In 2026, a lot of capital is chasing few genuinely deliverable infrastructure assets, while geopolitical turmoil is reshaping energy markets. Darryl Murphy, head of infrastructure, delves into what this means for investors.
Read this article to understand:
- The impact of execution constraints on deal flow
- How events in the Middle East are reframing Europe’s energy transition
- Why 2026 is all about deliverability
European infrastructure investors are facing a new reality in 2026. Deal flow is slightly down from the all-time highs of 2025, and not for a lack of financing. In fact, there has never been more capital available to invest in infrastructure projects.
Geopolitics has also returned to the fore, bolstering the investment case of many projects. The war in the Middle East and the disruption of shipping in the Strait of Hormuz have given Europe’s energy transition new impetus, restoring a harder focus on security of supply and system reliability.
But at the same time, fewer assets are genuinely deliverable: execution constraints are now defining the market. For infrastructure investors, the ability to navigate bottlenecks and delivery has never been more important to secure returns.
A wealth of capital
European policymakers have become highly effective at signalling openness to private capital. Cross‑border project lists, EU funding mechanisms and national initiatives all emphasise “crowding in” institutional investors.1
These investors have responded enthusiastically, from commercial banks to institutional investors, private credit and sovereign capital. As a result, liquidity available for European infrastructure is deep and diversified. Fundraising momentum rebounded strongly in 2025 and remains positive in 2026, with infrastructure standing out among alternative assets (see Figure 1).2
Figure 1: Net allocation intentions by asset class (per cent)
Source: Aviva Investors. Data as of October 2025.
The investment case for grids, flexibility and integrated power strategies
At the same time, the centre of gravity in Europe’s energy transition has moved from power generation to the overall system.
Roughly half of the EU’s priority energy projects now focus on electricity and smart grids
Since 2022, Europe’s investment in renewables has materially reduced its exposure to external shocks. Renewables generated around half of EU electricity in 2024-2025 and so helped cushion the economic impact of recent volatility in fuel markets.3 Given the ongoing uncertainty involved in geopolitics, this is now a structural factor.
However, wind and solar have proven necessary but not sufficient as other constraints in the energy system have come to into focus, which is why roughly half of the EU’s priority energy projects now focus on electricity and smart grids.4
Natural gas: The transition’s reliability layer
The IEA estimates that almost 20 per cent of the world’s liquefied natural gas (LNG) supply transits through the Strait of Hormuz. Its effective closure has delivered the largest energy security shock since 2022, driving sharp price volatility in both Asia and Europe.
Europe isn’t facing physical shortages, as it sources only a modest share of its LNG directly from Qatar, but it remains exposed to rising prices and competition from Asia for flexible cargoes. Analysts estimate that a doubling of gas prices could add around €100bn to Europe’s import bill over 12 months.5
The shock has not weakened Europe’s commitment to decarbonisation. It has instead reinforced the lesson that imported fossil fuels come with a volatility tax. But it has nevertheless underlined the ongoing role of gas:
- To add flexibility to renewable-heavy power systems,
- As an industrial and heating fuel during the transition,
- And as a backstop to ensure energy supply security during shocks.
For investors, the message is nuanced: gas is not a growth asset, but it is critical for risk management and reliability during the energy transition’s messy middle.
A dearth of execution
Despite policymakers’ drive to entice private investors to finance infrastructure projects, delivery institutions such as planning authorities, regulators and grid operators are unevenly resourced.
Europe does not have a funding gap, but a gap in execution‑ready projects
This can cause significant delays to permits and connections. Market outlooks consistently point to regulatory complexity, planning delays, grid constraints and supply‑chain bottlenecks causing transactions to take longer and to be abandoned more often, even late into the bidding process.
As a result, 2026 deal activity is modestly below its 2025 all-time peak, reflecting friction rather than fading interest. Europe does not have a funding gap, but a gap in execution‑ready projects.
Deliverability comes to the fore
The result of this friction is a two‑speed market.
Greenfield, development‑heavy and growth strategies (focused on long-term investment, structural reform and sustainability) now require a clear edge to gain approval.
In contrast, brownfield and contracted assets (projects structured to minimise risks through legally binding, long-term contracts) continue to transact. That is boosting competition and raising prices for de‑risked contracted assets.
The gap has created a feedback loop whereby capital chases fewer deliverable projects, leading to higher asset prices, in turn strengthening public scrutiny, making permitting even harder, leading to fewer deliverable projects.
It also means that the ability to execute – whether obtaining permits, accessing the grid or securing suppliers – has become a primary source of returns.
Investing outside the box
These constraints are also pushing investors to look for new – deliverable – opportunities.
Networks have become a chokepoint, but that also makes them the most investable bottlenecks. Europe’s prioritisation of electricity and smart grids favours investments in regulated asset bases (like electricity networks), long‑duration capex programmes, and grid‑adjacent strategies (like grid-enhancing technologies). The limited number of available opportunities also gives these assets scarcity value for investors able to access them.
Networks have become a chokepoint, but that also makes them the most investable bottlenecks
Investors are therefore exploring projects in transmission and distribution grids, interconnectors and offshore grids, storage and flexibility, and digital control and monitoring infrastructure.
They are also moving up and down the value chain, from development platforms – services and tools that allow organisations to develop, deploy, and manage infrastructure – to previously owned, operational assets.
Electrons and data are converging
Nowhere are delivery constraints clearer than in data centres. AI‑driven demand continues to surge, but expansion is increasingly limited by physical bottlenecks – like grid access, equipment supply and connection timelines – particularly in traditional power hubs.6
This reinforces the case for gas and other solutions that deliver flexibility until networks and storage can scale. It also means data centres are becoming power‑infrastructure plays as much as digital ones, further strengthening the investment case for grids and integrated power strategies.
The 2026 European infrastructure playbook
Europe’s infrastructure market is not cooling; it is professionalising. Capital is abundant, policy ambition is high, and the energy transition is inseparable from energy security, but delivery capacity is the scarce input.
This means that, in 2026, it’s no longer enough to simply provide capital. Instead, the ability to turn policy ambition into project delivery will drive returns. In this environment, five principles stand out for investors:
