The UK’s energy sector could attract £350bn of private capital during the next three decades if it does more to develop attractive assets for investors, according to research by Lane Clark & Peacock (LCP).
The consultancy firm explained how insufficient investment is often put down to a lack of demand from investors, when the problem has in fact been due to a lack of supply of assets at the right risk/return levels. It said that the energy industry needs to move away from the assumption that equity assets are the only game in town for investors, given that bonds, for instance, are by far the largest holding of corporate defined benefit pension funds.
With greater deployment of technology and other assets, LCP estimates that the energy sector could attract £12bn of annual investment every year until 2050. However, a business-as-usual scenario would leave a funding gap of £100bn by 2030.
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