Investing in infrastructure: navigating complexity and dependencies

The previous sections examined where capital is flowing and how it is structured. This section looks at what determines whether an asset actually reaches the point where that capital can be deployed – and why the work required to get there is where much of the value in infrastructure now sits.

The development phase

Infrastructure assets do not arrive on the market ready to buy. Before an institutional investor sees a contracted, consented, grid-connected asset with 20 years of predictable cashflow, a team has typically spent years navigating the development process that produced it: 

• assembling the site through land acquisitions, options, and long-term leases; 
• securing a grid connection; 
• obtaining planning consent; 
• negotiating offtake; 
• managing interface risk across multiple counterparties; and 
• assembling the holding and contractual structure that makes the asset financeable.

That development work is, increasingly, the binding constraint on the market. The capital is there, as Section 1 showed. What is scarce is the supply of assets that have cleared the development hurdles. 

Grid position: the constraint that sits upstream of everything else

Across most infrastructure segments, grid access has replaced capital availability as the primary bottleneck. A data centre can be built in 12 - 18 months; securing the power to run it takes eight to ten years in the UK for a new 50MW facility.¹ More than 2,500 GW of renewable, large-load, and storage projects sit in global connection queues.²

The UK’s connection reform – which replaced the first-come, first-served queue with a first-ready, first-connected system in June 2025 – is a direct response.³ Projects now hold their queue position only if they meet tougher gate criteria, and the Government is introducing commitment fees ranging between 2.5% and 7.5% of average project connection costs to weed out speculative projects. The system operator can terminate where milestones are missed. That is a significant shift and will reward  sponsors who are genuinely progressing development.

The result is that grid position now sits ahead of technology choice, planning consent, and construction readiness. An asset with a secured connection commands a premium; one without faces a multi-year queue and an uncertain timetable. In practice, we are seeing grid connection status drive valuations more than any other single factor in renewable and storage M&A.

The contract is the product

What ultimately converts a development-stage asset into something institutional capital will buy is the contract. A 20-year power purchase agreement (PPA) turns a merchant generator into a contracted asset by transferring price and volume risk to the offtaker. The offtaker accepts that risk because power availability constrains how much capacity it can bring online, and a fixed long-term price hedges the scarcity its own demand is creating.

This dynamic is most visible in data centres, where hyperscaler demand has extended typical PPA durations from 10 or 12 years out to 20. The strength of the counterparty credit is what makes the contract bankable, which is why energy assets tied to data centre load now underwrite more readily than comparable merchant capacity. Battery storage follows a similar pattern: tolling agreements and long-term offtake have given lenders the predictable cashflow that merchant-only projects could not, opening the segment to infrastructure debt for the first time.

Fibre tells the opposite story. Speculative build, limited contractual certainty, and continuous pricing pressure have made long-term contracted revenue difficult to substantiate. Investor appetite has cooled accordingly – a useful reminder that it is the contract structure, not the technology, that determines financeability.

The common thread is that the buyer of an operational infrastructure asset is paying for the development work it took to produce it – the queue position, the consent, the interface negotiation, the offtake. 

Looking ahead

For investment professionals, the takeaway is that execution risk (not capital availability) can be a limiting factor in infrastructure deployment. Three points follow:

• Assess the connection risk, not just the asset. Grid position is the clearest leading indicator of whether a project will reach financial close. Assets with secured connections will continue to attract premium valuations.
• The contract determines the capital. The type of offtake – its duration, counterparty credit, and risk allocation – dictates whether an asset attracts equity only or can also access debt. Sponsors who can negotiate and structure the right contract will unlock a broader and cheaper capital base.
• The real barrier to entry is execution. The barriers to entry in infrastructure are no longer primarily about capital. They are about the ability to navigate planning, connection, and interface risk across multiple counterparties and regulatory regimes – and to produce, at the end of that process, an asset packaged enough for institutional capital to buy.

The next section of this report examines how the policy and regulatory environment shapes that process: Investing in infrastructure: when public policy meets private capital.