Public infrastructure, from utility networks to transport routes, forms the backbone of modern societies and economies. According to the German Economic Institute (IW), Germany faces an investment backlog exceeding EUR 600 billion. Globally, the OECD estimates infrastructure needs until 2040 at approximately USD 95 trillion. This demand arises from the necessity to modernise existing facilities and adapt them to future requirements.
Former government budget cuts after 2008 led to a significant backlog in maintenance. This affects not only consumers but particularly impairs the economy, which relies on dependable transport routes, a stable energy supply, and modern digital connectivity. The relevance of this challenge has already been highlighted by notable figures such as former ECB President Mario Draghi, who emphasised the urgency of massive infrastructure investments for Europe's competitiveness in the 2024 Competitiveness Report.
Comprehensive Investment Programmes in Europe
The European Union has defined infrastructure investments as a central component of its competitiveness strategy. This is manifested in concrete large-scale projects and comprehensive budget allocations. The Federal Network Agency's network development plan in Germany envisages investments of over EUR 320 billion in the electricity grid by 2037. French grid operator RTE plans modernisation and expansion works worth around EUR 100 billion by 2035, while Tennet in the Netherlands is implementing an investment programme exceeding EUR 55 billion by 2028.
Significant funds are also being mobilised in the transport sector. The Brenner Base Tunnel, a joint project by Germany, Austria, and Italy, has a volume of approximately EUR 9 billion. In the German federal budget, around EUR 169 billion from the special fund for infrastructure and climate neutrality is earmarked until 2029 for the refurbishment of roads, bridges, rail networks, and waterways, as well as digitisation. Additionally, the EU is providing approximately EUR 25.8 billion through the Connecting Europe Facility for transport projects until 2027.
Technological Change as a Driver
Another significant factor is the increasing demand for electricity, particularly from data centres and the growing integration of artificial intelligence. Existing networks are sometimes not designed for these peak loads. Energy suppliers and grid operators are thus faced with a dual challenge: shaping the energy transition and meeting the demand increase induced by AI. This creates a predictable, long-term demand for companies in areas such as grid operation, renewable energies, data centre management, and software development.
The substantial state investment budgets in Europe are reflected in the plans of large listed utility companies, which are investing significant sums in infrastructure projects. For investors wishing to address a stable and long-term infrastructure trend, a careful selection of companies with solid cash flows in the equity and bond segments is recommended. Alternatively, actively managed funds specialising in regulated infrastructure companies offer a way to react flexibly to changing investment cycles and spread risk across a more diversified portfolio, as stated by Nermin Aliti, Head of Fund Advisory at LAUREUS AG PRIVAT FINANZ.
