Energy infrastructure transmits and distributes essential products and services such as electricity and natural gas to societies. Due to their natural monopoly status, energy infrastructure assets are highly regulated and produce very stable cash flow.
With their combination of high capital cost and low variable cost, energy infrastructure assets generally have very high operating margins. Regulators in many jurisdictions are sanctioning pricing regimes that encourage capital investment to ensure reliability and support economic growth. In many instances, there is significant protection against price, inflation, volume or utilization risks.
In addition, oil & gas pipelines, processing plants and storage facilities (“midstream companies”) as well as unregulated power generation facilities tend to be subject to less rigorous regulatory frameworks. In many jurisdictions, these companies can charge competitive prices subject to maximum rates. They tend to produce stable cash flow with growth as a result of high barriers to entry.
Brookfield has over 100 years of experience operating energy infrastructure assets.
Key attributes:
- Stable revenues with inflationary growth
- Strong free cash flow generation through regulated or contractual frameworks
- Diversity across regulatory regimes
- Significant opportunities to invest in system expansions at attractive returns