Catalysing investment in energy innovation blog series: trends and market needs in focus at LCP Delta

The drive to net zero and the need to mitigate climate change are reshaping the energy landscape. This transition necessitates the rapid development and deployment of new technologies, progressive policy and regulatory adaptations, and revolutionary business models. Changes in customer preferences also play an important role. These ongoing shifts present immense growth and value opportunities for both emerging and established entities in the energy sector.

Unsurprisingly, investor interest in the space is palpable. Capital is flowing into the new energy sector as fund managers search for secure, high-growth, and sustainable opportunities. However, as potential returns surge, so do the inherent risks. Identifying lucrative ventures, developing appropriate proposals, and anticipating policy changes are all essential considerations for potential investors.

At LCP Delta, we provide our clients with the information and guidance they need to make informed decisions, paving the way for capital investment in new energy. This four-part blog series will highlight the critical enquiries we receive from investors and those seeking investment, and explain how we’re helping. It will focus on four principal themes:

1. Investment Identification – Collaborating with investors to pinpoint high-growth, stable-return opportunities with the right risk profiles within the new energy industry.
2. Market and Commercial Due Diligence – Assisting investors in risk management and confidence-building concerning potential investment targets.
3. Market Size Assessment – Aiding both investors and vendors in determining the future scope of markets within which businesses operate.
4. Revenue Forecasting for Storage/Generation Assets – Providing clarity on future revenues from various assets to inform business case assessments.

In this introductory piece, we delve into the first theme, ‘Investment Identification’, providing a preliminary overview. The following posts will offer in-depth exploration of this topic and others.

Investment Identification

Investors approach this vast question with varying degrees of familiarity. Some already possess dedicated internal teams that have identified their desired sectors within the energy market. Others, however, are just beginning their energy investment journey.

We help investors by identifying or validating areas of the new energy landscape that align with their strategic investment priorities. For instance, we explore high-growth opportunities with stable returns in the short and long term, identify companies ripe for investment and scale-up, and define sectors of the energy landscape with the right risk profile.

Investors also examine these opportunities at different scales, from broad sectors to intricate value chains. This could include deciding whether to invest in the electrification of heat or transport, determining which specific technologies (such as EV charging infrastructure, battery or thermal storage, heat pumps, energy management, etc.) to back, or understanding the most investable segments of a particular value chain.

With our extensive knowledge across sectors, deep understanding of technological trends, policy landscapes, market demands, and investor needs, as well as experience working with boardrooms and investment committees, we have supported:

• Global green infrastructure investors in comprehending growth areas and their value chains in electric vehicle and heat electrification markets.
• Pension investment board managers in understanding the future prospects of energy sub-sectors.
• Multi-national asset managers in gaining comprehensive insight into their target heat, EV and home energy management markets and competitor technologies.

If you have any questions or require assistance in any of the areas outlined above, feel free to get in touch with us at Stephen.harkin@lcp.com.