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 Ideas2018, 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.

  1. 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.
  2. 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.
  3. Coal take-out picks up steam.  As predicted a year ago (see 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.
  4. 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.
  5. 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.
  6. “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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.

Infrastructure: 2021 in Review

2021 in Review

January 2022

In January 2021, Infrastructure Ideas made our annual 10 predictions for 2021.  With the year closed, it’s time to take a look at how things unfolded.  2021 was a banner year for our forecasts: nine out of ten predictions proved accurate.  By comparison, 6 of our ten predictions for 2020 were on the mark, after 7 in each of 2018 and 2019.

Let’s take a look at all the predictions that unfolded as expected:

A post-COVID boom for new renewable capacity.  As expected, investment in new renewable capacity showed a big jump in 2021, after several relatively flat years.  Final numbers are expected to come in at between $330 to $350 million, up from $304m in 2020.  Renewables accounted for 70% of all new generation investment worldwide.  Solar installations recorded record growth of nearly 160 GW, a jump of over 15% from 2020. For the first time, solar made up more than half of all the renewable energy capacity added in the year — solar installations recorded record growth of nearly 160 GW, a jump of over 15% from 2020.

The energy storage market gets back on trackAccording to Wood Mackenzie, global energy storage deployments will have nearly tripled in 2021 compared to 2020, reaching 12 Gigawatts.

Cyber risks grow for Utilities.  Regrettably, this has become a “safe” annual prediction.  The attack which shut down the Colonial Pipeline in the US in May 2021 was only the most publicized incident.  Concerns in the US were high enough for the Biden administration to issue a “100-day plan” to protect security in the utility and energy sector. 

Joint Action on Climate.  With a new administration in place in the United States, multilateral progress on climate change resumed in 2021.  While the Glasgow COP26 meeting had a glass half-empty, glass half-full character, over 150 countries did submit strengthened Nationally Determined Contribution (NDC) plans, and on the sidelines, the US and China – the world’s two biggest emitters of GHGs, agreed to wide-ranging cooperation going forward.

Cash for clunkers makes headway.  We predicted that 2021 would see the first proposals to buy-down coal-fired generation plants before the end of their technical life, and retire them early – similar to the “cash for clunkers” model which various governments have implemented at times to get old polluting automobiles off the roads.  In the Fall of 2021 we got exactly that, with a proposal from the Asian Development Bank at its annual meeting to raise a fund to buy and retire coal plants in Asia.  Heavyweights HSBC, Prudential and Citigroup are part of the group working with ADB on its “Energy Transition Mechanism.”

More airline bankruptcies.  The continued travel disruptions from COVID-19 that saw several carriers fold early in the epidemic (see “the Airline Shake-out Starts Up”) continued to hit the industry hard in 2021.  Seventeen more carriers ceased operating last year: the long list of bankruptcies included Air Antwerp, Air Namibia, and Interjet (Mexico), among many others.

The US gets its Trillion-dollar infrastructure plan.  Implementation has a long way to go, but the Biden administration did manage to get congressional approval for the Infrastructure Investments and Jobs Act.  Biden signed the $1.2 trillion bill into law on November 15, 2021.

The BRI gets a facelift.  We predicted that President Xi Ping’s desire to show China as a leader in the global fight against climate change would lead to changes in another of his flagship foreign priorities, the Belt and Road Initiative.  The penny dropped in September, with the announcement that China would no longer finance coal-fired generation plants internationally.  This will make a significant difference in many countries, as China was the last remaining major funder of such facilities, and make a big difference in the BRI.

This is (not) the time for the Emerging Markets infrastructure boom.  According to the Global Infrastructure Hub, private infrastructure investment in Emerging Markets fell 14% in 2021, on top of a 10% fall in 2020.  Soon?

The only prediction we had which was off the mark was a rethinking of mass transit.  We still believe this is coming, but 2021 was more about salvaging what there was and limping along with low ridership in most countries. 

Our 10 Infrastructure Predictions for 2022 are coming out in parallel.

Ten Infrastructure Predictions for 2021

January 2021

As for the past several years, we start the new year by looking into our crystal ball and seeing what these twelve months are likely to bring for infrastructure operators, investors and policy-makers (see here for Infrastructure Ideas2018, 2019 and 2020 predictions, and here for how well the predictions tracked for 2018, 2019 and 2020).  Here are ten infrastructure predictions for 2021.

  1. A post-COVID boom for new renewable capacity.  The ongoing COVID pandemic and its ensuing disruptions was the obvious big infrastructure story for 2020, but there were a few segments of outperformance.  Renewable energy managed to hold its own, and now after a few years of generally flat levels of activity globally, is poised to return to significant growth.  Global investment in new renewable energy capacity inched up 2% in 2020 to $304B, according to Bloomberg New Energy Finance, but this level has been essentially flat since 2015.  Underneath the aggregate numbers, patterns are more positive than they’ve been in some time for growth: 2020 was underpinned by new renewables investments in Europe, which is likely to continue to be the case under the EC’s “green recovery” plans; meanwhile investment fell in the two largest individual markets, China and the US, to $84B and $49B respectively.  In both China and the US, we can expect the combination of a return of demand growth (China’s economic growth rate is forecast to be the highest in years), the cost advantages of renewables, and the return of pro-renewable policy under the Biden administration, to underpin a jump in new wind and solar investments in both these markets.  In China in particular, we expect prices of new solar capacity to drop significantly, as the country continues its transition away from its older Feed-in-Tariff procurement mechanism for domestic solar generation towards competitive auctions.  Look for a record-breaking year in total investment and in Gigawatts of new solar capacity added worldwide, and another record for renewables as a share of net new generating capacity added worldwide, at over 70%.
  2. The energy storage market gets back on track.  Prices of energy storage have been tumbling, while the size of utility-installed batteries has been soaring.  The cost of a four-hour storage addition to new generation capacity has fallen from over $80/megawatt-hour in 2010 to less than $10 today.  Nonetheless new installed energy storage capacity has fallen by 15-20% each of the last two years, down to $3.6 billion in 2020, largely due to regulatory uncertainties.  2021 will see a completely different story.  With solar-plus-storage costs for new generation capacity beginning to match the costs of new gas-fired plants, more and more utilities are switching new projects from gas to renewables plus storage.  And with the Biden administration in the US focused on getting a favorable regulatory environment in place, we can expect a surge in new capacity additions in the US.  The last few months have already seen this emerging: according to the Energy Storage Association, fourth-quarter 2020 deployments of energy storage in the US more than doubled those of any previous quarter on record.  The EIA expects a record 4.3 GW of new battery power to be added worldwide in 2021, and we agree – that should imply about $5 billion in investment — and we also expect grid-scale capacity to exceed not only 2 GW for the first time, but to reach between 2.5 and 3 GW.
  3. More airline bankruptcies.  The Fallout of COVID for all sorts of transport infrastructure for moving people has already been horrendous – whether airlines, mass transit, or taxis.  The flow of red ink is far from over.  Infrastructure Ideas reviewed the situation of airlines back in mid-2020 (The Airline Shakeout Starts Up), and by year-end over 40 carriers had declared bankruptcy.  Today many others have fragile Balance Sheets from hemorrhaging cash all year, and there is little sign of any turn around in air traffic demand in the next few months.  IATA says airlines lost over $80 billion in 2020, and projects the industry to lose $5-6 billion a month in the coming year.  Watch for more carriers to fall by the wayside in 2021 (for more see Over 40 airlines have failed in 2020 so far and more are set to come).
  4. Rethinking mass transit.  COVID has also been a disaster for mass transit infrastructure everywhere.  Ridership across US metropolitan systems fell by 65-90%.  Revenue shortfalls have forced transit authorities to cut routes and frequencies, and delay expansion and maintenance.  These measures will unfortunately create a negative feedback loop: transit systems which run fewer, slower routes, less reliably, will attract fewer riders, even when pandemic concerns eventually recede.  The $20 billion for mass transit in the Biden Administration’s “Rescue America” plan will reduce the damage to an extent, but we can expect the financial wreckage to last several years.  Infrastructure Ideas expects several consequences: (a) further reductions and delays in planned expansions of mass transit systems worldwide; (b) a sharp falloff in interest in new subway plans, including across Emerging Markets, and their replacement by cheaper Bus Rapid-Transit plan; (c) new partnerships between municipal mass transit systems and “shared mobility” players (bicycle, scooter, and car-sharing companies). 
  5. Cyber risks grow for Utilities.  Regrettably, this has become a “safe” annual prediction.  2020 saw a worldwide increase in the frequency and scope of cyberattacks on a wide range of targets, including infrastructure.  Aside from the much-publicized Solar Winds hack which, along with breaching several parts of the US government, exposed several infrastructure systems in the US, 2020 also saw several other known, and no doubt more unknown, attacks.  In February, a US natural gas compressor unit was closed for two days after dealing with one incident.  In April, a pair of cyberattacks were reported on electric utilities in Brazil.  In June, Ethiopia reported it had thwarted a cyberattack from an Egyptian group aimed at creating pressure against the filling of the Grand Ethiopian Renaissance Dam on the Nile.  Concerns run across geographies, including Africa.  A recent McKinsey analysis found three characteristics that make the energy sector especially vulnerable to contemporary cyberthreats:  an increased number of threats and actors targeting utilities, including nation-state actors and cybercriminals; utilities’ expansive and increasing attack surface; the electric-power and gas sector’s unique interdependencies between physical and cyber infrastructure.  Look for the headlines to get worse in 2021.
  6. Joint action on climate… finally.  With the exit of the Trump administration, the stage is reset for multilateral progress on climate change.  2020 was either tied or in second place for the hottest year on record, and that’s with the pandemic-induced slowdown in economic activity and emissions.  Most analysis now show the world on track for at least 3 degrees if not significantly more of warming (see McKinsey’s analysis of the world being on a 3.5 degree track), and the damage from heat waves, storms and flooding continues to increase.  Joe Biden already on his first day in office committed the US to return to the Paris Climate Accords, and China has become more aggressive in its emission reduction undertakings.  Look for new substance at the November climate summit in Glasgow, COP26.  In particular, look for (a) announcements of further reductions beyond those undertaken by countries in the Paris Accords, and (b) the emergence of a clearer tracking system to “grade” countries on how their actions are matching their commitments – a key missing element in the global frameworks to date.  The first baby steps beyond “voluntary” action.
  7. Cash for clunkers makes headway.  Coal-fired plant closures have brought constant positive emissions-related headlines over the past few years.  Last week came the announcement of the upcoming closure of a large Florida coal plant – 18 years early.  As a good piece by Justin Guay in Green Tech Media put it “Nearly every day, articles appear announcing new record lows in coal generationcoal retirements and the generalized economic train wreck that is the coal industry.”  Yet these headlines are not yet enough to bring the world back to a 2-degree warming scenario – and probably not enough to keep it even to a 3-degree scenario.  To be on track to meet the Paris Agreement goals, every coal fired-plant in the OECD would have to be offline by 2030, and every coal-fired plant in the rest of the world would have to be by 2040.  In OECD countries, almost half the existing coal-fired generation plants are not earmarked for retirement before 2030, so a lot of work will be needed there.  The biggest rich-country coal users – Japan, the US, Germany and Australia – are in the best of cases a decade off schedule.  Yet this dwarfs the complications of the rest of the world, especially Asia.  China has 1,000 gigawatts of young coal plants – almost half the world’s total coal-generation capacity, and is still building new ones.  India and the rest of Asia have about 400 gigawatts of coal-fired generation, need much more electricity, and are still locked in internal debates as to how much of their future energy needs are to be with coal (see Infrastructure Ideas’ series on Asia’s Energy Transformation: Pakistan, Bangladesh, India, and Indonesia).  The technical lives of many of these plants will stretch long past when they would need to be shuttered to meet the Paris accords, and many of them are insulated from the declining economics of coal by quasi-monopolies and/or long-term contracts.  According to Carbon Tracker, the US and the EU will, by next year, be paying coal plants over $5 billion to stay in operation, through contracted capacity payments.  It would be much better to use these funds to buy the plants out and close them, in effect a “cash-for-clunkers” program as Justin Guay labels it.  As an earlier Infrastructure Ideas piece puts it, “Money is Coming for Coal.”  The funds would be needed to buy out legacy operators, and to support affected workers and communities.  This will be controversial, and complex to design and implement.  But with emissions likely rebounding again and a more favorable political environment, look for paying coal to go away to get on the table in 2021.
  8. The US gets its trillion-dollar infrastructure plan.  There were plenty of promises in 2016 about a trillion-dollar infrastructure plan for the US to fix many of its problems, but this never materialized.  Now with a new administration, and democratic control of both houses of Congress, there will surely be such a plan put in place in 2021, with roll-out getting underway.  The nomination of Pete Buttigieg as Secretary of Transport indicates that urban infrastructure will be a priority, and that municipal authorities will get much more say going forward on how funding helps address cities’ infrastructure needs.  Buttigieg had his own trillion-dollar plan as a candidate (see “Inside Buttigieg’s $1 Trillion Infrastructure Plan”) in the primaries, and stated “as a former mayor, I know that priority-based budgets made locally are better than budget-based priorities set in Washington.”  This will be in sharp contrast to the previous four years, when whatever federal funding trickled out was aimed almost entirely at the rural areas which were the base of Donald Trump’s support.  Climate adaptation and road rebuilding were high on both Buttigieg and Joe Biden’s campaign pronouncements, so look for major spending in these areas in 2021.  President Biden apparently also plans to re-create a version of the depression-era Civilian Conservation Corps to work on climate adaptation projects.
  9. The BRI gets a facelift.  In September, Chinese President Xi Jinping pledged to make China carbon neutral by 2060, and to “bring forward” an earlier pledge to start reducing GHG emissions by 2030.  The announcement was widely welcomed, but it will be a hard slog to turn into reality: with economic pressures, 2020 saw a sharp increase in the number of permits for new coal-fired plants issued in China.  China’s emissions progress will likely stay in the limelight as international climate discussions get more serious in 2021, thanks to the re-engagement of the US (see above).  At the same time, China’s flagship international initiative, the Belt and Road Initiative (BRI), is seeing increased criticism of its environmental and climate impacts.  Coal-fired generation plants have been big recipients of support under the BRI, particularly in South Asia.  Announcing some sort of “greening” of the BRI going forward would be low hanging fruit for Xi Jinping to avoid focus on the BRI’s environmental negatives at a time China wants to be seen as a leader of the international agenda.  Look for this to come to pass later in 2021.
  10. This is (not) the time for the Emerging Markets infrastructure boom.  There is one coming – really!  For years policy-makers, analysts and investors have looked at Emerging Markets as the great future of infrastructure.  Large infrastructure deficits, growing wealth and demand for services among the population, higher returns than in wealthy markets, coupled with a “wall of money” from institutional investors looking to get some yield on their excess liquidity.  In 2021 it … will not happen.  The demand pull will stay largely theoretical.  Of the ten or so larger economies that make up 80% of collective GDP of Emerging Markets, four of the biggest – Brazil, Mexico, South Africa and Turkey – will at best remain hamstrung from a combination of COVID and internal politics, and at worse turn their back on private investment.  The “push” from investors will be going elsewhere.  Between a big push for new infrastructure in the US, and the European “Green Recovery” plan, investors and infrastructure companies will be looking for their opportunities in developed markets.  And between the Trump tax cuts and forthcoming public spending increases, look for interest rates to start inching up, further reducing the push from institutional investors.  At some point continued internal pressures, and limited public spending options, will lead to a wave of Emerging Market reforms.  Just don’t look for it in 2021.

2020 in Review

January 2021

In January 2020, Infrastructure Ideas made our annual 10 predictions for 2020.  With the year closed, it’s time to take a look at how things unfolded, and as we all know, 2020 proved to be a crazy year all over the place!  A pandemic, a major recession, unprecedented political events in the US, among other things – most people would like to put 2020 as far as possible in the rear-view mirror.  Nonetheless, our 2020 forecast was not dramatically off the mark: of Infrastructure Ideas’ 10 predictions for 2020, six still were on target, while the other four remain… debatable.  This compares to our 7 for 10 outcome for both our 2018 and 2019 predictions.

Here were six predictions which managed to be on the mark for turbulent 2020:

Offshore wind is the new big thing

Pandemic?  What pandemic?  Offshore wind, a stepchild until the last 2-3 years, had a remarkable 2020.  Bloomberg New Energy Finance had reported that 2019 was already well above expectations, with worldwide new financings for offshore wind at a record $29.9 billion; 2020 broke that record… in the first six months.  BNEF reported $35 billion of new financings for 28 offshore wind projects through June 2020, with the still to be determined year-end number likely to come in at least at $50B.  Offshore wind will have accounted for over a quarter of all new renewable power investments, which is remarkable.  Even more remarkable?  Leading offshore wind developer Ørsted has a higher market capitalization than BP ($75 billion versus $55 billion).   Success has been driven by falling costs, from around $0.15-0.20 a kilowatt-hour in 2015 to $0.05-$0.07/KwH in 2020, and increasing geographic acceptance.  After the technology’s early adoption in the EU and China, the US East Coast has jumped into offshore wind in a big way, and markets from Vietnam to Poland are planning large investments.  Falling costs are being driven by improved technology, and by increasing scale.  Two newly announced mega-turbine models, GE’s Haliade-X and Siemens’ Gamesa newest turbine, can provide 12 and 14 megawatts of power – for each turbine.  (see more in Infrastructure Ideas’ February 2020 review of offshore wind).

Challenges mount for power grids and utilities

Grid operators saw a ramp-up of challenges associated with the energy transition in 2020.  Before the pandemic, these challenges already included continued switching to lower-cost intermittent generation sources, transmission, integrating storage, and integrating growing numbers of electric vehicles.  We expected to see in 2020 larger transmission investments in developed markets, and increasing concern in Emerging Markets – particularly those with state-owned grids – about how to modernize grids.  Developed markets were given some breathing room by the pandemic and the ensuing decline in electricity demand, but we can observe growing calls for such larger investments for the post-pandemic period (see “alliance calls for $50B in federal spending for grid modernization,” and “renewables and resiliency drive transmission upgrades.”)  The economic shock associated with COVID-19 has limited the ability of many emerging markets to address these issues, and last week’s country-wide blackout from a grid failure in Pakistan was a reminder of the growing urgency of the issue.

Non-lithium batteries get serious

We expected non-lithium batteries to make bigger headlines in 2020, and this was certainly the case.  Overall investments in battery storage through the first three quarters of 2020 were up $2B over FY2019, in spite of the economic effects of the pandemic.  And this year a much greater slice of this investment went into technologies other than Lithium-Ion.  The biggest splash was made by Latham, New York-based Plug Power, which raised over $1 billion – not once, but twice.  Then the list goes on, and on.  Eos Energy Storage, which produces zinc aqueous hybrid cathode battery storage systems, listed on Nasdaq in November.  Form Energy, with its aqueous air battery, raised $76m in 2020, double their 2019 funding.  Highview Power raised over $50m, while smaller amounts were raised by Quidnet Energy (a long-duration storage start-up), e-Zn (developer of Zinc-ion batteries), Invinity Energy Systems (vanadium flow batteries), Natron (sodium-ion batteries), and Enervenue (nickel-hydrogen batteries).  Aerospace and defense giant Lockheed Martin also made headlines in deploying its GridStar Flow long-duration energy storage technology in October, using a coordination chemistry flow battery.

Lockheed Martin battery

Green House Gas emissions: alarm keeps climbing, but no global agreements yet

We called this one of our safest predictions for 2020, and so it was.  In spite of a pandemic-driven pause in GHG emissions growth, temperature records continued to be broken in 2020, and extreme weather events – both storms and wildfires, set new records.  And 2020 certainly saw no coordinated global action on the front, with the Trump administration formally pulling out of the Paris accords. Two glimmers of hope for better news: the change of administration coming in the US, and China’s unilateral announcement that it would seek “carbon neutrality” earlier than it had claimed before.

Delivery vehicles become the new EV focus

We expected electric delivery vans to get plenty of attention in 2020, and this was without a hint of what COVID would do to the transport market.  Logistics became the fastest growing infrastructure segment around, with consumers everywhere shifting from on-site shopping to delivery.  Demand for delivery vans went through the roof, and electric vehicles were big beneficiaries.  Amazon’s EV van partner Rivian raised $2.5 billion in July 2020 to expand and accelerate production, with its first 10,000 all-electric vans expected on the roads by 2022.  Also in 2020 Ford, General Motors and Mercedes-Benz all unveiled electric van plans.  Ford is investing $100 million in a plant in Missouri, and breaking ground on a new manufacturing facility in Dearborn, Michigan, for mass production of its new electric van.

Concerns grow over hacking of infrastructure

Unfortunately, correct.  No need to say much about this prediction.  One has only to look at the still continuing fallout of the massive Solarwinds hack to see that this issue continues to get worse.  Even Standard & Poor’s has issued a warning about the related vulnerabilities of utilities.

Here are our four other infrastructure predictions for 2020 that were either thrown off by events or were premature.

Wind and solar keep growing. 

After two years of fairly flat investment levels, we expected global renewable energy investment to resume strong growth in 2020. The picture looks decidedly mixed.  While year-end numbers are still awaited from industry analysts, it looks as though 2020 will again have seen flat investment levels.  Bloomberg New Energy Finance did see a small increase in the first half of 2020 in renewable investment, compared to the same period of 2019, but the first half of 2019 had been particularly slow.  China, the world’s largest renewables market which had seen a significant decline in 2019, did bounce back, with a 42% increase shown at mid-year, largely thanks to large offshore wind investments.  Onshore wind investments worldwide on the other hand were particularly hard hit by supply chain disruptions, and renewable installations in the US were significantly off from their 2019 levels.  The IEA is forecasting that electricity generation from renewable energy sources will have grown by almost 7% in 2020.  We will see what year-end numbers bring.

Emissions-free city zones multiply

In a “normal” environment, we would have expected many more cities to declare “emission free zones,” as we’ve seen in Spain and other parts of Europe.  The pandemic and ensuing recession have drawn the attention of urban policy-makers elsewhere.  This said, a new phenomenon which greatly expanded in 2020 was the closing of certain areas to vehicle traffic – allowing for more walking or bicycle riding — in many cities.  Initially a response to the pandemic and the need for social distancing, these closures could well both become permanent and draw more replication.  Even Bogota joined the bandwagon in 2020.

Unilateral “100% renewables” commitments multiply

In the same vein, our expectation of more unilateral commitments to 100% clean energy in 2020 was disappointed by policy-makers’ attention being turned elsewhere.  Give the size of job losses and economic problems stemming from the pandemic, other priorities dominated the agenda.  The decline in emissions due to reduced transport activity also contributed to reduced urgency.  We can expect both a bounce-back in emission levels post-COVID, and renewed action on both the joint and unilateral fronts, especially given the results of the US election.

Financing premiums appear for climate risks

The press continued to be filled in 2020 with stories of problems for insurance companies related to climate change – whether from flooding or fires.  Yet we were premature in our expectation that this would become a visible piece of financing costs.  It won’t be long now…

What Infrastructure Ideas did not predict, and which massively impacted infrastructure in 2020, was COVID-19.  While a few areas flourished, notably logistics, infrastructure businesses designed for transporting people rather than goods were devastated by a disappearance of demand – the fallout for mass transit, airlines and railways will continue to unfold over the next 12 months (see our pieces on the impact of the coronavirus on infrastructure, and on airlines from May).  On the energy front, it was a bad year for coal, natural gas, and oil, with all the decline in energy demand being absorbed by fossil fuels.  We can also expect that provision of public infrastructure, especially in economically hard-hit emerging markets, will face a steep decline until public finances stabilize.  Look soon for our 2021 predictions.