Private Markets Raise $230 Billion for Energy Transition

(Bloomberg) -- Private markets raised almost $230 billion for energy-transition funds over the past decade, creating a growing source of financing for clean energy and other renewable projects, according to BloombergNEF.

Much of that capital remains undeployed. About $92 billion is still sitting on the sidelines, said Ryan Loughead, a senior associate at BNEF in London. “It’s a pocket of money that’s increasing and it’s not inconsequential,” he said.

Brookfield Asset Management, Blackstone Inc., BlackRock Inc. and Copenhagen Infrastructure Partners are among the asset managers betting that rising energy demand and the improving economics of renewables will continue to drive investment. The funds are emerging as “a significant source of capital” for the energy transition, BNEF wrote in a report published Thursday.

Even so, the world remains far short of what’s needed to avoid the worst effects of climate change. BNEF estimates annual spending of $5.2 trillion is required through the end of the decade for the global economy to stay on track for a net zero scenario. Last year, a record $2.3 trillion was invested in electrified transport, renewable energy, power grids and other green businesses, leaving the world well behind pace.

Based on available data, BNEF estimates that the median internal rate of return for dedicated transition funds ranged from an annualized 7% to more than 20% between 2015 and 2022, though the payback period varies significantly.

Private markets — investments in assets not traded on public exchanges — have expanded rapidly. Globally, assets under management in private capital climbed almost 20-fold to about $22 trillion between 2000 and 2024, according to estimates from McKinsey & Co.

In all, private markets have raised $2.7 trillion for funds investing in all sorts of energy, including fossil fuels, over the past decade, BNEF reported. 

Brookfield Asset Management has done a series of big green deals in recent years, including a £1.75 billion ($2.4 billion) stake purchase in UK offshore wind farms from Orsted A/S. The asset manager also partnered with Microsoft Corp. in 2024 in what was then the largest announced corporate clean-energy purchase agreement.

(Adds estimated fund returns in the fifth paragraph.)

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