Infrastructure outlook: AI, decarbonization and policy tailwinds in 2026

What are some risks to this AI tailwind that you’re monitoring?

Charles Hamieh: Hyperscalers have generally struck 15- to 20-year contracts where the utility supplies the infrastructure (including power) and gets an attractive return on its equity, normally in the range of 9%–12%. For existing projects, the utility is 100% protected and will receive a return on its investment. That also means that current guidance upgrades are structural and have transparency out 7–10 years.

Risks we’re monitoring include pressure on residential customer bills through higher power prices, which becomes political and may lead to concern that data center growth is bad for utility customers in general. Also, electricity grid constraints, in the form of delays in interconnection agreements, power plants and approvals. Supply chain and construction delays could mean cost increases, insufficient labor or lack of specialized equipment. There’s a chance, although I believe a small one, that some type of meaningful change in technology might also translate through to significantly more power efficiency and less power demand. Finally, funding constraints on the growth in data centers, while very unlikely, would lead to a slowdown in growth.

Nuclear is back in the discussion as a clean-emission power source. How are you thinking of pure-play nuclear and other utility

Charles Hamieh: Along with gas, nuclear generation is the only base load 24/7 traditional generation currently being built. Nuclear also has the added benefit that it is clean. The downside is the longer lead time on builds, but if the small modular reactors model can be proven, this form of generation will be far more prevalent in the next decade. opportunities that have exposure to nuclear generation?

What are the main sustainability themes you see driving infrastructure returns in 2026 and beyond?

Nick Langley: Decarbonization and the clean energy transition continue to drive investment into renewables globally as well as retirement of carbon-based generation such as coal. While certainly some of the hype has come out of the market, most countries and many of the largest companies still have clear decarbonization targets. Much of the spending required to meet these targets is related to poles and wires networks, nearly all of it earning regulated returns. Further climate-proofing and spending on physical asset risk mitigation has been a large feature of capex plans, especially in places like California and the US Gulf Coast. Global utilities have been major beneficiaries of these trends.

Resource efficiency and nature-positive infrastructure are also important for UK water companies, as they roll out their next five-year capex plan. Stepping back, the global water infrastructure gap is large. Aging systems, climate change (droughts and floods), and rising demand mean many regions need major upgrades. Governments and regulators are increasingly prioritizing water quality, reliability, resilience and efficiency, as we saw in the recent UK regulatory review. This received further positive support through the Cunliffe review,² which aims to support water quality, water company performance and efficiency into the future.

How are macro factors like inflation, interest rates and government debt shaping the relative attractiveness of listed infrastructure versus private markets?

Shane Hurst: While a majority over 90% of our portfolios can directly or indirectly pass through inflation, listed markets often react to surprises in inflation data. With inflation in 2025 largely subdued, outside of periods like April where there were concerns tariffs may be inflationary, inflation has had a limited impact. In April, as the market sold off on tariff expectations, many listed infrastructure investors were able to use this volatility to position in high-conviction names that were only impacted by beta, not fundamental changes. Investors in unlisted infrastructure could not have taken advantage of this opportunity, given the lack of liquidity and the time it takes to execute a deal.

The large government debt burden has led to a greater reliance on the private sectors for growth initiatives, as government spending focuses on areas such as defense. That has led to improved siting and approvals of projects and more constructive regulation in some regions.

Which sectors or regions are offering the most compelling infrastructure investment opportunities?

Nick Langley: We are heavily exposed to global electric utility companies, given the trends discussed above. North American gas pipelines are also compelling, with expansions driven by the need to satisfy new gas-fired plants (that stabilize the grid and supply power to data centers) and liquefied natural gas (LNG) export needs. High-efficiency gas generation should also help stabilize grids as they decarbonize. Global renewables and energy storage solutions are likewise benefiting from the need for more power (driven by coal-fired generation retirements and data center demand growth) and to decarbonize grids. Finally, user-pays infrastructure in Europe looks attractive where, in many cases, airports and toll roads are hitting capacity. This is creating a greater need for investment to expand capacity and the potential for attractive return generation.

Conclusion

We believe the outlook for infrastructure in 2026 remains robust, driven by the accelerating demand for power and data fueled by AI, as well as decarbonization and network investment to replace aging infrastructure, improve resiliency and support onshoring and supply chain realignment. Utilities and gross domestic product-sensitive infrastructure assets such as airports and toll roads are positioned to benefit from long-term contracts, regulatory support and essential service status, which can provide earnings stability even in volatile macro environments. While risks such as grid constraints, political pressures related to affordability and supply chain challenges persist, we believe opportunities abound in developed markets, especially in North America and Europe. Ultimately, we believe infrastructure stands out as a resilient asset class, offering attractive returns and defensive qualities amid shifting economic conditions and rapid technological advancements.