GIC sees need for further investments in energy infrastructure

SINGAPORE: Sovereign fund GIC is expanding its energy infrastructure portfolio while addressing a complex global landscape where regional energy strategies vary greatly.

“The world really needs all kinds of energy. I would say it needs it quickly because, especially with AI, the demand for energy is tremendous,” said GIC’s CEO Lim Chow Kiat, emphasising the urgent energy needs driven by new technologies.

Although renewable energy costs have dropped by nearly 85% over the past decade, GIC understands that regional approaches differ. Natural gas is expected to remain important in the US, while renewables are particularly strong in Europe, China, and India.

The fund’s investment strategy focuses on regions with clear regulatory frameworks. It targets regulated electric networks and utilities that provide stable cash flows and growth potential. Key areas of interest include dispatchable baseload generation, battery storage, and grid infrastructure solutions.

“The transition theme is the main one for us. If we can find good opportunities, with capable management who have solid plans, and we track their progress, that creates long-term value,” said Bryan Yeo, the group chief investment officer.

Emerging technologies in hard-to-decarbonise sectors present significant chances. GIC has invested in green ammonia projects with competitive costs and innovative supply chains. The fund has also supported a European cable systems manufacturer and a utility company in Asia-Pacific that is shifting from coal to cleaner energy sources.

Energy management, smart metering, and cooling options for data centres and industrial environments are crucial investment areas. For instance, data centre energy use is forecast to reach 8% of global electricity demand by 2030.

Better economic fundamentals, not government subsidies, are driving the push for electrification. Buildings and transportation are two industries that are changing quickly, with electric heat pumps and cars becoming more practical choices.

In addition to energy infrastructure, GIC is exploring climate adaptation solutions. This includes traditional building materials that resist climate impacts and new technologies for weather intelligence.

A report GIC published in May predicts that global annual revenues from specific climate adaptation solutions will grow from US$1 trillion (S$1.35 trillion) today to US$4 trillion by 2050. This increase will have US$2 trillion in growth as a result of global warming.

This approach reflects GIC’s focus on strategic, future-proof investments that balance economic returns with environmental sustainability. The recent Techem deal, where it co-invested with a consortium of firms in a German property tech company, reflects this.