European Utilities & Clean Energy — Regulated Networks Primer series: Part 3: Growth and Capex Outlooks in European Power networks

Regulated utilities are one of the most dynamic subsectors within European Utilities. In this Part 3 of the Regulated Networks Primer Series, we look at the underlying drivers of capex growth for electricity networks in more detail. European regulated power grids are currently riding 5 key megatrends: 1) growing power demand; 2) decarbonisation of power production; 3) a push towards energy sovereignty and power markets integrity; 4) networks digitalisation and cybersecurity; and 5) infrastructure resilience and environmental standards. These megatrends each provide strong tailwinds for investment and asset growth, with high visibility, driving a structural improvement in earnings quality. We do not believe the market currently appreciates the duration of an investment runway which we see extending for at least a decade, underpinning an investment runway until at least the mid-2030s, with potential for further supercycle extension if power demand develops as anticipated. Companies such