Energy transition investors shift to storage, hydrogen and power demand

Schroders Greencoat says capital needs remain vast.

Energy transition infrastructure is moving beyond renewable generation alone, with battery storage, green hydrogen, and rising electricity demand from sectors such as data centres emerging as the next major investment opportunities, according to Schroders Greencoat.

The asset manager said renewables have remained central to infrastructure investing, accounting for 77% to 87% of energy-related infrastructure deals each year since 2020, whilst global investment in the energy transition reached about $2t in 2024.

Yet it said current-policy pathways still imply roughly $28t of additional infrastructure buildout through 2050, highlighting how much capital is still required.

Schroders Greencoat said one of the clearest openings is in mid-market platforms, where fundraising has become concentrated in mega-funds and early-stage venture capital, leaving mid-sized infrastructure businesses with operational assets and growth pipelines short of scaling capital.

It said these platforms can offer investors a mix of infrastructure-style income visibility and private equity-style expansion.

Battery storage was identified as another key growth area, as higher renewable penetration drives power price volatility, curtailment risk, and more hours of zero- or negative-pricing.

Schroders Greencoat said storage can smooth imbalances by shifting power from periods of oversupply to times of stronger demand, supporting both grid resilience and renewable project economics, with Europe’s battery storage capacity projected to rise from 12GW in 2024 to 115GW by 2033.

The report said the next phase of the transition will also depend on creating more demand for renewable power. It pointed to green hydrogen, electrified heating, electric vehicles, and digital infrastructure as important drivers of future electricity consumption, arguing that the value of renewable assets will increasingly depend on how effectively they are linked to industrial offtake and fast-growing end markets.

Green hydrogen is gaining momentum as a source of industrial demand, the report said, with low-emissions hydrogen production up by more than 50% since 2021 and electrolyser capacity expanding sharply.

It added that major companies, including BP, Shell, TotalEnergies, and EWE, reached final investment decisions in 2024 on green hydrogen projects totalling more than 1,000MW, whilst data centre electricity demand could double within a few years as artificial intelligence expands.

Schroders Greencoat said the investment case now spans generation, storage, hydrogen production, grid reinforcement, electric vehicle charging, heat networks, and powered land.

It said investors able to connect renewable generation with storage and emerging demand centres would be better placed to capture durable value as the energy transition broadens from a supply story into a system-wide infrastructure buildout.