Which Infrastructure Specialization (Renewables, Digital, Transport, etc.)
Hi guys,
I wondered which Infrastructure sub-sector (digital, renewables, transport, essential infra, etc.) has the best future outlook with regards to compensation, how many jobs there will be and if the sector still be a thing in 10 years from now. I a a generalist within the infrastructure space but think I'll need to build specialized knowledge someday.
Digital seems like it has the strongest returns and also competes with corporate PE funds - which would also be a potential opportunity to work at. But someday all the fiber and all the towers and datacenters will be deployed, and then (this would be also true for renewables)?
Renewables is the fastest growing sector, but returns are low and compensation probably too.
What are your thoughts?
push - really hope someone can share his thoughts
Can’t speak to comp or too much about the sectors other than renewables. But I would say renewable investment is only going to go up over the next 10-30 years. There will be ups and downs driven by policy, but the scale that governments and the private sectors are targeting is absolutely massive.
Politics aside, its good business for the companies involved. Utilities and developers/IPPs are happy to turn over the grid from thermal to renewables/batteries because it means new assets to collect returns on (despite their short-term griping. Some oil/gas companies are a bit different, but once they ride their existing assets to the bottom, they’ll be on board).
And the private sector will become even more crucial in my opinion, as the governments don’t want to put up the investments any more than they have to, and are happy to let the private sector do it.
pace is great. but are you making money? sus unit economics in the space.
I don’t have a whole lot of a data points but anecdotally I’d agree you’re right on comp and unit econ. I’ve been in non-traditional roles in renewables/energy, primarily trading and transaction related. But when it comes to PE renewable/energy funds and comp, I’d argue they’re quite downstream of a lot of value creation which affects comp, more so compared to PE for other sectors.
I think for someone with a PE background who wants to be in energy, there’s roles at developers/IPPs, consultants, and even “trading” shops where the comp can be solid and WLB can be great. It won’t compete on comp with most other PE sectors, but for me at least, the other factors like WLB and interesting work outweigh that.
For example, most smaller developers are portcos for PE, but the larger ones are public or owner by utilities or private/pension owned. So PE ownership doesn’t add much besides capital and they’ll eventually sell the portco to a larger developer. And some roles at developers with PE type skills can have solid bonus potential like origination, structuring, M&A (buying other projects, not companies).
But ya overall I could buy that comp is weaker for the sector, but growth is probably the best. If someone wanted to do the sector and max comp, they’d do their time at somewhere like an IPP and grow into origination or trading.
It'll be midstream
Thanks for those answers so far. I'm seeing a huge need for Renewable professionals, however, comp seems to be pretty low compared to PE salaries. What I'm seeing is IPPs looking for professionals with 2-4 yrs experience but only paying less than 200k all-in in NYC lol. So yeah, the sector is growing very strongly, and demand for professionals is high, but the comp just doesn't feel very attractive....
But that's only my experience, I'm open for other opinions
Choosing a sub-sector within infrastructure involves considering factors like growth potential, job market dynamics, and alignment with personal interests and skills. Here's a brief overview:
Digital Infrastructure: Offers strong returns driven by increasing demand for connectivity and cloud services. However, saturation could be a concern in the long term.
Renewable Energy: Experiencing rapid growth due to environmental concerns, but returns may currently be lower. Long-term outlook remains positive as countries transition to cleaner energy sources.
Transport Infrastructure: Provides steady returns but faces challenges like funding constraints and long project timelines. Advancements in technology present new opportunities for growth.
Essential Infrastructure: Encompasses critical sectors like water and healthcare facilities. Offers stable job opportunities but compensation may vary.
This is more a question of what you think is the most interesting bc all 3 will be around forever. IMO its digital, especially if you believe AI will change the world. Demand for data infra is remarkably higher than supply and will stay that way for a long time. But what I think is most interesting about digital is that its really the convergence of three verticals - the infra assets, the software that enables the assets, and pretty soon, how those assets will be powered. I think a lot of players are going to be grouping digital and power into a single bucket/spectrum in the not so distant future
Very interesting opinion - thank you very much for that!
It is digital infrastructure - if you see all the hundred millionaires / billionaires floating around the industry who all came into existence in the last 10 years, you'll understand why. Unless you believe that demand for things like cloud, ai, VR, streaming content etc have peaked, it's hard to thematically see a bear case for it in the long run
Digital infra / AI craze / electrification of everything will have pretty big ramifications on our electrical grids, power demand is expected to absolutely skyrocket over the next decade and supply is going to be a big issue. So i think playing in the power generation space of infra is a pretty enticing place to be.
Either digital or renewables given where the $ are going and growth in both sectors. You can even combine the two - a # of places combine the two and pursue "green digital" investments, look at Ares' climate infra group for example.
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