For much of the last 20 years, energy debates have beenframed around choices. Gas or renewables. Molecules or electrons. Energysecurity or decarbonisation. Incumbent technologies or new ones. Investors,understandably, have spent enormous effort trying to work out whichtechnologies will win, how demand will evolve and where capital should follow.

At Gastech in Bangkok, whereI had the opportunity to participate alongside Bilateral Chamber and engagewith energy leaders from across the industry, one issue surfaced repeatedly invery different conversations: how should we think about investment whenuncertainty itself has become persistent? Rashid Al Mazrouei of ADNOCmade a simple point about the current geopolitical uncertainty. As far back ashe could remember, there had always been something happening somewhere in theworld that disrupted energy markets. The industry has dealt with crises before,adapted and continued to supply energy. What we are experiencing today isserious, but disruption itself is hardly new.

What is worth examining is whether the investment logicunderneath that adaptation has kept pace with it, or whether we are stillunderwriting projects as if the next disruption were the exception rather thanthe pattern. We forecast electricity demand, LNG consumption, AI powerrequirements and technology costs, and then allocate capital around thoseexpectations. We have to. But if we know we are likely to be repeatedly wrongabout the future, why do we keep evaluating investments as though getting theforecast right is the central task?

Here is another way to think about it. When you cannot confidently pick thewinning horse, perhaps you should ask whether it makes more sense to invest inthe racetrack. The winner may change from one race to the next, but everyhorse still needs the track.

Energy investing increasingly presents the same question.We can spend enormous effort trying to predict which technology, fuel orcompany will win. Or we can ask what every credible winner will need, whatbecomes scarce as they grow, and whether there is more durable value in owningor financing that infrastructure.

That is not an argument against picking winners. Nor isowning the racetrack an investment thesis by itself. A racetrack with no payingcustomers is simply expensive infrastructure. The more useful question is whatmakes an asset valuable across different possible futures.

Across the discussions I joined and conversations I hadat Gastech, these questions surfaced in different ways. How much is resilienceactually worth? Is the demand behind an asset genuinely bankable? Who isultimately carrying the risk? And when a market grows, what becomes scarce?

Those questions lead to a different way of thinking aboutenergy investment. Instead of beginning only with which technology or marketwill win, they begin with the economics of the system that every plausiblewinner will have to operate within.

How much resilience is worth paying for?

Resilience was one of the recurring themes in Bangkok. Inone of the LNG discussions, Woodside Energy CEO Liz Westcott described a shiftin customer thinking from “just in time LNG” towards “just in case LNG”.Increasingly, customers are looking for flexibility, which raises a biggerquestion about how energy systems should be designed and financed when the nextdisruption is inherently difficult to predict.

The same issue appeared from a very different perspectivein a discussion with retired US Army Lieutenant General Stephen Lanza. Theconversation focused on the resilience of critical infrastructure in anenvironment where physical attacks, cyber threats and sabotage have become partof the security landscape, and on the capabilities and coordination required tokeep essential systems operating under pressure.

Put those perspectives together and resilience starts tolook different. For an LNG buyer, it may mean access to additional supply orcontractual flexibility. From a national security perspective, it may meaninfrastructure that continues operating when it is deliberately disrupted. Foran investor, both lead to a similar economic question: how much redundancy,flexibility and spare capacity is worth paying for before it is needed?

The last 20 years illustrate why that question isdifficult. Oil traded above 140 dollars a barrel before the financial crisis.During COVID, the collapse in demand was so abrupt that the front month WTIfutures contract briefly fell below zero. The direction, source andconsequences of different disruptions are rarely the same.

Resilience therefore cannot depend on correctlypredicting the next crisis. It comes from having enough flexibility to respondwhen something happens that the investment case did not anticipate. That mightcome from storage, spare import capacity, diversified suppliers,interconnections, flexible generation, demand response or simply thecontractual ability to source energy elsewhere.

The difficulty is that resilience often looks expensiveuntil the moment it is needed. An LNG terminal with spare capacity, additionalgas storage or a peaking plant that operates only occasionally can lookinefficient during normal conditions. Utilisation is low, capital is tied upand somebody has to pay for capacity that may sit largely unused. During adisruption, the value of precisely that capacity can change very quickly.

For aninvestor, however, economic value and investable value are not the same thing. Astorage facility or flexible generation asset may save an energy systemenormous costs during a crisis, but unless somebody pays for availability,capacity or flexibility during normal periods, that value does not necessarilybecome an investable revenue stream.

Flexibility and diversification can therefore be worthmore than simply the volume of energy sold. The harder part is converting thatvalue into revenues that can be underwritten before the disruption happens.Spare capacity has little investment value if everybody appreciates it during acrisis but nobody is willing to pay for it during normal conditions.

The question is not simply whether we need moreresilience. It is where resilience has economic value, who should pay for itand how that value can be captured before the disruption occurs. That becomesmuch harder when the customers who need greater resilience are alreadystruggling to finance the energy system they have.

Is the demand actually bankable?

We spend enormous effort forecasting electricityconsumption, LNG demand and industrial growth. But a demand forecast can lookcompelling on a slide. The harder question begins when you ask who actuallypays.

The challenge is particularly visible in energy importingeconomies. New LNG supply may be available, but additional consumption canrequire investment in regasification, storage and pipelines. If the gas is usedfor power, further capital may be needed for generation, transmission and thegrid. Ultimately, governments, utilities, industrial customers and householdshave to support the revenues that allow this entire chain to be financed.

Repeated crises make that more difficult. Manygovernments have had relatively little fiscal breathing room between COVID,subsequent energy shocks and higher financing costs. When another shockarrives, attention and financial resources naturally move towards the immediateproblem: securing fuel, protecting consumers, supporting utilities andpreserving industrial activity. The risk is that capital that could strengthenthe system over the long term is repeatedly consumed by the cost of managingthe system today.

Thailand illustrates how quickly these pressures canemerge. At Gastech, PTTEP’s incoming CEO Kanita Sartwattayu said that every 3dollar per MMBtu increase in LNG prices could raise Thai electricity prices byaround 5%. Asian spot LNG prices have recently moved from around 10 dollars perMMBtu to almost 30. A cargo that cost roughly 10 dollars suddenly costs closeto 30. The power station still needs the gas. The turbine produces the sameelectricity. The factory connected to the grid still needs the same power.Nothing physical has changed, yet the cost of the marginal fuel entering thesystem has almost tripled.

Applying the PTTEP sensitivity mechanically would imply asubstantial effect on electricity prices. I would not treat that as a forecast.Actual electricity prices depend on contracted versus spot LNG, generation mix,tariffs and government intervention. But the sensitivity shows how quickly acommodity shock can travel through an energy system and arrive at theelectricity bill of a household or factory thousands of kilometres away.

China provides another perspective. At Gastech,PetroChina International CEO Luo Yizhou argued that Chinese LNG demand couldrecover when prices return towards a more normal 7 to 9 dollar per MMBtu range,particularly as electricity consumption continues to grow. The underlying needfor electricity has not necessarily disappeared. What changes is whether LNGremains economically competitive enough to serve it.

A market can have enormous underlying energy needswithout having the financial capacity to absorb every fuel at every price.China has greater ability than many energy deficit economies to reduce spot LNGpurchases when prices become uneconomic. For suppliers and investors,forecasting energy consumption is therefore only part of the investment case.The harder question is what price customers can sustain and whose balance sheetabsorbs the difference when they cannot.

This can create a difficult cycle. Insufficient long terminvestment can leave an energy system more exposed to disruption. The nextdisruption then requires emergency spending, weakening the financial capacityavailable for the investments that could make the system more resilient in thefuture. The issue is not necessarily an absence of energy demand. It can be anabsence of sufficient balance sheet capacity to turn that demand intoinfrastructure that can actually be financed.

Need isnot the same as bankable demand. Somewhere in the system there has to be acustomer, utility, government or other counterparty with the financial capacityto support the revenues behind the investment. Once that becomes uncertain, thequestion quickly moves from how much energy will be consumed to who is beingasked to carry the risk.

Who should carry the risk?

At Gastech, the distinction between capital availabilityand project investability came up repeatedly. One of the strategic financingdiscussions started from an interesting contradiction: more than 3 trilliondollars is being invested in energy globally each year, yet capital is becomingincreasingly selective, with greater scrutiny of contracts, counterparties andregulation.

This was also central to the financing roundtable Ijoined. There was clearly capital looking for energy infrastructure acrossconventional energy, power and the transition. The harder question was whatrisks investors were actually being asked to carry. A project can address agenuine energy need, use proven technology and offer attractive headlineeconomics, yet still struggle to attract financing if too many risks areconcentrated in the same place.

Consider a gas fired power project in a fast growing market. The plant itself may be relatively straightforward to build andoperate. Then you open the financial model. The gas may be priced in dollarswhile electricity revenues are in local currency. The utility signing the powerpurchase agreement may have a constrained balance sheet. Tariffs may not fullypass through fuel costs. Future demand may be uncertain, while the projectrequires financing extending 15 or 20 years. Suddenly the investment committeeis spending less time discussing turbines and more time discussing currencies,counterparties, contracts and government policy.

Theturbine is not necessarily the difficult part. The balance sheets around itoften are.

The problem is not that these risks exist. Infrastructureinvestment always involves risk. The more important question is whether eachrisk sits with the party best able to manage it. A power producer cannotcontrol a country’s exchange rate. An LNG supplier cannot repair the financesof an electricity utility. A lender cannot create electricity demand. Puttingall of those risks into the project company does not make them disappear. Itraises the cost of capital, reduces debt capacity and, beyond a certain point,can make the project unfinanceable.

Riskallocation is not simply financial engineering. It can create or destroy value. Agovernment may be better placed to address particular regulatory risks. Autility may provide credible long term demand through an appropriatelystructured contract. A supplier may be better able to manage commodity exposureor volume flexibility. Investors can then concentrate on construction,operating and commercial risks they are actually equipped to underwrite.

The solution cannot simply be for governments toguarantee every risk. Guarantees, subsidies and sovereign support consumefinancial capacity too. Good project structuring means deciding which risksgenuinely require public support, which can be transferred contractually, whichcan be diversified or hedged and which investors should reasonably retain.

Many of these questions cannot beresolved by investors or project developers alone. They sit at the intersectionof government policy, corporate balance sheets, infrastructure development andprivate capital. This is also where organisations such as Bilateral Chamber canplay an important convening role, bringing business and government leaders intothe same conversation. Better risk allocation often begins with a betterunderstanding of what each party can realistically control, finance and committo over the life of an asset.

Before asking where the capital will come from, it isworth asking who should own each risk. Getting that allocation right can makean otherwise difficult project investable. But making capital able to move isone question. Deciding where it should move is another.

What becomes scarce if the market succeeds?

Energy investment discussions naturally focus on thetechnologies or markets expected to grow fastest. But as one constraint issolved, another can start to determine the economics. The opportunity istherefore not always in the technology experiencing the growth. It may sit inwhatever that growth makes scarce.

Solar provides a useful example. Module costs have fallendramatically and manufacturing has scaled to the point where panels themselvesare increasingly commoditised. That is an extraordinary achievement, but italso changes where competitive advantage sits. In many markets, developinganother solar project is no longer principally a question of securing modulesat an attractive price. The harder problems can be securing land, permits, gridconnections and transmission capacity, and increasingly being able to shiftelectricity from periods when it has little value to periods when the systemactually needs it.

A developer with access to a constrained grid connectionmay therefore own something more strategically valuable than a developer ableto buy panels slightly more cheaply. A battery located where congestion orprice volatility is greatest may capture more value than an identical batterysomewhere else. The technology is identical. What surrounds it is not.

AI infrastructure makes the issue even more visible. Ahyperscaler may be able to procure servers and build the physical data centre,but it cannot simply order a gigawatt of reliable electricity in the same wayit orders computing equipment. Generation has to exist, but so do transmissioncapacity, substations, transformers, grid connections, firming capacity and,depending on the system, gas supply, storage or other sources of flexibility.

Everyonecan see the data centre. The constraint may be the substation nobody is talkingabout.

The same issue was visible in the US discussion atGastech. FERC Chair Laura Swett argued that the United States can expand LNGexports to meet growing Asian demand while also supporting rising domesticpower requirements from AI data centres as additional infrastructure andterminal capacity are developed. The resource can exist and the demand canexist while the infrastructure between the two still determines how quickly themarket can respond.

Nor is this peculiar to new technologies. If LNG demandgrows, the opportunity is not necessarily confined to producing anothermolecule. The constraint might emerge in liquefaction, shipping, storage,regasification, pipelines, gas fired generation or the creditworthiness ofcustomers further downstream. The same demand growth can therefore create verydifferent investment opportunities depending on which part of the systembecomes difficult to secure.

Not every constraint is physical. Technology may be readyand customers may exist, but if investors cannot see how revenues are created,who carries particular risks or whether the rules will endure over the life ofthe asset, capital will remain expensive or simply stay away. A crediblecontract or commercial framework can be every bit as important as a pipeline orgrid connection.

This is where the racetrack analogy becomes useful. Theinvestment opportunity is not automatically in owning the infrastructure aroundthe winner. The racetrack still needs traffic and somebody willing to pay touse it. But when several plausible winners depend on the same scarceinfrastructure, the economics become much more interesting.

Thehorse may change. The racetrack remains.

The investment question is changing

Forecasting still matters. We need views on electricitydemand, LNG consumption, AI power requirements and technology costs. But forassets expected to operate for decades, getting the central forecast rightcannot be the only source of investment value.

A more durable investment case asks what happens when theforecast is wrong. Does the asset remain useful when the system is stressed?Are there customers with the financial capacity to pay for it? Are the riskscarried by parties capable of managing them? And if the market does grow, doesthe asset control something that becomes increasingly difficult to replicate orsecure?

That is ultimately what I mean by betting on theracetrack. It is not about avoiding the horse. It is about understanding whatevery plausible winner will need.

Some of the most interesting opportunities may thereforesit outside the technologies attracting the most attention. They may sit in agrid connection, a transmission line, storage, flexible generation, a contract,an infrastructure corridor or another constraint whose value increases as themarket around it grows.

Thequestion for the next investment cycle is not only what will grow, but whatbecomes difficult to secure when it does.

There is a reason these questionsbenefit from forums such as Gastech and organisations such as BilateralChamber. Energy infrastructure is ultimately built at the intersection ofcapital, corporate strategy and public policy. Investors can provide capital,but they cannot create durable policy. Governments can shape markets, but theycannot allocate every commercial risk. Companies can develop projects, but theystill need customers, infrastructure and finance. Bringing those parties together is not simply about dialogue. It ispart of what allows investment to move.

That is where I see the value ofBilateral Chamber and why I have been pleased to collaborate with them around Gastech. Their work connecting business and government across markets is particularly relevant at a time when energy security, affordability, infrastructure investment and decarbonisation are becoming increasingly interconnected. My thanks to Aida Araissi and the Bilateral Chamber team for creating the opportunity for these conversations and for encouraging me to develop these reflections further.

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