RARE Infrastructure predicts stranded gas assets

06 February 2020 - 12:00 am UTC

Gas pipelines are now more likely to become stranded assets as renewable energy becomes cheaper and investor concerns about climate change mount, according to RARE Infrastructure.

At the same time, new investment opportunities are emerging even as investors shy away from coal, oil and gas infrastructure.

“You might have a lot of lateral pipelines become stranded assets,” Nick Langley, co-founder and senior portfolio manager of the listed infrastructure manager, said at a roundtable briefing in Sydney yesterday. “You will still have the trunk pipeline, but the nature of the networks is going to change.”

This is because the cost of renewable energy is falling fast, making gas power plants ever more uncompetitive. The only thing now holding back renewables is the cost of storage, but the price of this is also now dropping rapidly, he said. 

Fellow portfolio manager Charles Hamieh said: “Ten years ago you would have thought there were 100 years of solid growth in gas [infrastructure]. That is fanciful now.”

RARE invests in numerous gas infrastructure companies around the world, including the ASX-listed APA Group, and will do so for some time yet, he said. 

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