What does long-term value look like when the future is becoming harder to predict? As infrastructure leaders navigate accelerating change across energy, water, communities and industry, Nexus Magazine explores how strategic foresight can help organisations make better decisions today. From electrification and resource security to legacy assets and investment priorities, we examine why the most valuable infrastructure will be the infrastructure that continues to hold its value as the world changes around it.
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Infrastructure that holds its value
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Contents Introduction:
Infrastructure that holds its value ...................................... 3 Good design is good business ........................................... 4 Why cities can no longer afford the “cheap” infrastructure option ..................................... 8 Gas to power Why energy reliability hinges on the contract more than the plant ................................... 13 The asset that survives the forecast .............................. 18 Ambition alone will not decarbonise infrastructure .............................................. 22 Water runs the world .......................................................... 27 Gold to gigawatts Turning old mines into renewable energy ............................................................... 31 Cheap today, costly for a century .................................. 36 Unlocking the grid: Investing in energy security .............................................. 41 About the authors .............................................................. 46
Welcome to the third edition of Nexus Magazine. This quarter we discuss how the infrastructure we design today will shape the choices available tomorrow. very major infrastructure decision encodes assumptions about the future: about demand, technology, climate, regulation, capital, community expectations and the systems those assets will need to support. For infrastructure leaders, this is no longer a theoretical issue. A substation is not just a substation when electrification is accelerating. A water asset is not just a water asset when scarcity, resilience and liveability are converging. A legacy mine is not just a closure challenge when land, energy and circular economy opportunities are being reimagined. The context around infrastructure is changing and with it, the definition of long-term value. It is no longer enough to optimise for a single expected future. The more important question is whether the decisions we make today can continue to create value across a range of plausible futures. This is the work strategic foresight helps enable. It gives leaders a way to challenge inherited assumptions, explore alternative conditions and identify where today’s choices may create tomorrow’s constraints or tomorrow’s opportunities. Across this edition of Nexus Magazine, you’ll see this shift reflected in different ways: in energy systems, urban infrastructure, investment priorities, policy settings and legacy assets being reconsidered through a new lens. Together, these shifts point to a future where the most valuable infrastructure will not simply be the infrastructure that performs well on day one. It will be the infrastructure that continues to hold its value as the world changes around it.
Anne-Marie Kirkman Strategic Growth Initiatives - Global Program Lead, GHD E
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise without the prior permission of the Public Relations Department, GHD.
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Good design is good business
When I sit down with a client, the first questions I hear are usually, “What will this look like?” or “How much will the design cost?” One client asked me those questions ahead of plans to double their workforce, assuming they also needed to double their building footprint. The question I wished they had asked is, “What value can we create together?”
Jane Cassidy Distinguished Technical Leader - Director, GHD Design
I explained that by reworking their existing space, they could avoid an expensive and potentially wasteful new build. Good design earns its place early in these conversations by testing assumptions before a project gathers speed. In this case, it saved the client billions of dollars — not just in the financial and environmental costs of a needless new build, but also in the lifetime running costs of those buildings. Architecture’s value is as much about experience as it is finances. We instinctively understand the importance of the user experience in the world of technology. Buildings are no different. They shape how we work, learn and connect every day. For centuries, architects have been weighing how much money, environmental impact, risk and time a project will take against how people experience the value created. Much like the best CEOs, good architects lean into that complexity early, making decisions without complete information to steer a project away from overspend or redundancy. In other words, good design is good business. It’s a maxim coined by IBM’s midcentury CEO Thomas Watson Jr., who turned design from an afterthought into a core corporate strategy. The worlds of tech and product have cleaved to it ever since, integrating design into boardroom discussions as second nature.¹ The built environment has just as strong a claim to encapsulating the value of that idea. This is easy to forget in a world where public (and often client) thinking is shaped by social media trained us to judge a building by how well it photographs. Treating architecture as purely cosmetic misses an opportunity to create value for clients and communities.
Doing so also ignores architects’ roles as optimisers and integrators. Our value proposition to clients is that we know how to “do more with less.” Of course, beauty matters, but design is strongest when it comes from clear business decisions about value and use. Commercial discipline is inherent in that applied creativity. A study by Accenture’s creative and technology arm found that 81 percent of business leaders say their organisations can generate creative ideas, but only 16 percent turn them into growth. Like that 16 percent, architects can generate creative ideas and are trained to apply them, delivering better outcomes.² Understood properly, good design delivers better assets long before concrete is polished or engineered oak is installed. The highest cost on any project is not construction; it’'s making decisions too late. The later the decision, the higher the cost Later-stage changes become more expensive, disruptive and carbon-intensive.
Early-stage design decisions have the highest
influence on value and the
lowest cost to change.
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That sensibility is clear in the work of architects such as Kevin Carmody of London’s Carmody Groarke (for full disclosure, he is also my cousin). Carmody has built much of his reputation on adaptive reuse: reworking existing buildings instead of replacing them. He reworked the Urquhart Building, a 32,000 sqm Brutalist structure on a former World War II munitions site in Boston Spa, into a key part of the British Library’s redeveloped campus.⁴ Doing so allowed him to save thousands of tonnes of waste and reduce costs. It’s true that my hierarchy is a moral and design preference. But it’s also a pragmatic financial framework. The earliest decisions on structure and materials lock in risk for the building's life and the communities it affects. It’s a risk-based approach. A building’s embodied carbon is a case in point. Roughly half of it sits in the superstructure, so an early call to adaptively reuse existing structures or use low-carbon concrete or mass timber is one of the largest strategic decisions a client will make.
Half the carbon is decided early Embodied carbon across major building components,
Superstructure Dominant embodied carbon category.
In the same way, carefully taken decisions can also stand in for big budgets. Chairing last year’s National Architecture Awards jury in Australia, I saw how architects are using tight budgets to meet the social, environmental and economic needs of complex projects.⁵ Many of the best projects challenged the notion that affordability must come at the expense of quality or dignity for those who use them. They were the physical result of optimism meeting discipline. At scale, housing affordability, climate urgency and social fragmentation are where cities are solved or scaled. Good design is how we respond. Those same early choices decide whether a place isolates people or brings them together. The importance of that doesn’t show up on the build cost, but it becomes value that compounds for years. You can see those good choices in the way that a city that works knits together. Applied creativity moves beyond individual buildings to create systems of care and connection: cities that endure and support prosperity. Each human-made space and city tells a story about what we value. In a world growing more volatile by almost every economic, political and environmental measure, the cost of not using an architect is only rising. The best architecture delivers multiple returns that flow into long- term stability and prosperity. Bring in good design at the start, and what looked like an expense becomes the reason the project works.
In order of importance, I try to convince clients to build nothing if they can rework what they already have, build less where they can, and build well where they must. Unsurprisingly, I’ve never finished a project with a client unhappy that I’d saved them money.
Take the European worker sweltering through a heatwave in an office made for a colder climate. That building’s ability to retain heat was fixed years before anyone moved in. The worker, their colleagues and their employer will pay for it in comfort and in energy bills for decades. When a building or space is being discussed, the members of the project responsible for finance, emissions or planning often pull in different directions. Instinct might dictate that the architect, the person responsible for navigating those contradictory forces, should try to cut that tension or simplify it. But instead of trading one choice for another, we have to serve every stakeholder at once, and do so early. More than just designing buildings, architects design the decisions that shape a project’s risk and long-term value. More than ever, architects consider whether a build even needs to happen. Since I learned the principle of
Substructure Envelope Services Finishes External works
A smarter brief starts before the building
Build wel l Invest in quality, resilience and long-term performance
References
Build less Reduce footprint, materials and operational demand
1. IBM. n.d. "IBM Design." IBM Heritage. https://www.ibm.com/history/design-program 2. Accenture Song. 2025. Applied Creativity—and How to Lead It. By Nick Law. https://www.accenture.com/gb-en/insights/song/applied-creativity 3. Pritzker Architecture Prize. 2002. "Glenn Murcutt." The Hyatt Foundation. https://www.pritzkerprize.com/laureates/2002 4. Carmody Groarke. n.d. "British Library, Boston Spa." https://carmodygroarke.com/work/british-library-boston-spa 5. Australian Institute of Architects. 2025. "2025 National Architecture Awards Jury Announced." March 24. https://www.architecture.com.au/archives/news_media_articles/2025-national- architecture-awards-jury-announced
“touching the earth lightly” from Glenn Murcutt (one of my architectural heroes), it’s governed how I think about the genuine needs of a project.³
Build nothing Optimise, repurpose or reconfigure existing assets
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O f course, nearly everyone would potentially a replacement. Yet cities have effectively been opting for the cheap roof for decades. Urban planners and political leaders tend to fixate on the upfront capital cost of new infrastructure, understandable given their fiscal restraints and the short political calendar. But it’s a false economy, the only rational cost to focus on is the entire infrastructure life cycle. As cities globally come under increasing climate stress, the costs of that approach are growing and risk becoming unsustainable. choose the 30-year roof. It’s easy to see that the cheaper option isn’t fiscal prudence – it’s a decision to pay more over time on repair, maintenance and Over 800 million people living in 570 cities could be at risk from sea level rise by 2050 if emissions continue on their current trajectory¹. In the U.S., climate disasters have cost the economy USD 6.6 trillion over the past 12 years². Yet funding for climate resilience is
falling far short of what’s required. Some 124 U.S. cities reported seeking USD 40.8 billion in climate resilience funding in 2024, against an overall investment need of USD 62.7 billion³. The need for a different approach is clear: policymakers need to prioritise durability and cost-effectiveness across the whole life cycle and to treat infrastructure as a system rather than a series of disconnected ribbon- cutting events.
The resilience funding gap is widening
USD 62.7B
Investment required
USD 40.8B
Funding sought Funding shortfall
Why cities can no longer afford the “cheap” infrastructure option
USD 21.9B
Imagine you’re a homeowner in need of a new roof. One option will last 10 years; the other 30. Both jobs require the same labour, but the more durable solution has a 5 percent premium
for higher-quality design and materials. Maria Lehman Business Development Leader - Region GHD
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Financial forces aligning behind resilience The positive news is that financial forces are increasingly aligning with the more rational approach. The smart choice is becoming the obviously more economical choice. This provides a stronger impetus for resilient infrastructure than any policy or climate argument. In the U.S., rising insurance premiums⁴ on homes in vulnerable areas and doubts over the future of FEMA⁵ are weakening the safety net that have allowed developers and cities to externalise climate risk. As that risk gets repriced, it will be reflected in lower interest rates for truly resilient infrastructure – helping offset the higher upfront cost. The municipal bond market, which funds the majority of U.S. public infrastructure, is increasingly rewarding a long-term approach. The average maturity of U.S. municipal bond issuance has lengthened from 16 years a decade ago to 20 years in 2025, according to SIFMA data – extending the horizon over which investors must consider operational and maintenance performance⁶. Much longer durations are becoming more common. New York’s Governor Mario M. Cuomo Bridge is now financed with bonds running through 2056⁷. Chicago's City Council in early 2025 approved an USD 830 million bond issue with a 40-year repayment schedule to fund road, bridge and other infrastructure projects⁸. What resilience looks like The financial case for durable infrastructure has always been there. Every $1 invested in resilience saves $13 in economic impact, damage and cleanup costs after the event, a 2024 report produced by the U.S. Chamber of Commerce found⁹. The
Thinking in systems, not projects
Why resilient cities outperform Project mindset
Cities leading the way on resilient infrastructure have one thing in common – they think in systems rather than one-off projects. Their infrastructure choices reinforce one another, targeting a “triple bottom line” of economic, social and environmental returns. Amsterdam has learned to adapt its water management over centuries. Rather than just fighting rising water, it has found ways to live with it and use it to support its broader resilience goals. The nutrient-rich silts created by centuries of river and marine sediment have given the Netherlands some of Europe's most productive farmland, while windmills that began as pumping mechanisms have evolved into a renewable energy source. Amsterdam’s latest use of its canal system for transport consists of a fleet of autonomous electric water taxis, contributing to the city’s target of being a fully circular economy by 2050 12 .
System mindset – Lowest lifecycle cost – Network and system focus – Whole-of-life value decision – Economic, social and environmental returns – Planned resilience.
– Lowest upfront costs – Individual asset focus – Capital expenditure decisions – Single outcome – Reactive maintenance
Water Transport
Communities Energy
Economic activity
New Orleans provides a powerful example of why. After Hurricane Katrina, the Army Corps rebuilt the city's levees to a 100-year storm standard, a major upgrade from pre-Katrina defenses, though still short of the 500- year standard that many engineers and state officials believe is necessary. When Category 4 Hurricane Ida struck in 2021, the levees protecting New Orleans held, even as some unprotected suburbs outside the system flooded. Engineers involved in the rebuild noted the system likely exceeded its official 100-year standard and was closer to a 200-year benchmark 10 . Unfortunately, that contrasts with the ageing and inadequate state of levees throughout the country. The country’s 24,000 miles of levees have an average age of 60 years, with maintenance patchy and often deferred 11 . Many of them are earth embankments built decades ago to protect farmland, but now play a crucial role in protecting densely populated neighbourhoods from floodwaters. Financial realities mean that not every infrastructure project needs to be built to the maximum standard. Spending can be calibrated to the scale of risk and designed to enable cities to withstand and recover from extreme events rather than emerge completely unscathed. Applying this “functional recovery” standard in practice, a city could aim to keep two lanes of a highway open during a flood rather than all four or prioritise a dam that protects a nuclear power plant over one that protects a sparsely populated area. Reasonable resilience goals could be no deaths, continued commerce and to allow recovery to begin.
$1 $13 13x Invested Saved Returned
strongest business case in infrastructure
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Why energy reliability hinges on the contract more than the plant Gas to power When winter storm Uri knocked out power
across Texas five years ago, it was a worst-case scenario for the millions of people left freezing in the dark in the most energy-rich state of the world’s largest economy. That’s what can happen when reliable electricity capacity falls short.
Singapore treats its infrastructure as a single, integrated system, mandating that every new building contribute to rather than simply draw from, the city-state's resources. Wastewater is recycled into buildings, which increasingly have green walls and roofs. Some 80 percent of its buildings are on course to be “greened” (meeting minimum energy standards) by 2030 13 . Singapore’s unified approach to resilience underscores the importance of coordination frameworks for implementing plans across regional and political boundaries. Climate effects don’t stop at city or county limits. That’s a real barrier to effective resilience in more politically contentious societies like the United States. Southern Florida, among the most vulnerable regions to rising sea levels, has shown the value of a bipartisan approach. Politically diverse counties, including Miami- Dade, Monroe and Palm Beach, have been coordinating since 2009 to reduce regional greenhouse gas emissions, implement adaptation strategies and build climate resilience 14 . References 1. C40 Cities. 2018. "Sea Level Rise and Coastal Flooding." C40 Cities. https://www.c40.org/what-we-do/scaling-up-climate-action/water-heat-nature/ the-future-we-dont-want/sea-level-rise/ 2. CDP. 2025. "From Climate Risk to Investment Opportunity: Filling the Funding Gap for Cities." September 19. https://www.cdp.net/en/insights/from-climate-risk-to-investment-opportunity 3. CDP. 2025. "From Climate Risk to Investment Opportunity: Filling the Funding Gap for Cities." September 19. https://www.cdp.net/en/insights/from-climate-risk-to-investment-opportunity 4. Flavelle, Christopher, and Mira Rojanasakul. 2024. "As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose." New York Times, May 13. https://www.nytimes.com/interactive/2024/05/13/climate/insurance-homes- climate-change-weather.html 5. Sganga, Nicole. 2026. "New Analysis Warns FEMA Overhaul Would Make Disaster Aid Harder to Access, Shifting Costs to Survivors." CBS News, June 9. https://www. cbsnews.com/news/new-analysis-fema-overhaul-trump-disaster-aid/ 6. SIFMA. 2026. "US Municipal Bonds Statistics." June 15. https://www.sifma.org/research/statistics/us-municipal-bonds-statistics 7. Baker, Christina. 2025. "New York Thruway Authority Rings in New Year with a Refunding Deal." Bond Buyer, December 29. https://www.bondbuyer.com/news/new- york-thruway-authority-rings-in-new-year-with-a-refunding-deal
A hopeful moment Despite the growing climate threats to aging
Hassan Modarresi Senior Technical Director , GHD
infrastructure, I believe we’re at a hopeful moment. The financial calculus is changing in a way that makes the fallacy of “saving money” on less resilient projects clearer than ever. Meanwhile, the growing real-world effects of our changing climate will make it increasingly costly to pursue any infrastructure approach other than a unified, systemic one. More than ever, infrastructure has to be durable, cost- effective and efficient. It’s time for leaders to stop evaluating projects purely by sticker price and instead mandate life-cycle cost analyses that provide a true picture of their value.
8. Eng, Monica. 2025. "Chicago City Council Passes Controversial Bond." Axios, February 26. https://www.axios.com/local/chicago/2025/02/26/chicago-city- council-passes-controversial-bond 9. U.S. Chamber of Commerce, Allstate, and U.S. Chamber of Commerce Foundation. 2024. The Preparedness Payoff: The Economic Benefits of Investing in Climate Resilience. June 25. https://www.uschamber.com/security/the-preparedness- payoff-the-economic-benefits-of-investing-in-climate-resilience 10. de la Garza, Alejandro. 2021. "Engineers Bent the Rules, and May Have Saved New Orleans." Time, September 2. https://time.com/6094221/hurricane-ida-engineering- protection/ 11. Vahedifard, Farshid. 2026. "West Coast Levee Failures Show the Rising Risks from America's Aging Flood Defenses." The Conversation, January 5. https:// theconversation.com/west-coast-levee-failures-show-the-rising-risks-from- americas-aging-flood-defenses-272556 12. C40 Knowledge Hub. n.d. "How Amsterdam Is Transitioning to a Circular Economy." https://www.c40knowledgehub.org/s/article/How-Amsterdam-is-transitioning-to-a- circular-economy?language=en_US 13. Building and Construction Authority (BCA), Singapore. 2026. "Singapore Green Building Masterplan (SGBMP)." Last updated March 18. https://www1.bca.gov.sg/ sustainability/sgbmp/ 14. Southeast Florida Regional Climate Change Compact. 2023. "Our Initiatives." November 2. https://southeastfloridaclimatecompact.org/our-initiatives/
R enewables already supply more than a third of Texas’s power and they do so relatively cheaply. But when disruptions inevitably occur, gas power should fill the void. The Uri crunch highlighted how ambitions for disruption-free electricity capacity depend on building the markets to finance that power. During Uri, frozen wellheads and unwinterised plants made gas the largest source of capacity outages, highlighting the need to incentivise providers to invest in readiness.⁴
Texas is an example of an electricity market where returns on what should be a lucrative commodity are often insufficient to justify the investment required to build it. Texas is far from alone. The same design runs through the world's handful of "energy-only" markets, where generators are paid for the electricity they deliver but not for simply being available to deliver it.
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Revenue design beats asset quality
Keeping the lights on isn't free
Demand is set to double and prices are already feeling it Projected 79%
That creates volatile and unpredictable cash flows. In contrast, markets such as PJM (serving 13 states, including Pennsylvania, New Jersey and Maryland) are ‘capacity markets’ that provide a more stable revenue base by paying plants for being available, not just for generating power.⁸ Identical plants can deliver very different financial outcomes depending on their revenue model. Modelling shows two identical projects generating gross margins of around 19 percent in PJM compared with roughly 5 percent in ERCOT.⁹
Texas is an “energy-only market” where generators are paid only for the electricity they produce. That leads to unpredictable cash flows and revenues that are highly dependent on rare price spikes. Without stable revenue, investors are finding it hard to finance new projects even when the system clearly needs them. As a result, developers are turning to contract-driven models. Behind-the-meter generation, where a plant is tied to a single large customer, is perhaps the clearest way to make the numbers work.⁵ Texas’s grid operator, the Electric Reliability Council of Texas (ERCOT), expects the state’s overall grid demand to nearly double before the decade is out.⁶ That pace of growth should, in theory, support major investment in new power capacity. Global trends point in the same direction, with natural gas investment climbing to a decade high.⁷ But in Texas, those signals do not automatically translate into viable projects. The challenge isn't asset quality but securing the predictable cash flows lenders and investors require.
price raise in 2027 driven by data centre demand.
Same plant, four times the margin Gross margin for two identical gas projects
2030 The state grid demand will nearly double before the decade is over.
PJM ("Capacity market - paid for being available") ERCOT ("Energy-only market - paid only for power produced)
19%
2020
5%
Nor can developers simply build bigger and bank on economies of scale. In practice, scale amplifies the challenge. A gigawatt plant carries disproportionately higher risks and costs across transmission, water, fuel and permitting, with grid connection alone potentially adding hundreds of millions of dollars and several years to the development timeline. For most of the year, Texas power is cheap and abundant, with higher prices confined to rare windows when prices spike. Meanwhile, PJM provides a stable capacity payment alongside energy revenues, creating a more predictable income stream. For investors, that’s the difference between a project that gets built and one that does not. The contract, not scale, makes the economics work In practice, ERCOT projects tend to require long-term contracts with large, creditworthy buyers, such as data centres, before lenders are willing to commit. 10 Texas lawmakers have taken note. While Senate Bill 6 (SB 6), which became law last year, does not fix the market's overall structure, it strengthens the business case for contract-backed gas-to-power projects. 11 By assigning more of the grid upgrade costs to large new loads, such as data centres, the legislation encourages direct partnerships between power generators and large customers through behind-the-meter and long-term contracted arrangements.
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While ERCOT is the only major US power market without capacity payments, it is a model found elsewhere, including in Australia's National Electricity Market. A government review there late last year reached a conclusion similar to that of Senate Bill 6: that the way to get new plants built is to underwrite them with long-term contracts. 12 AI data centres are rewriting the load curve and deal structure The demand side is also evolving. AI-driven data centres, like conventional cloud-based facilities, require extremely high levels of reliability. But a single AI site can demand hundreds of megawatts, while also introducing much sharper swings in load demand. Those fluctuations are difficult for the grid to absorb, calling for more responsive generation, storage and control systems. AI is set to drive rapid growth in data centre power demand, forcing developers to rethink how these loads are served. 13 On the one hand, many data-centre operators remain committed to clean energy and continue to prioritise renewables. On the other, even a mixture of battery storage, wind and solar struggles to sustain continuous operation under fast-changing loads. That forces reliability and sustainability to pull against each other. One emerging response is the integrated energy system: wind and solar supply most of the energy, while storage and dispatchable gas provide flexible, on-demand capacity to manage variability and maintain reliability. Behind-the-meter configurations allow these systems to serve large; high-reliability loads directly while reducing exposure to grid constraints. This approach is already visible in Texas, where Alphabet is developing energy parks through data centre energy group Intersect that combine renewables, storage and gas generation to support data centre growth. 14 How developers engineer certainty when the market won’t
Behind-the-meter may be more dependable than the alternatives, but it alone can't deliver the near- perfect reliability data centre demand. That level of dependability takes careful system design that builds in backup generation, redundancy and battery storage. Those measures have the added benefit of reassuring lenders.
Developers have to build certainty
Despite recent policy changes, ERCOT still doesn't pay for capacity, so developers must engineer stability through contracts rather than rely on the market alone. In practice, this is driving projects toward configurations built around large, anchored loads, often behind the meter or in close proximity to a single customer. These structures align generation with demand and provide the predictable cash flows that lenders require. Gas remains a reliable bridge alongside renewables, but reliability alone isn't enough. In an energy-only market, a plant’s bankability depends on how revenue is structured, not just how power is produced. When those elements come together, secured demand, stable contracts and resilient system design, gas-to-power projects stop being a bet on price spikes and become investable infrastructure that can support both reliability and the energy transition.
References
1. Wall Street Journal. "Winter Storm Forces Rolling Power Outages in Texas." February 15, 2021. https://www.wsj.com/us-news/climate-environment/winter-storm-forces- rolling-power-outages-in-texas-11613407767. 2. U.S. Energy Information Administration. "ERCOT increasingly meets rising demand with solar, wind, and batteries." October 24, 2025. https://www.eia.gov/todayinenergy/detail.php?id=66464. 3. Wall Street Journal. "Texas Electric Bills Were $28 Billion Higher Under Deregulation." February 24, 2021. https://www.wsj.com/business/energy-oil/texas-electric-bills- were-28-billion-higher-under-deregulation-11614162780. 4. Federal Energy Regulatory Commission, North American Electric Reliability Corporation. "The February 2021 Cold Weather Outages in Texas and the South Central United States: FERC, NERC and Regional Entity Staff Report." November 16, 2021. https://www.ferc.gov/media/february-2021-cold-weather-outages-texas- and-south-central-united-states-ferc-nerc-and 5. Reuters. "Texas Off-Grid Power Build Soars as Data Centers Bridge Grid Delays." May 6, 2026. https://www.reuters.com/business/energy/texas-off-grid-power- build-soars-data-centers-bridge-grid-delays--reeii-2026-05-06/. 6. Texas Public Policy Foundation. "New Report: Texas Transmission Costs Expected to More Than Double, Adding $100 Annually to Average Electric Bills." January 12, 2026. https://www.texaspolicy.com/press/new-report-texas-transmission-costs- expected-to-more-than-double-adding-100-annually-to-average-electric-bills. 7. International Energy Agency. World Energy Investment 2026. May 28, 2026. https://www.iea.org/reports/world-energy-investment-2026.
8. Federal Energy Regulatory Commission. "An Introductory Guide to Electricity Markets Regulated by the Federal Energy Regulatory Commission." n.d. https://www.ferc.gov/introductory-guide-electricity-markets-regulated-federal- energy-regulatory-commission. 9. Modarresi, Hassan. Gas-to-Power Policy and Market Design Pathways: Impact of Policy and Market Design Pathways on Gas-to-Power Project Economics — An Analysis of ERCOT and PJM Markets for Data Center Load Growth. Rice Business, Jones Graduate School of Business. April 19, 2026. 10. Utility Dive. "Data Center Demand Spike Could Drive 79% ERCOT Price Hike in 2027: EIA." March 16, 2026. https://www.utilitydive.com/news/data-center-demand- spike-could-drive-79-ercot-price-hike-in-2027-eia/814804/. 11. Texas Legislature. "SB 6, 89th Regular Session." June 20, 2025. https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB6. 12. Australian Government, Department of Climate Change, Energy, the Environment and Water. "National Electricity Market Wholesale Market Settings Review: Final Report." December 2025. https://www.energy.gov.au/sites/default/files/2025-12/ national-electricity-market-wholesale-market-settings-review-final-report.pdf. 13. Modarresi, Hassan. Gas-to-Power Policy and Market Design Pathways: Impact of Policy and Market Design Pathways on Gas-to-Power Project Economics — An Analysis of ERCOT and PJM Markets for Data Center Load Growth. Rice Business, Jones Graduate School of Business. April 19, 2026. 14. Financial Times. "Alphabet Agrees to Buy Intersect for $4.75bn." December 22, 2025. https://www.ft.com/content/1fefa00c-408f-4b46-a54e-44b95fc21630.
Wind + solar Supplying most energy.
Battery storage + dispatchable gas Providing flexible on-demand capacity.
AI data centre Demanding hundreds of MW with back up generation and redundancy layered in.
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T hat era has not ended, but it has collided Brookfield describes the convergence of digitalisation, decarbonisation and deglobalisation as an infrastructure supercycle: more than USD 100 trillion of investment required by 2040, with the AI value chain alone requiring some USD 7 trillion over the next decade.¹ The bill for rebuilding the physical world: USD 100 trillion by 2040 with the physical world. Artificial intelligence requires data centres, fibre and vast quantities of reliable electricity. Electrification requires generation, transmission and storage.
Engineers have always understood that optionality, staging and redundancy create value. Today, investors are becoming explicit about recognising those qualities in underwriting, in the leverage an asset can safely carry, the probability that it reaches financial close, the range of customers it can serve and the value it retains at exit. Project drawings are entering the investment memorandum. Forecast error is part of the design brief Traditional project design begins with a specification across expected demand, defined capacity and often, an anchor customer. More resilient underwriting begins by testing each of those assumptions. What happens if demand arrives three years late or utilisation settles below the base case? Does the site retain value because of its land, permits, grid connection or access to water? Under this lens, the second user, the alternative use and the residual value of the site become part of the investment case. Legacy mines illustrate the point. An asset developed for one purpose can acquire a second life as an industrial location, an energy-storage site or a source of recoverable materials. The commodity forecast that justified the mine may have expired. The land, water, grid connection and permissions have not. The question shifts from “will the forecast be right?” to “how much of the A renewable energy project without transmission cannot sell its power. A data centre without reliable electricity cannot process data. An industrial facility without access to water, logistics or permits may never operate at its intended scale. Value concentrates at the constraint. Brookfield cites estimates that annual investment in electricity grids will need to exceed USD 600 billion by 2030, with interconnection queues in major markets already approaching a decade.¹ The bottleneck is the business: where infrastructure returns now concentrate asset's value survives if it is not?” The valuable asset may be the bottleneck
~USD 7tn
>USD 600bn
Total capital required, the AI value chain slice. Over the decade
Grid investment. Annually by 2030
The asset that survives the forecast
Source: Brookfield 2026 outlook.
Capital is returning to pipes, wires, steel and land, but not indiscriminately. Taken together, the perspectives of infrastructure investors including Brookfield, Macquarie and Stonepeak point to a more demanding underwriting question than confidence in the base case: Will the asset still create value if the assumptions used to justify it prove wrong? And can its financing survive the wait? The test The data centre debate provides the clearest example. What makes a data centre investment resilient, as Stonepeak’s Michael Dorrell argues, is the quality of the customer, the strength of the location, the adaptability of the asset and a financing structure capable of absorbing periods of weaker utilisation.² The point is not that demand forecasts will always be correct. It is that the asset and its capital structure should not depend on every forecast being correct from the first day of operation. Brookfield makes a related case through its emphasis on embedded resilience. Macquarie argues that future infrastructure returns will depend more on income, earnings growth and operational improvement than on continued expansion of valuation multiples.¹·³ Investors are interested in the return an asset produces when the forecast is right and increasingly, how much value remains when it is wrong.
As capital returns to the physical economy, investors are paying closer attention to the decisions made at the drawing board. Over the past two decades, the market's most highly valued businesses were those that could scale without proportionate investment in physical assets. Software could be developed once and distributed globally. The prize was scale without steel.
Robert Casamento Global Strategy Executive Across AI, Energy and Climate
10 year interconnection queue
USD 600 bn grid investment gap
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The capital structure is a load the asset must carry The deepest point running through these investor perspectives is not about demand. It is about leverage. A sound asset can become a failed investment if its financing assumes immediate utilisation, perfect delivery and uninterrupted revenue growth. Interest must be paid on specific dates whether or not demand has arrived. A phased programme changes when capital is committed; modularity reduces the amount invested before demand is proven. In that sense, the Gantt chart is also a credit decision. Macquarie's 2026 infrastructure outlook projects private infrastructure returns of approximately 9 to 10 percent annually over the coming decade, with income, earnings growth and operational improvement doing more of the work than rising multiples.³ Returns will increasingly need to be earned within the asset itself, which brings design much closer to the source of investment performance. Resilience without gold-plating This matters most in import dependent energy markets. Long-duration capital can spread the cost of essential infrastructure across the decades in which it is used, but capital alone does not create affordability. Well designed resilience, storage, flexibility, modularity, alternative conversion pathways protect supply and reduces whole- system cost over time. Poorly designed resilience is gold plating passed on to customers. Engineering judgement, applied early, is what separates one from the other.
In that environment, the substation may be as strategically important as the project it connects. A permitted corridor, water right or durable community licence may be worth more than developers assume. These have traditionally been treated as inputs to be secured before the “real” asset is built. Increasingly, the input may itself be the asset. Time has acquired a price A technically superior asset delivered in seven years may create less value than a good asset operating in three. Every additional month before operation increases financing costs and creates another opportunity for policy, technology or demand to change. Standardisation, staged capacity, simpler permitting and early community engagement determine when capital is drawn and whether the project reaches operation at all. A tender process may reward the lowest stated capital cost; an investment committee must also weigh certainty, speed and deliverability. Good design has to reconcile the two. The cheapest asset on paper is not necessarily the most valuable asset in practice. 9-10 percent but earned inside the asset, not off rising multiples
10% Percent annual return
0%
100%
– Private infrastructure returns – Drivers - income – Earnings growth – Operational improvement
Design enters the investment committee
The investors shaping this cycle are consistent about what it will favour: infrastructure that removes genuine bottlenecks, reaches operation with certainty, remains useful when forecasts change and carries its financing through volatility. Those qualities are decided at the drawing board, in the configuration of the asset, the sequencing of delivery, the capital committed before demand is proven and a future that the design leaves open. Value is not created only after capital has been committed. It is designed into the asset that capital chooses to fund.
Source: Macquarie Asset Management, Outlook 2026.
For much of the past decade, investors asked which businesses could scale without owning physical assets. The question has been inverted: which of the world's defining ambitions can scale without rebuilding the physical world? Artificial intelligence, electrification, energy security, industrial decarbonisation and supply-chain resilience all depend on infrastructure. But capital will not reward every project equally.
References 1. Brookfield, 2026 Investment Outlook: Infrastructure, Accelerating Growth, Embedded Resilience, December 2025. 2. Bain & Company, Dry Powder podcast, “Mastering the Infrastructure Cycle with Stonepeak's Michael Dorrell,” March 2026. https://www.bain.com/insights/mastering-the-infrastructure-cycle-with- stonespeaks-michael-dorrell-podcast/
3. Macquarie Asset Management, Outlook 2026: Infrastructure; and Pathways: Private Infrastructure Performance, Uncovering the Source of Returns. https://www.macquarie.com/au/en/about/company/macquarie-asset- management/financial-advisor/insights/outlooks/2026/infrastructure.html
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Ambition alone will not decarbonise infrastructure
As infrastructure decarbonisation moves into implementation, leaders are being pushed to make defensible decisions under uncertainty. Despite growing political backlash around climate and sustainability initiatives in some markets, many organisations continue advancing decarbonisation efforts.
Nathan Alexander Senior Advisor - Sustainability & Resilience Resources, GHD
B etween April 2024 and May 2025, 85 percent of 75 global firms¹ maintained or accelerated sustainability initiatives, while more than 10,000 companies now hold validated science-based targets². However, as infrastructure decarbonisation moves into implementation, scrutiny is shifting from targets alone to the credibility of delivery. Net Zero Stocktake 2025 found that only 7 percent of assessed companies met minimum integrity criteria³ for their net-zero targets, increasing pressure on organisations to demonstrate how decarbonisation strategies will be funded, delivered and governed in practice. Targets are common. Credible delivery is rare. 85% of firms maintained or accelerated sustainability initiatives (April 2024 - May 2025) 10,000+ companies now hold
These expectations are shaping core infrastructure investment and delivery decisions. Funders, regulators, auditors and communities now expect decisions to be transparent, evidence-based and defensible. Major financial institutions, including the European Investment Bank and World Bank Group, have aligned financing activities with the goals of the Paris Agreement, further embedding climate considerations into infrastructure investment decisions. Regulatory expectations are also tightening, with the United Nations Environment Programme calling for all G20 countries and at least 75 other nations to implement zero-emissions-aligned building codes by 2030⁴. In this context, organisations are required to make long-term infrastructure decisions before technologies, standards, funding mechanisms and markets have fully stabilised, making robust and transparent decision- making essential. Meeting these expectations requires stronger capabilities in three areas: funding, timelines and governance.
validated science-based targets 7%
met minimum integrity criteria for their net-zero targets (Net Zero Stocktake 2025)
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Addressing this challenge requires decarbonisation to be integrated into planning, feasibility, risk assessment and stakeholder engagement processes from the outset. Early consultation, coalition-building and identification of delivery barriers can help organisations align priorities, assess trade-offs, reduce implementation risk and avoid costly redesign or delays later in the project lifecycle. Governance: Decarbonisation must become a core business decision Infrastructure decarbonisation is moving beyond sustainability teams and becoming integrated into core organisational decision-making. Deloitte’s 2025 CxO Sustainability Report found that nearly 80 percent of executives say sustainability is either embedded across their organisation or driving broader business model transformation. In practice, this means decarbonisation is being considered alongside legal, financial, operational and risk management priorities, rather than as a standalone sustainability initiative. Despite this shift, many organisations still struggle to integrate decarbonisation into core governance and feasibility processes. Common gaps include unclear boundaries, delayed decision-making and weak integration with legal, financial and operational functions. These challenges can make it difficult to align accountability, assess trade-offs consistently or respond effectively as conditions change over time. As a result, decarbonisation decisions are often delayed, fragmented or disconnected from core investment and delivery processes.
Strong governance requires organisations to clearly define assumptions, boundaries and decision criteria from the outset, while acknowledging uncertainty explicitly rather than treating it as a temporary obstacle to overcome. It also requires clear accountability for decision-making, including who is responsible for providing inputs, assessing trade- offs and approving a course of action. Governance processes should allow decisions to be revisited as technologies, markets and policy conditions change, ensuring assumptions remain valid and responsibilities remain clear over time. As scrutiny around implementation continues to grow, transparency and accountability are becoming increasingly important to maintaining stakeholder confidence. Operationalising decarbonisation in practice In practice, these challenges often emerge during project delivery, where organisations are required to balance funding constraints, delivery risks and long- term decarbonisation objectives before conditions have fully stabilised.
Funding: Targets need a credible delivery path
Timelines: Early decisions shape long-term outcomes Building credible delivery pathways requires decarbonisation to be considered early in infrastructure planning and feasibility processes. Infrastructure assets are often designed to operate for decades⁶, with many remaining in service for more than 50 years. Decisions made during early planning and feasibility stages can shape emissions trajectories, operating costs, resilience and system flexibility over the life of the asset, while influencing how easily organisations can adapt to changing technologies, markets and policy conditions. However, many of the most consequential decarbonisation decisions are made well before procurement or construction begins, requiring organisations to move forward before technologies, standards and markets have fully stabilised. Poorly timed or narrowly scoped decisions can lock in carbon- intensive pathways⁷ or create stranded assets, while effective decarbonisation planning depends on making disciplined early decisions that preserve future adaptability.
For infrastructure organisations managing long-lived and capital-intensive assets, decarbonisation strategies must be supported by credible funding and implementation pathways. Investors are using climate transition plans to inform capital allocation, risk assessment and valuation⁵, while stakeholders are looking beyond targets to understand how projects will actually be delivered in practice. This includes understanding key trade-offs between cost and emissions reduction, resilience and decarbonisation and near-term delivery and future optimisation, alongside how projects will be funded and the assumptions underpinning delivery. At the same time, inaccurate, inadequate or unreliable transition plan disclosures can contribute to asset mispricing, capital misallocation and greenwashing risks, increasing the importance of credible and transparent planning. Organisations need decarbonisation plans that are decision-ready, with clear emissions baselines, comparable delivery options and credible implementation pathways supported by defined ownership of risks and dependencies. The decisions that lock in emissions are made first, not last
50+ years of operation
Planning
Feasibility
Procurement
Construction
Most consequential decarbonisation decisions made here
The highest leverage decarbonisation choices happen BEFORE procurement or construction,
yet assets run for decades.
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