscape has changed significantly. The number of funds rose steadily from 121 in 2014 to over 200 annually between 2020 and 2022, before falling back to around 100 in 2024 in line with a wider fundraising slowdown.
At the same time, capital has become more concentrated. In 2024, and despite the drop in the number of funds, the average infrastructure fund size hit a record $1.12 billion, driven by a handful of mega-funds raising upwards of $25 billion.
Average infrastructure fund sizes have been rising, driven by mega-funds
Source: Schroders Greencoat, Preqin, February 2025.
These larger pools of capital naturally seek larger deals, concentrating activity around the biggest, most mature assets. At the other end of the spectrum, venture capital continues to flow into early-stage clean tech and climate innovation.
The result is a capital allocation void – the “missing middle” – where mid-sized infrastructure platforms lack sufficient funding to scale.
These mid-market opportunities are not start-ups. They are businesses with proven models, operational assets and credible pipelines – yet they often remain overlooked due to their size or complexity.
What we look for
Our platform strategy is underpinned by focusing on opportunities with some or all of four defining characteristics:
- Asset backing with growth potential: We favour companies that already own or operate assets, providing near-term income and mitigating early-stage risks, but that also have credible development pipelines or that can be scaled through bolt-on acquisitions.
- People-led growth: We back people as much as projects; teams with deep market expertise and strong execution track records are essential.
- Exposure to future-facing technologies: Green hydrogen, battery storage, biowaste – we actively seek platforms that can lead in emerging energy transition segments that are increasingly critical to global decarbonisation.
By targeting businesses with these attributes, we’re able to construct portfolios that are resilient, diversified and positioned for long-term growth. Below we highlight three examples of platforms we have invested in across our strategies, reflecting the real opportunities we see in the market.
Carlton Power: Scaling up green hydrogen production
Hydrogen is a critical fuel of the low-carbon future – and green hydrogen, produced through renewable-powered electrolysis, is gaining momentum. Since 2021, low-emissions hydrogen production has risen by more than 50%, with electrolysis capacity seeing a ninefold increase – and a threefold increase year-on-year.
Green hydrogen production and capacity is increasing
Source: International Energy Agency, October 2024.
In the UK, the Government allocated £2bn in subsidies to 11 projects in its first hydrogen project allocation round. A further 27 applications where shortlisted for the second round in April 2025. Carlton Power is well posited to benefit from this opportunity, having developed gas and power assets for over two decades.
In 2023, Schroders Greencoat formed a joint venture with Carlton, securing exclusive access to its hydrogen pipeline for four years. This structure allowed Carlton to retain a stake in the assets as they went through construction to operation, while providing us access to a large pipeline without taking substantial development risk. Thus, interests converged with a common goal: to develop, construct and operate a 500MW portfolio of green hydrogen projects across the UK by 2030.
Three initial projects – in Greater Manchester, Cumbria and Devon – have been awarded subsidies in the UK’s first allocation round. Each is structured around a clear offtaker-led model, with demand from industrial users such as the paper and mining sectors ensuring immediate utilisation. Meanwhile, support from government provides pricing certainty, delivering visibility on cashflows and de-risking project economics.
Our role is to accelerate delivery – from project capitalisation to construction. These projects exemplify the kind of offtaker-linked, scalable platforms that can underpin the UK’s push to decarbonise hard-to-abate sectors.
BelEnergia: Building a Southern European renewable champion
BelEnergia is on its way to becoming a leading independent power producer in Southern Europe. It specialises in wind and solar power production, and is also a leading regional producer of biomethane produced from organic waste.
Biomethane, also known as ‘renewable natural gas’, can be used as an alternative to natural gas without any changes to existing transmission infrastructure. It can also be used as a low-emission alternative fuel in transportation. The sector is experiencing rapid growth, with capacity expanding in Europe especially to help meet targets for decarbonisation and energy independence.
Evolution of European biomethane production facilities
Source: EBA Database
Headquartered in Italy – a region with abundant sunlight to drive solar power generation and strong regulatory tailwinds for renewables and biomethane – the company combines a robust operational base with deep technical expertise in developing high-value renewable projects.
Schroders Greencoat invested with a clear rationale: to support BelEnergia in doubling down on its core strengths. We are helping the company concentrate its strategy on biomethane and solar, strengthen its management team, optimise its financial structure and implement the processes needed to operate at a larger scale.
With a clear roadmap to 2029, BelEnergia is now executing a growth strategy centred on expanding in Southern Europe’s most attractive markets.
Bring Energy: Decarbonising heat through district networks
Heating accounts for a quarter of UK carbon emissions. Despite this, less than 3% of UK homes are connected to district heating networks, which provide a low-carbon supply of heat by recirculating energy released as heat from a range of sources.
Share of residential heat demand supplied by district heating
Source: Ramboll, European Commission, 2020.
Compare that to Nordic countries, where penetration exceeds 50%, and the opportunity becomes clear. The UK government is focused on supporting the opportunity, for example by supplying new grant funding and introducing policy measures such as heat zoning, which mandate connection to local heat networks for government and other new buildings.
Catalysed by these and other measures, the Climate Change Committee estimates that the market share accounted for by district heating networks will rise from less than 3% in 2022 to more than 20% by 2050.
Bring Energy is the UK’s largest district heating platform. Schroders Greencoat acquired a significant stake in December 2023, attracted by the scale of the opportunity and the potential for impact. Bring operates 12 networks with a combined capacity of 432MW, and holds city-centre concessions anchored by public sector, commercial and residential offtakers.
Our investment thesis is built on two pillars: first, organic growth through expanding existing networks and winning new ones; second, decarbonising current infrastructure, with the goal of becoming fully zero carbon by 2035.
Importantly, Bring’s networks operate under exclusivity zones – a structural feature that provides stable, long-term revenues and limits competition. With strong policy support and growing public awareness, district heating is poised for rapid growth – and Bring Energy is ideally positioned to lead that transformation.
Real assets, real growth, real impact
In a market where average infrastructure fund sizes are rising and capital is becoming more concentrated, mid-market platforms represent a compelling investment opportunity. They offer the ability to deploy capital at scale, support the energy transition, and deliver robust, long-term returns.
Whether through green hydrogen, biowaste, heat decarbonisation or the numerous others that Schroders Greencoat have supported and funded, the platforms we back are already making a difference – and have clear, investible routes to deliver potentially strong future growth. As investors seek resilience and returns in a volatile world, platform strategies offer something increasingly rare: the ability to do well by doing good, and to do both at scale.
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