When the Energy Transition Meets the Real World
Is the energy transition sustainable? Have we passed peak energy transition investing?
The 47th presidency of the US has issued orders to open up more US land and seas for fossil fuel extraction while curtailing clean energy development and starting the process of withdrawing the country from the Paris climate agreement. There’s a danger that renewable energy production and infrastructure could fall by the wayside not only in the US but around the world as countries follow the US example.
These concerns are now commonplace. The reality, however, is there are few signs of renewable investment falling by the wayside.
«Infrastructure and transition projects are very dynamic in Europe and Asia,» says Raphaël Lance, MD – Global Head of Private Assets and Energy Transition Funds, at Mirova, an affiliate of Natixis Investment Managers.
«There are some doubts in the US at the moment, but overall, there are no question marks about investment in this space. It is a simple economic necessity.»
The policy paradox in the US
The policy changes in the US, which can be summarised as «drill, baby, drill», are an obvious headwind for renewable energy production.
However, policy – important as it is – does not outrank economic reality. «The paradox is that there have never been as many high energy consumption projects in the US as there are today,» says Raphaël. He points to data centres, the growth of AI and the observation by the former CEO of Google who testified thatopens in a new tab data centres will use 99 percent of current electricity consumption by 20301.
«The only way to meet that level of demand without growth in renewables is by gas-fired plants, but the big data centre owners don’t want fossil fuel based power as they all have met zero trajectories,» Raphaël says.
One alternative is nuclear energy, but this has a 15-20 year build cycle, so supply will not increase before 2040 at the earliest, even if the decision were taken today to go nuclear.
Raphaël says the current situation is likely to be short-lived. «The political position is not grounded economically so it won’t last forever,» he says. «There is a huge shift in energy policy on the horizon and a huge funding gap to fill.»
This gap is likely to be filled by investors and operators who have developed technology and experience in the European markets in the interim.
European renewables power on despite withdrawal of subsidies
The European market, supported by positive policy is, conversely, buoyant. This is despite changing market structure as government subsidies are gradually withdrawn and more renewable projects operate at market costs and prices.
This structural change calls for greater expertise in how deals are structured. «We are much more agile in how we source and secure strategies,» says Raphaël.
Rather than dealing solely with governments, Mirova now often signs bilateral agreements with single, large companies or groups of companies seeking green power. Mirova employs a team whose sole job is to deal with tender processes and find the best deals for its power operations.
Key to the success of this evolving strategy is reliability. Companies buying green power need to know it will be available and at the right scale. Raphaël says: «If Amazon is going to open a data centre in one year, it needs to be sure sufficient power will be available in one year exactly.»
This kind of construction risk has increased the complexity of Mirova’s projects, he notes, but it also creates more value for Mirova’s investors when executed to specification and on schedule.
A move to energy sovereignty
A more recent driver of energy transition is the desire for energy sovereignty in Europe.
Raphaël says: «The war in Ukraine and US protectionism have underlined the importance of energy independence and that resonates with energy infrastructure investors too.»
Some countries have reached the conclusion that building nuclear reactors is the key to energy sovereignty – Mirova takes the stance that the issue is infinitely more complex. As Raphaël puts it: «Nuclear is a long-term energy source, but you can’t pilot it and you can’t stop it. That means it is a base load supply you cannot match peak demand to supply and that is key today.»
If demand doubles at various points during the day, it is impossible to meet demand only with nuclear which creates a constant, unvarying supply.
The possibility of matching supply to demand is where renewables, combined with new storage solutions and new grid configurations, are likely to come into their own.
Storage is critical to effectiveness of renewables
The inability of grids to solve the supply and demand equation was a key factor behind the power cutsopens in a new tab across Spain and Portugal in April 20252. Better power storage for renewable energy and a shift in the configuration of grids could prevent similar outages from occurring in the future.
As renewable energy increases, there is a need to store overproduction, particularly in the middle of the day when supply is high and consumption is low. «There is a great arbitrage opportunity here,» says Raphaël.
«Storage capacity can take energy out of the grid very quickly, so you get paid for storage when there is oversupply. You also get paid for injecting it into the grid at times of high demand.»
Mirova has made a number of storage investments across Europe, with the UK leading the way, and Germany and France close behind. «Today, we cannot contemplate building a solar plant without creating storage facilities alongside it,» Raphaël adds.
Hybridisation: decentralising power generation
Storage innovation will provide the foundation for decentralised power grids and thereby for optimised supply and demand.
The move from centralised to decentralised generation also requires investment in the grid infrastructure to facilitate the development of local energy storage solutions.
These solutions may be wind or solar, or they may be everyday items used by consumers, such as EV cars. Raphaël says: «From a grid viewpoint, cars are just batteries and as such can help stabilise the grid. Cars can, for example, take from the grid during the night at a time of cheap production and return to the grid in, say, the evening when consumption spikes.»
Investment is required for hybridisation of the grid, whereby several modes of electricity generation can be either injected or removed from the system. Hybrid grids offer high levels of energy security and security through the mix of generation methods.
«A number of countries allow for hybridisation in order to reduce intermittency, with investment particularly strong in Spain, Portugal and Poland,» Raphaël notes.
AI powers ahead, green hydrogen powers down
These fast-evolving energy technologies will soon be supercharged by AI, which can predict and target even more precisely power supply and demand, and thereby optimise grids. As Raphaël says: «We are at the start of the growth of smart grids and smart consumption.»
Take the car-as-battery example. If a car owner plugs the car in for 12 hours it will perhaps not immediately charge, as AI predicts that oversupply is highest and the tariff is cheapest at a certain time of night. The AI-enabled grid might for instance, decide to charge the car at the start of the night, empty the car in middle of the night and charge it again in the morning before it is used.
The one renewables based technology where development has slowed is green hydrogen. Mirova has tempered its ambitions in this area as power prices, which are a significant input cost, remain too high for green hydrogen to be financially viable.
Renewable infrastructure proves resilient
The development of renewables technology means there is plenty of value to be captured, in both energy production and the infrastructure that enables it. This is particularly true of the mid-market space which Mirova inhabits, where less institutional money is chasing the same assets.
«We think we are in the right spot in the mid market,» says Raphaël. «We have six vintages, but our overall assets are still relatively small so we can be nimble and flexible.»
Mirova has deployed €2billion in equity transactions over the past two years, bringing the total of projects it has financed to well over 1,000 across 20 OECD countries. It manages €4.1 billion in energy transition infrastructure funds.
Energy infrastructure projects have proved resilient in the face of the inflation of the last three to four years, as power revenues have matched, or even outpaced, inflation measures. «There was little inflation before 2022, so it was hard to show energy transition infrastructure was resilient to inflation. But since 2022, it has proven to be a good diversifier and a defensive strategy in a volatile environment,» Raphaël says.
And as the strategy grows, so does the Mirova team, who were awarded ‘Infrastructure Manager of the Year’ at the 2025 Insurance Asset Risk Awards3. The firm deploys local teams across Europe in France, Poland, Greece and Spain, as well as a discrete emerging markets team with specific knowledge of those markets.
Conclusion: navigating the value chain
The renewables sector is mutating rapidly and investors must be fully engaged with all the new services and solutions in order to participate and extract significant value.
Once, renewable energy investors built solar and wind plants for national or regional authorities and were guaranteed prices perhaps 20 years into the future. Today is different – regulated tariffs are relatively rare and bilateral deals are becoming more prevalent.
In addition, any new power offering must be piloted, hybridised systems must be navigated, and storage must be an integral part of the package. «You have to optimise the whole power generation value chain today,» says Raphaël.
Written in November 2025
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This creates a lot of potential value for investors and operators who understand how power markets are shifting, have long-established networks and are positioned for rapid change.
