The Enablers of the Energy Transition

The energy transition depends on more than power plants. Investment opportunities also lie in the infrastructure and services that support generation: grids, storage, energy efficiency, components, and supporting services.

According to the International Energy Agency (IEA), total energy investment in 2026 is expected to reach US$3.4 trillion, with grid investment approaching US$550 billion (International Energy Agency, 2026b), an increase of nearly 20 percent from the previous year (Metal.com, 2026). Investment in renewable generation is about US$665 billion (Investment Monitor, 2026). Although grid investment is growing rapidly, it remains below investment in renewable generation. The investment case rests on rising demand and constrained supply, rather than current market size, for three reasons.

First, rising electricity demand requires corresponding investment in the grid. The IEA expects demand to grow by more than 3.5 percent annually through 2030 and says annual grid investment needs to increase by 50 percent by 2030 (International Energy Agency, 2026a). Projects totaling more than 2,500 GW are waiting for grid connections (International Energy Agency, 2026a). The agency also expects electricity use by data centers to more than double, exceeding 945 TWh annually by 2030 (Norman, 2025).

Second, critical components remain in short supply. Analysts at PwC report lead times of up to four years for high-capacity transformers, while industry experts report price increases of roughly 80 percent over five years (Kennedy, 2026). At the same time, storage costs are falling. According to BloombergNEF, turnkey storage systems averaged US$117 per kWh in 2025, a decline of 31 percent (Energy-Storage.News, 2025).

Third, the Gulf is already investing in this infrastructure. Masdar reports that it and EWEC reached financial close on 13 July 2026, for a US$6.1 billion project combining 5.2 GW of solar capacity with 19 GWh of storage to supply 1 GW continuously (Masdar, 2026). According to the GCC Interconnection Authority, a 400 kV link spanning 530 km between the UAE and Oman is expected to be fully operational in late 2027 (Oman Observer, 2025).

Investors and developers can respond in three ways: identify projects constrained by grid access or equipment availability rather than generation capacity; secure scarce components and capacity early; and develop the engineering, maintenance, and energy-efficiency services needed to keep the grid operating.

These investments can strengthen the Gulf's power systems and the industries that serve them, while creating opportunities for partners with specialized skills and technology.

At I3H Investment, we invest in and develop enterprises for the long term. We focus on businesses that provide the infrastructure, equipment, and services needed to support the energy transition.

References