Infrastructure: 10 Predictions for 2022
February 2022
As for the past several years, we start the new year (a bit behind schedule) by looking into our crystal ball and seeing what these twelve months are likely to bring for infrastructure operators, investors and policy-makers (see Infrastructure Ideas’ 2018, 2019, 2020 and 2021 predictions, and here for how well the predictions tracked for 2018, 2019, 2020, and 2021). Here are our ten infrastructure predictions for 2022.
- Solar and wind economics stay volatile, but remain cheap. The well-publicized supply chain disruptions of much of 2021 caused prices for solar panels, and in some cases wind turbines, to rise for the time after over a decade of sharp declines. The supply-chain disruptions are far from over, and developers can expect prices to remain at best uncertain and at worst above 2020 prices. Yet the costs of solar and wind generation will continue to remain far below those of alternatives.
- The natural gas price rally ends. In the last quarter of 2021, prices of natural gas reached levels unseen in decades. In Europe, spot prices for natural gas increased six-fold from June to December, exceeding $10/mmbtu. Gas producers have been hopeful that the economics for new gas development would remain favorable enough for investments to move forward. Don’t plan on it: expect prices back down at the $4/mmbtu levels by the second quarter at the latest.
- Coal take-out picks up steam. As predicted a year ago (ss our “cash for clunkers” 2021 prediction), proposals for funding the early closure of coal-fired generation plants began to appear in 2021. A heavyweight consortium of Citibank, Prudential, HSBC and the Asian Development Bank floated a proposal in November for an “Energy Transition Mechanism,” to raise funds in order to begin acquiring coal-fired generating plants in Asia, in order to shut them down ahead of their technical end-of-life dates. With older coal plants closing for both technical and environmental reasons across the US and Europe, Asia now accounts for 75% of all coal generation globally, according to the IEA. While the 2021 consortium proposal has a number of issues, we expect the topic to continue to gain urgency in 2022, more proposals to emerge, and the first announcements of successful fund raising.
- EV charging networks become a big investment target. The global EV charging infrastructure reached $18 billion in 2021, according to Fortune, and will continue to be one of the fastest growing infrastructure segments. Though China is by far and away the largest market and continues to invest, expect the US market to grow faster with $7.5 billion in funding just from the Biden infrastructure bill, continued technology advances, and the push to create “fuel corridors” to reduce drivers’ range anxiety. Look for 2022 investment to reach between $22-25 billion and keep growing.
- Hydrogen investment becomes more than hot air. Climate mitigation efforts and investments have focused to date mostly on electricity and transport. Heavy industry also generates large amounts of GHG emissions, and many industrial processes require energy unlikely to come from electrification. The use of hydrogen to replace fossil fuels in industry has long sounded like a well “over-the-horizon” idea, but this is rapidly changing. Look for some of the first major announcements of investments in hydrogen-based energy in the US and Europe in 2022.
- “Net Zero” targets face a battle over transparency. With corporate pronouncements of “Net Zero” targets for some future point proliferating – and yet GHG emissions continuing to grow – expect considerable pressure from observers for announcing businesses to be transparent about what they mean by “Net Zero.” Definitions and methodologies appear to vary greatly, along with substantive action accompanying announcements. Look for the same kind of movement that pushed for transparency on “sustainability” practices do the same on climate.
- First infrastructure cyber risks, now drones. Technology is driving major improvements in infrastructure services and costs, but not all technology brings positives. Cyber attacks have become a major concern for utilities. In 2021 drones, a technology which is beginning to play an interesting role in logistics (see “The Drones are Here”), have also been used in a handful of conflict and crime situations. Look for concerns to grow in 2022 around the risk of drone attacks on infrastructure facilities.
- Emerging markets infrastructure remains in the doldrums. This is a repeat of our (unfortunately correct) 2021 prediction. The potential for emerging markets to outgrow developed markets as a destination for infrastructure investments will again remain potential. The continued effects of COVID, supply chain disruptions, and a drive to “near-shoring” in several industries will continue to make infrastructure demand and investment very uncertain in 2022.
- Sea barriers continue to attract more investment. New projections about sea level rises seem to appear every few weeks. A new study released this past week pointed to a foot of sea level rise along the US East Coast by 2050. Look in 2022 for announcements of large (and publicly visible) investments in marine infrastructure to become popular with politicians in many jurisdictions. As noted by Infrastructure Ideas (“Seawalls and Emerging Markets”) a few months ago, these will not come cheaply.
- Water recycling in the news. Droughts in the US West and many other places continue to drive pressure on water supplies in large markets. Climate change and the exhaustion of aquifers point to this pressure continuing. Look for water recycling infrastructure to begin drawing more serious attention in 2022 as part of the solution.
Previous Posts
Energy Markets
- China’s New Carbon Market
- Xi Jinping’s UN Coal Pledge
- The Carbon Capture Business
- Lessons from the Texas Grid Failure
- The Future of Natural Gas pipelines
- What Next for Natural Gas?
- Renewable PPAs and Political Risk: Spain Revisited
- Offshore Wind: the Next Big Thing
- Money for Coal
- The Future of Coal: What Next for Coal ?; The Coming Decommissioning Wave; Blue Coal ?
- Checking in on Energy Storage Costs
- And the Prices Keep Falling (part I: good news) (part II: some downside)
- Asia’s Energy Transformation: (1) Pakistan; (2) Bangladesh; (3) Indonesia; (4) India; (5) Vietnam; ; (6) China (part I, part II)
- The PG&E bankruptcy: five questions
- Renewable Energy as 2019 begins: winners and losers
- Japan moves away from coal
- China Sneezes, and the Solar World catches a cold;
- Hope for the Little Guys
- What’s Next for Renewable Energy ?
- Solar’s Big Failure
Disruptive technologies
- The Demise of Loon
- Revisiting Micromobility
- An Infrastructure Bright Spot: EV Charging
- The Drones are Here
- EV buses: the next big thing (maybe)
- More Betting on Batteries: Germany and China
- News from the Revolution: changing mobility (I); implications for investors ; implications for policy-makers
- Life-threatening Infrastructure Technology;
- Not your Father’s Infrastructure (Part I, overview), (Part II, implications for policy-makers), (Part III, implications for companies), (Part IV, implications for investors and lenders)
- Remember Stuxnet?
Urban Infrastructure
- A High-Profile PPP Comes Apart; Part II: Back from the Brink
- The Desal Boom
- And many more strikes to come
- $3B for mobility in the Middle East
- EV buses: the next big thing (maybe)
- Santa Amazon is coming to town
- Washington DC’s Silver Line woes
- Public Transport — A Tale of Two Cities
- The mobility revolution: implications for investors
- The mobility revolution: implications for policy-makers
Climate Adaptation
- The German Floods and Performance Bonds
- Seawalls and Emerging Markets
- Cities and Climate Change
- The Water Wars are Here
- Airports, Ports, and Climate Change (Part I, Airports), (Part II, Ports)
- Lessons from the Venice Floods
- Capital Punishment (or, so long, Jakarta)
- The PG&E bankruptcy: five questions
- Macron’s Yellow Vests
- The Climate Apocalypse Reports, December 2018
- Floods and Infrastructure: climate adaptation ( part I)
- Floods and Infrastructure: climate adaptation ( part II)
- Lessons in Hurricane Recovery
General infrastructure
- 2021 in Review
- Ransomware and the Pipeline
- Not Just Another $2.5 Trillion Infrastructure Plan
- Where Did All the Chinese Money Go ?
- 10 Infrastructure Predictions for 2021
- 2020 in Review
- Infrastructure and the US Elections
- The Water Wars are Here
- The Airline Shake-Out Starts Up
- Infrastructure and viruses: Part I (cyber-risks); Part II (COVID-19); Silver Linings
- 10 Infrastructure Predictions for 2020
- 2019: Infrastructure in Review
- The Great Recycling Crash
- Populism trumps infrastructure solutions (again)
- 10 infrastructure predictions for 2019
- 2018: Infrastructure in Review
- Everything I know about infrastructure I learned from… Astérix
- Infrastructure Weak
- Second Efforts
- Infrastructure Meets Politics
- Pitfalls of Infrastructure Pricing
- The Trump Infrastructure Plan: Lessons for Emerging Markets
- Wall Street? Not exactly…
- Infrastructure in 2017: the Dogs that Didn’t Bark
- 10 Infrastructure Predictions for 2018