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Global infrastructure development: 2020 in review

Michael Rautmann
Michael Rautmann
Global Head of Emerging and Frontier Markets, Refinitiv

The number of global infrastructure projects continued to grow in 2020, in spite of the COVID-19 pandemic, and are expected to be part of the efforts to stimulate the global economic recovery. As 2021 plays out, what role will sustainable infrastructure projects play in this process?

  1. Global infrastructure projects are expected to form the bedrock of plans for economic recovery from the COVID-19 pandemic.
  2. In 2020, more than 2,500 global infrastructure projects were announced — an increase of 5.5 percent from 2019. Over half of these were classed as sustainable infrastructure projects, such as wind and solar power.
  3. Despite global demand, the infrastructure investment gap remains significant. Investors need access to transparent, reliable data sources in order to understand, analyze and deliver profitability for any capital employed.

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Last year, we suggested that 2020 could be ‘the year for infrastructure as an asset class’. With a major infrastructure funding gap, and a low interest rate environment pushing investors to seek returns in alternative asset classes, the challenge identified was ensuring capital holders had access to transparent data.

Fast forward to January 2021, and infrastructure is now expected to play a key part in the economic recovery of both emerging and developed markets post COVID-19, with Joe Biden’s ‘build back better’ scheme promising to ‘lay a new foundation for sustainable growth’.

Against this backdrop, Refinitiv has launched Infrastructure 360: A comprehensive set of news, data, insights and analytics on global infrastructure developments from rumor to close.

Experience Infrastructure 360 on Refinitiv Workspace

So, what can the data tell us about global infrastructure in 2020?

Number of projects grows in 2020

Our database shows that 2,551 projects were announced between 1 January and 31 December 2020, with a total value of $739 billion (bn). That’s a 5.5 percent increase on number of projects announced in 2019, suggesting the pandemic has had little effect in slowing infrastructure ambitions.

The geographical breakdown shows that North America held the highest value of announced projects at $167bn, followed by Western Europe at $136bn.

Geographical breakdown of global infrastructure projects
Source: Infrastructure 360

All eyes on ESG: Renewables seen as global priority

As Dewi John, Head of Research, UK & Ireland at Refinitiv Lipper commented, demand for sustainable infrastructure investment opportunities in particular is growing.

Of the 2,551 projects announced, 1,437 (56 percent) were categorized as renewables (such as biomass, geothermal, hydroelectric, solar and wind). In that sense, they can be classed as ‘sustainable’ projects.

This is the fifth consecutive year that the number of sustainable projects announced has trended positive.

Given this trend, it’s unsurprising that of all sectors, power saw the highest number of projects announced in 2020, followed by transportation.

Solar and wind account for 79 percent of all power projects and are slated to see continued growth in the coming years.

It was a UK-based wind project — Dogger Bank A and B Offshore Wind Farm — that won green deal of the year at the 2020 PFI awards. Developed under a government-run contract for difference scheme, Dogger Bank is expected to provide the UK’s largest single source of renewable energy.

Dogger Bank A and B Offshore Wind Farm; Infrastructure 360. Global infrastructure development: 2020 in review.
Source: Infrastructure 360

Off-shore wind isn’t just a focus for the UK.

Filtering by total cost, the highest value wind project announced last year — La Gan Off Shore — was based in Vietnam. This has an estimated cost of $10bn, although it has yet to be financed.

La Gan Off Shore; Infrastructure 360. Global infrastructure development: 2020 in review.
Source: Infrastructure 360

The picture is similar in the U.S., where House Democrats recently introduced a bill to set a 25GW offshore wind target by 2030, including 12.5GW by 2025. Biden’s presidency will likely add further momentum towards renewable energy.

Financing doesn’t look to be a major concern here, because large oil companies will be under increasing pressure to move away from fossil fuels.

BP recently contributed $1.1bn to take a 50 percent stake in two Equinor-owned offshore wind farms on the East Coast. Its first deal of that nature in the U.S.

Watch — Follow The Sun 2021 Predictions 24-Hour Special: Infrastructure as an asset class in 2021

Looking ahead to 2021 in global infrastructure

So, while the pandemic will have undoubtedly disrupted multiple infrastructure projects, the sector isn’t slowing down anytime soon.

Green infrastructure is on the rise, and as governments plan to stimulate their economies and meet carbon reduction targets in tandem, focus will continue to be placed on renewables.

The shift towards remote working will also necessitate developments in telecommunications such as fiber, broadband and data centers.

Yet the infrastructure funding gap has only widened over the past 12 months. While the number of projects announced increased YoY, the total value of deals financed was 8.7 percent less than in 2019.

For the Asia Pacific region, total value of deals financed was nearly 30 percent less.

In emerging markets, public spending and investment are likely to be limited in the coming months, as the focus remains on getting countries through the pandemic with healthcare systems intact.

Meanwhile, private savings in the hands of institutional investors are at an all-time high (US$104tn in assets under management). Attracting private capital is therefore more important than ever.

While investors will need to pay close attention to country risk rankings, access to reliable and transparent data will make it far easier to qualify opportunities.

With Infrastructure 360, Refinitiv offers a complete workflow on deal structuring, financing, risk profiling, regulatory compliance and lender, investor, and advisor profiles. This will enable users to make informed decisions that maximize returns.

Experience Infrastructure 360 on Refinitiv Workspace

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