Transport and data centres power infrastructure opportunities

Global listed infrastructure is entering a new era, fuelled by demand forces reshaping economies, industries, and investment opportunities. From soaring electricity needs to digital transformation and shifting global supply chains, these megatrends are converging to create a once-in-a-generation investment opportunity.

The scale of global infrastructure needs is immense. Nearly $100tn in spending is required by 2040 according to the World Economic Forum. Governments alone cannot meet this demand, leaving an estimated $15tn funding gap that opens the door to private and listed infrastructure investors.

Developed markets urgently need to upgrade ageing systems, while emerging markets must expand capacity to support demographic and urban growth. Massive public programmes are underway, but listed infrastructure companies are increasingly essential to bridge the gap.

One of the most powerful structural trends reshaping infrastructure is rising electricity demand. After nearly two decades of flat growth in the US, power demand, according to the US Energy Information Administration, is expected to expand 3 to 4 per cent annually through 2030, with some utilities seeing growth above 5 per cent.

Electrification of transport, precision manufacturing, and especially the explosion in artificial intelligence and data centres, are all driving this surge. US data centres alone could account for nearly 12 per cent of total electricity demand by 2030, up from less than 5 per cent today, as calculated by the Environmental and Energy Study Institute.

Meeting this demand requires a ‘more of everything’ approach. Renewables are gaining market share, with wind, solar and biomass projected to grow from 10 per cent of global generation today to nearly 30 per cent by 2040, and potentially 50 per cent under more aggressive policies. Yet natural gas and nuclear remain critical for reliability, with 60 per cent of incremental data centre demand in the next five years expected to be met by natural gas, according to the International Energy Agency.

This creates increased opportunities for electric and gas utilities, renewable developers, and midstream energy providers that can balance cost, sustainability, and reliability. However, there will be regulatory nuances to navigate, as well as a need to separate hype from substance.

The digital revolution is no longer just about faster smartphones. Every industry is building digital platforms, with artificial intelligence still in its early innings. Global mobile data traffic is forecast to more than double by 2030, with 5G networks carrying 80 per cent of all traffic, up from 35 per cent at the end of 2024, as detailed in the Ericsson Mobility Report.

This transformation demands enormous infrastructure investment. Beneficiaries include mobile phone tower companies enabling connectivity, satellite operators providing global reach, and data centres powering and storing the digital economy. Utilities supplying reliable energy also stand to gain.

Deglobalisation and supply chain evolution

The Covid-19 pandemic and geopolitical tensions exposed the fragility of global supply chains, sparking a trend toward ‘nearshoring’ and ‘reshoring’ manufacturing. In the US, manufacturing construction spending has tripled in the past three years as companies move production closer to home.

Infrastructure companies that facilitate the movement of people and goods (railways, ports, airports and toll roads) are positioned to benefit from this structural shift. These logistics operators, which account for up to 30 per cent of the listed infrastructure universe, according to Cohen & Steers figures, also stand to gain from operational efficiencies, ecommerce growth, and increased demand for domestic transport capacity.

As compelling as the global infrastructure market appears, investors should understand potential risks. In addition to macro factors such as inflation and interest rates, adverse regulatory or political decisions present additional risk for the asset class. This could include adverse amendments in allowed returns for regulated assets, changes in governments energy policy priorities and subsidy frameworks, or in project permitting.

To mitigate this, investors should seek to understand local nuances. This helps anticipating and interpreting those outcomes, which are crucial to identifying market mispricing, and therefore investment opportunities.

The road ahead

Despite these challenges and risks, global infrastructure investment is not optional, it is necessary. The world must meet surging power demand, rewire economies for the digital age, and rebuild resilient supply chains. With governments unable to do it alone, listed infrastructure stands at the centre of the solution.

For investors, the opportunity is both structural and long term: exposure to essential services with high barrier to entry and predictable cash flows, mitigation of inflation impact, attractive historical performance, and participation in the transformation of the global economy through access to major disruptive themes such as next-gen energy and AI investments.

The convergence of these forces signals a golden age for global listed infrastructure and those positioned early may benefit from one of the most powerful investment trends of our time.

Thuy Quynh Dang, global listed infrastructure portfolio manager at Cohen & Steers