July 30, 2021

Senate Agreement an Encouraging Step Toward Constructive Infrastructure Legislation

Key Takeaways

  • A bipartisan majority of 67 Senators has agreed to support legislation providing for $550 billion of federal infrastructure spending.  Once formally passed by the Senate, the bill would move to the House, where it already faces opposition from some progressives.
  • The current bill provides:
    • $73 billion of incentives for electrical transmission to support connection of renewables and enhance reliability and resilience;
    • $7.5 billion for EV charging stations; and
    • $5 billion to electrify school buses.
  • The White House Fact Sheet is consistent with the Administration’s prior messaging which recognizes the importance of leveraging existing infrastructure and private capital to achieve an improved energy system. This is a positive for our portfolio companies who operate incumbent network infrastructure.

What’s New

We highlight a few quotes from the White House announcement:

“Today, the President and a bipartisan group announced agreement on the details of a once-in-a-generation investment in our infrastructure, which will be taken up in the Senate for consideration. In total, the deal includes $550 billion in new federal investment in America’s infrastructure. The Bipartisan Infrastructure Deal will grow the economy, enhance our competitiveness, create good jobs, and make our economy more sustainable, resilient, and just.”

“A Department of Energy study found that power outages cost the U.S. economy up to $70 billion annually. The deal’s $73 billion investment is the single largest investment in clean energy transmission in American history. It upgrades our power infrastructure, including by building thousands of miles of new, resilient transmission lines to facilitate the expansion of renewable energy.”

Why It Matters

EIP returned to participate in the Aspen Institute’s Energy Policy program this week where the core topic was decarbonization. Extensive discussions ensued with an emphasis on key objectives 1) building a safe, resilient, reliable, low-cost energy system, 2) accessing the capital markets to leverage existing infrastructure, and 3) engaging local communities and worker skills.

For investors in energy infrastructure, the growing recognition of the need to utilize existing infrastructure more effectively to take on these challenges, in our opinion, is important. The already-built network of electric transmission and natural gas pipelines can be leveraged and/or repurposed to incorporate more flexible and distributed generation, transportation of alternative energy carriers (such as ammonia for hydrogen), and has the advantage of not needing a four-year approval process to begin tackling what many view as a 15-year problem deadline.

While legislative financial support is nice, it is EIP’s view that government’s greatest contribution lies in setting goals and streamlining approval paths for industry to achieve them.  Many of the Aspen attendees are active participants in the legislative and policy processes, and we’re hopeful that some of the discussion we heard this week informs those processes as this legislation works its way through Congress.  That said, it remains very clear to us that the infrastructure that EIP’s portfolio companies own is critically important to achieving the goals of the legislative agreement announced this week.

The Information provided in this article is believed to be accurate as of the date above. EIP reserves the right to update, modify or change information without notice. Any statements of opinion are EIP’s opinion and should not be relied upon as a prediction of any future event. The information is based on data obtained from third party publicly available sources that EIP believes to be reliable but EIP has not independently verified and cannot warrant the accuracy of such information. Investors are encouraged to seek their own legal, tax, or other advice before investing. EIP is not responsible for any information provided in third party links.

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