Central and Eastern Europe is brimming with opportunities in renewables, airport expansions and electrification of transport as the race towards green leadership and proactive government policies gather pace. These are among the findings published in the 2019 CMS Infrastructure Index: Bridging Continents.
The latest report by international law firm CMS in conjunction with inspiratia, analyses data against six criteria to create a guide to the most attractive destinations for infrastructure investment in the world. This year’s report confirms that a crucial point has been reached in the global transition into greener, smarter and more sustainable investments and assets.
Secondary market opportunities rapidly expanding in CEE
Seven countries in CEE secured a ranking in the 2019 Index, with Poland claiming the top spot across the region for investment attractiveness. Poland, which this year rises three points since the 2017 index to claim 19th position in the 2019 global index, is making huge strides in the clean energy sector. In August it signed one of its first PPAs between a wind farm producer and car manufacturing group, marking Europe’s first automotive renewables transaction. Meanwhile, the Polish government is putting forward ambitious targets to reduce its coal generation by 50% by 2040 and develop 10 GW of offshore wind capacity by 2030.
The report reveals that the secondary market in CEE is rapidly increasing, with the region boasting the highest growth of passenger traffic in Europe. CEE countries are announcing huge airport expansion projects, such as Serbia’s Nikola Tesla airport, which, following the acquisition by Vinci, plans to invest roughly EUR 730m to build-up the facility into the best-connected airport in the region. Many are also planning new greenfield additions, including in Romania and Lithuania.
The findings also show that CEE countries are making significant strides with electric vehicles following an upsurge in demand. Germany-based Ionity partnered with Shell in Q3 2018 to deploy EV charging stations in 24 European countries, including Poland, Czech Republic, Hungary and Slovakia, as part of what could be the Europe’s largest ultra-fast charging network. Austria’s largest electricity provider, Verbund, also partnered up with Enel X, Smatrics, Greenway and OMV to develop EV charging infrastructure in Romania, Slovenia, Croatia, Hungary and other countries in the CEE region.
Marcin Bejm, Head of Infrastructure at CMS Poland says: “Poland’s strong position in the Index is gratifying and reflects the strength of the secondary infrastructure market and the government’s support for investment in sustainable assets. Throughout the CEE region there is growing commitment to new technologies and clean energy, with encouraging signs of foreign business partnership, which bodes well for the future.”
Europe charges ahead in sustainability race
Germany overtook the Netherlands to take the top spot in the 2019 Index, thanks to its considerable sustainability and innovation drive. The country is putting climate action at the centre of the German national identity, supported by a number of offshore wind projects, the construction of a fourth electricity highway and an extensive EV charging programme. Elsewhere, notably the Brexit-effect is taking its toll on the UK infrastructure sector as it slips five places to 9th position on the 2019 Index.
Overall, Europe claimed six of the top 10 countries in this year’s Index.
Other findings in the report show:
Kristy Duane, Co-Head of Infrastructure and Project Finance at CMS, comments: “Infrastructure is connecting people worldwide at an unrelenting level. With sustainability, innovation and digital transformation at the heart of government agendas, investors are finding new and exciting opportunities on a global scale, including in 5G, subsidy-free renewables, smart cities and PPP in new markets.
As our 2019 report illustrates, infrastructure assets play a vital role in climate change mitigation, with top-ranked Germany a standout example of a country that is transforming its infrastructure efforts to meet its ambitious targets. Environmental, social and governance (ESG) criteria are becoming a top priority for infrastructure investors – however this brings with it challenges as investors navigate a complex matrix of evolving requirements and standards for different assets around the world.
M&A activity was also an important feature in markets globally in 2019, with developing economies, in particular, investing heavily in roads, rail and airports to drive economic growth and bring them closer to international trading partners.
Overall, the infrastructure sector continues to present a positive picture in an uncertain world.”
To find out more, please read the 2019 CMS Infrastructure Index here: cms.law/infraindex2019