Investments in the infrastructure needed for the transition to sustainable energy are poised to perform well in 2024, according to the deVere Group.

The improving interest rate environment helps make these investments a “megatrend” for this year and beyond, Nigel Green, CEO of the deVere Group, said in a statement today. The deVere Group is an independent financial advisory, asset management and fintech firm that has $12 billion in client assets under advisement.

Expected interest rate decreases this year will provide a tailwind for the sector, he said.

“Investing in renewable energy infrastructure, such as utility-scale solar and wind farms, demands significant upfront capital. As such when interest rates are high, the return on investment for these projects can be adversely affected, leading developers to hesitate and potentially put new projects on the back burner,” Green said. 

A positive outlook persists for the transition towards sustainable energy, the deVere Group said.

“The enduring validity of the long-term investment perspective is underscored, with companies maintaining their dedication to environmental objectives, and governments worldwide offering financial backing to facilitate the transition,” Green said.

In recent years “the energy transition has been hit by high interest rates and inflation, but now the stage appears to be set for an upward trajectory in energy transition investments,” he added. “This, together with global commitments to environmental sustainability intensifying, 2024 could see the start of an energy transition investment megatrend.”

In addition, the industrial sector is exploring alternatives to traditional fuels with lower carbon footprints, such as hydrogen and natural gas. “This strategic shift is motivated by a dual concern for both environmental preservation and economic viability,” Green said.

At the same time, interest is growing in electric vehicles, hydrogen-powered vehicles, biodiesel, and compressed natural gas, all of which require infrastructure to advance their adoption, he said.