Jerome Neyroud, head of infrastructure debt at Schroders Capital, says concerns around security of supply have created opportunities on the generation side, especially as Europe seeks alternatives to fossil fuels in the form of renewables. “We continue to see a huge opportunity in energy storage, but remain cautious around retail due to its exposure to price volatility, and around newer technologies like hydrogen where business models have not been tested yet.”

Investors, Neyroud says, are very keen on the opportunities on offer from energy assets in Europe but cautious about price volatility. “We need to take time to explain the complexities of the sector and the fact that some segments will benefit while others may suffer. That is where our investment expertise comes into play, allowing us to make good investments in the context of a rising tide that may not benefit all boats.”

Derwin Jenkinson, London partner in the energy and infrastructure finance practice at law firm Paul Hastings, says there is growing appetite for private debt in energy financing: “The data suggests that in the last two years, non-bank private has put around $12 billion to work investing in energy assets in Europe, with just over half of that by value, and around two-thirds by transaction volume, going into renewables.

“Within renewables, the most active sectors are onshore wind, solar and energy from waste power generation. In the broader energy sector, by contrast, it is almost all invested in oil and gas storage and district heating and cooling, rather than conventional power or upstream oil and gas.”

Tom Van Rijsewijk, a managing director within the private credit team at Macquarie Asset Management, says the banks are very active and “really keen to drive this”. “Most private credit lenders are trying to play in parts of the market where the banks are less competitive,” he says. “This might be when there’s an extra layer of junior debt being put on top, where the tenure is very long or where the banks perhaps have quite a lot of exposure to a certain offtaker and private credit can offer some extra liquidity.

“Private credit can also sometimes be very competitive at the very stable end of the market, which can sometimes almost be too low risk for the banks.”