The infrastructure moment

(56 pages)

Infrastructure is a critical enabler of long-term global economic growth, supporting prosperous societies, elevated standards of living, and every modern industry. But the ongoing expansion and evolution of what infrastructure comprises has transformed its definition, demanding a fundamental mindset shift among governments, investors, and industry operators about how to fund, build, use, and maintain it. Even as infrastructure verticals are evolving individually, their new intersections form another aspect of evolution.

McKinsey estimates that a cumulative $106 trillion in investment will be necessary through 2040 to meet the need for new and updated infrastructure. The required investment spans seven critical infrastructure verticals, with transport and logistics requiring the largest share ($36 trillion), followed by energy and power ($23 trillion), digital ($19 trillion), social ($16 trillion), waste and water infrastructure ($6 trillion), agriculture ($5 trillion), and defense ($2 trillion).¹Adding these figures does not total to $106 trillion, due to rounding.

A confluence of global forces is accelerating the need for infrastructure investment. Outdated assets, rapid urbanization, geopolitical shifts, and technological advancements are exposing the limitations of yesterday’s infrastructure.

These forces are also changing the very definition of infrastructure. Traditionally, the term has been synonymous with assets such as power grids, roads, ports, and bridges. More recently, advances in technology have meant that newer assets such as fiber-optic networks, hyperscale data centers, and electric-vehicle charging stations are increasingly vital. These modern types of infrastructure share traits with “traditional” infrastructure, including long lifespans, significant initial investment, predictable and resilient cash flows, and critical economic roles.

A supporting layer of specialized services—maintenance, inspection, compliance, and remote monitoring—ensures these assets remain operational and are increasingly considered to be infrastructure as well. Governments and investors must fund these supporting services alongside critical assets.

At the same time, the boundaries between infrastructure verticals are blurring. Many of today's most critical needs—such as infrastructure to support the deployment of artificial intelligence and the energy transition—exist at the intersections of the verticals. This report explores these intersections in depth and reveals why a siloed approach to infrastructure planning and investment may no longer be viable. Governments, investors, and operators will want to reflect on these interconnections and pursue integrated strategies that best deliver the mix of infrastructure that society needs to prosper.

Private capital is playing an increasingly important role in delivering infrastructure that sits at these intersections and within verticals. Private infrastructure assets under management surged from about $500 billion in 2016 to $1.5 trillion in 2024, reflecting its new position as the most desired asset class for increased investment. Investments will focus within and at the intersection of seven critical verticals, which this report explores in depth: energy, power, and resources; transportation and logistics; agriculture; digital and communications; waste and water; social; and defense.

To mobilize capital at the required scale, stakeholders can adopt clear, practical, and novel strategies. Policymakers can consider meeting the moment and strategically prioritizing verticals by creating frameworks to attract private capital, streamlining regulatory processes and repurposing underused assets. Investors can broaden their scope by embracing cross-vertical plays and thematic investment opportunities while considering new financing structures that align with long-term asset performance. Finally, infrastructure operators should strive for efficiency gains and improved asset resilience by integrating technology solutions.

The next decade will be a defining one for global infrastructure. Those who act decisively today will shape the future of connectivity, economic growth, and societal well-being for generations to come.

The world will need massive investment in infrastructure—$106 trillion by 2040, according to our projections. Alongside these accelerating investment needs, the very definition of infrastructure is changing and expanding across seven key verticals. This presents a remarkable coupling of challenge and opportunity for governments and investors alike.

Global population growth, economic development, and technological advances are creating massive demand for infrastructure across the world—not only more of the familiar elements but also new kinds altogether. The very definition of infrastructure is expanding and evolving, shaped both by changes within individual infrastructure verticals and by the new and exciting ways they intersect.

Traditionally, infrastructure has referred to the physical assets that have underpinned societies throughout history, from the fundamentals like roads, ports, and bridges to later developments such as power grids. Those assets remain important, and they require significant investment to support every sector of the global economy while continuing to improve living standards (Exhibit 1).

However, infrastructure now includes elements that enable newer assets, services, and technologies such as artificial intelligence, renewables, and electric vehicles. In many cases, these new elements of infrastructure integrate with established ones. For example, fiber-optic networks, electric-vehicle charging stations, and AI- and Internet of Things (IoT)–powered predictive maintenance systems now operate in conjunction with traditional concrete and steel structures.

This fundamental redefinition calls for a substantial mindset shift among three stakeholder groups: governments, investors, and industry operators. Only with an evolved understanding of what infrastructure means today can these stakeholders build to meet the needs of tomorrow. That presents challenges but also introduces a range of compelling opportunities for those willing to act in innovative, forward-thinking ways.

Traditional infrastructure is defined by several characteristics (Exhibit 2):

• Asset-heavy and capital-intensive. The definition of infrastructure calls to mind large, physical structures such as dams, highways, and airports that require high upfront capital expenditures and long construction timelines.
• Highly regulated and often government controlled. Many infrastructure assets are owned or operated by a single or few public entities.
• Linear and centralized. Traditional infrastructure is built around one-way flows (for example, power flowing from grid to user or water running from reservoir to tap) and large-scale systems, such as national power grids that distribute electricity from a few central plants to millions of homes and businesses.
• Capital-expenditure-intensive. Acquiring traditional infrastructure requires a significant initial investment in physical assets, as well as long development cycles, complex financing, and multiyear payback horizons.
• Built on long-established technologies. Much of the infrastructure that fits in traditional categories has been built on mature, often fossil-fuel-based systems and incorporates relatively little integrated digital technology.

That definition is rapidly changing and expanding. Modern infrastructure increasingly has the following characteristics:

• Tech-enabled. Digital platforms, sensors, and AI enable capabilities such as real-time monitoring (for example, IoT-powered water management), predictive maintenance (AI-supported rail system diagnostics), and advanced network optimization (smart traffic systems).
• Market-driven. Infrastructure is increasingly shaped by private capital flows, user demand, and competitive forces. For example, AI demand is driving accelerated data center development and private investment.
• Decentralized and modular. Nimble networks of smaller, self-contained units are faster to deploy, easier to upgrade, and more resilient to disruption than legacy infrastructure. For example, segments of the energy sector are moving from centralized power plants to a modular model where multiple smaller power sources (such as microgrids that generate solar and offer battery storage and backup power) are aggregated by a centrally managed platform, or “virtual power plant.”
• Operating-expense oriented and service based. A growing share of value can be captured through models such as asset-as-a-service offerings (where the customer pays for uptime or output rather than buying or leasing an asset), which often include bundled maintenance services, as well as stand-alone third-party operations and maintenance contracts. Both models are increasingly enabled by monitoring technologies and aim to deliver superior uptime and efficiency over the long term.
• Built on scaling and disruptive technologies. Infrastructure may be designed with the goal of limiting life cycle emissions, incorporating energy-efficient systems and circular-economy practices.

This expanded definition of infrastructure manifests in seven main infrastructure verticals, many of which blend physical assets, new technologies, and ongoing services.

Infrastructure verticals are getting more interdependent

Infrastructure systems are more interconnected than ever, so when governments, investors, and private-sector operators plan investment strategies, they are learning to shift their mindsets to “cross-vertical” thinking. It’s not enough to take a compartmentalized approach. Electric-vehicle corridors, for example, require coordination among power utilities (energy), highway authorities (transportation), and payment platforms for charging stations (digital).

Other verticals are blending as well. As data center clusters expand to facilitate AI, they draw heavily on the grid for power and water for cooling, bringing together digital, energy, and water infrastructure. Waste, agriculture, and energy are increasingly interconnected now that farm waste such as livestock manure and food scraps can be converted into renewable natural gas to feed electricity back to the grid and power on-site equipment.²“Biomass explained: Landfill gas and biogas,” US Energy Information Administration, updated November 19, 2024; “Project profile: Ruckman Farm,” AgSTAR, US Environmental Protection Agency, updated May 7, 2025. These overlaps are sparking new business models that pull together different types of infrastructure to create more flexible, resilient ways to deliver infrastructure services.

In fact, in many cases, full value from assets in different verticals can be realized only when they operate as an integrated whole. Lagging development among the assets of a single vertical can create bottlenecks across the system. Insufficient electricity production, for example, hampers the construction of data centers. This interconnectedness—and interdependence—is prompting investors to target cross-vertical opportunities at increasing levels. From the second half of 2023 through the first half of 2024, cross-vertical strategies attracted 75 percent of the infrastructure capital raised.³Funds and Investors Report, IJInvestor, H1 2024. Antin Infrastructure Partners’ latest €10.2 billion flagship Fund V, for example, explicitly targets opportunities that bridge energy transition, digital infrastructure, transportation, and social infrastructure across Europe and North America.⁴Emily Lai, “Antin Infrastructure secures €10B for latest flagship fund,” PitchBook, December 19, 2024. Similarly, EQT’s Infrastructure VI, which closed at €21.5 billion, aims to invest in themes across digital infrastructure, energy storage and distribution, electrification of transport, and decarbonization.⁵“EQT Infrastructure VI holds final close at its hard-cap, raising EUR 21.5 billion in total commitments,” EQT, March 28, 2025.

New infrastructure’s $106 trillion opportunity

Sectors of the economy are no longer isolated, so how and where capital flows to one sector has an increasing influence on investment in others. Thus, the emergence of this more expansive, interconnected infrastructure ecosystem is creating substantial opportunities and increasing infrastructure investment needs compared to previous decades. According to McKinsey estimates, addressing the global need for new and improved infrastructure will require roughly $106 trillion in investment across the seven main verticals by 2040 (Exhibit 3; see sidebar “About the research” for our methodology).

Projected investment needs by vertical

Chapter 3 of this report includes a focused look at how the seven verticals intersect and explores the investment opportunities that arise from these evolving connections. But first, it’s vital to understand the projected investment needs for each vertical.

The leader is transportation and logistics, with $36 trillion in projected investment. This substantial figure reflects the scale of unmet demand across the world: many countries are grappling with aging roads, congested ports, and strained public transit systems while trying to decarbonize freight, aviation, and passenger mobility.

Energy ranks second at $23 trillion, driven by the global push to expand clean generation, upgrade aging grids, and meet electrification demand from industries and end users.

Digital infrastructure is estimated to require $19 trillion of investment. While this figure is lower than that needed for several other verticals, digital’s role as a catalyst for them means it will see the most growth from today’s level of investment. Fiber, towers, satellites, and data centers form the backbone of business, cities, digital services, and AI-powered systems across all other verticals.

Agriculture and waste and water, while smaller in dollar terms ($5 trillion and $6 trillion, respectively), are essential for food security, resource conservation, emissions reduction, and, increasingly, supplying clean fuels and circular inputs to other verticals.

Projected investment varies considerably by region, with Asia alone accounting for more than two-thirds at $70 trillion (Exhibit 4). This substantial majority reflects Asia’s rapid urbanization, population growth, and continued industrial expansion. Much of this capital will go to transportation, energy, and digital connectivity to support rising demand in megacities and industrial zones.

We project the Americas will attract approximately $16 trillion in investment, split between three opportunities. One is modernizing legacy infrastructure, such as transportation systems. A second is expanding new digital infrastructure, including data center growth. The third involves scaling infrastructure in fast-growing Latin American cities such as Lima and Medellín.

Europe is expected to follow, with roughly $13 trillion in investment. Much of this will focus on renewal of aging infrastructure—from roads, bridges, and railways built decades ago to the upgrading of digital networks. Europe tends to have the world’s most ambitious climate targets; meeting them will require considerable renewable-energy projects and grid modernization.

Clearly, the infrastructure moment has arrived—and with it, tremendous opportunity. Our next chapter will examine the powerful forces driving the evolution of infrastructure, including seven macro trends, including the age of physical assets, emerging technologies, and geopolitical and labor market factors.

The redefinition of infrastructure isn’t happening in a vacuum. It’s being shaped and accelerated by a set of global forces—such as urbanization, geopolitical shifts, and skilled labor shortages—that are changing how infrastructure is planned, financed, and executed while also increasing investment needs. At the same time, the energy transition and emerging technologies are creating new avenues for growth while adding complexity to investment strategies.

This chapter explores how seven macro trends could influence the direction of global infrastructure development and investment over the next decade:

1. Infrastructure globally is aging and unable to meet society’s demands, requiring upgrades.
2. Urbanization and demographic shifts are adding to the pressure on existing infrastructure.
3. Digital technology, particularly AI, is the major driver of technological advancement in infrastructure.
4. The global transition to cleaner energy is progressing but at varied speeds in different markets.
5. Over the past decade, private investors have emerged as a pivotal force in infrastructure financing, but they face challenges, including high interest rates and longer exit timelines.
6. Infrastructure investment has become a strategic tool in global politics, with countries using large-scale projects to extend influence, secure resources, and reshape trade networks.
7. Labor shortages are causing substantial delays and cost increases among infrastructure projects, during both construction and operations.

Later in this report, we’ll consider how these trends could change stakeholder decision making. But first, let’s take a close look at how each is playing a role in reshaping the infrastructure landscape.

Infrastructure must be refreshed or upgraded around the world

Infrastructure systems around the globe are becoming increasingly inadequate to meet the demands of the 21st century. In some regions, assets built decades ago are nearing the end of their intended functional lifespan. Elsewhere, infrastructure is relatively new but already strained by rapid urbanization, climate volatility, or technological disruption. Regardless of context, many systems are insufficient for the pressures of today’s economy, population dynamics, and sustainability goals.

Much of the core infrastructure in the United States—roads, bridges, water systems, and the electrical grid—was built in the mid-20th century and has been affected by decades of underinvestment. The American Society of Civil Engineers (ASCE) estimates that failing to modernize this infrastructure could cost the US economy $10 trillion in lost GDP by 2039.⁶“Failing infrastructure costing families $3,300 a year, new ASCE report says,” American Society of Civil Engineers, February 1, 2021.

Most of China’s infrastructure was built more recently, but the scale of the build-out has outpaced maintenance budgets in many regions. Some earlier-generation projects from the 1980s and the 1990s, such as sewage systems, are already showing signs of deterioration. Newer assets—from high-speed rail to metro systems—are nearing the usage threshold when major repairs or renovations are typically needed for continued operations.⁷“AI power: Expanding data center capacity to meet growing demand,” McKinsey, October 29, 2024.

Urbanization and demographic shifts are adding to the pressure on infrastructure

Compounding the age factor, rapid urbanization and demographic changes are also exerting unprecedented pressure on infrastructure systems. United Nations projections indicate that by 2050, as much as 70 percent of the world’s population will reside in urban areas.⁸“Sustainable cities and communities,” chap. 11 of The Sustainable Development Goals report 2023: Special edition, UN Department of Economic and Social Affairs, July 2023.

Urbanization is creating exceptionally high demand for infrastructure development in Africa and South Asia, including public transit systems, utilities, and digital connectivity. For example, Lagos, Nigeria, is home to 27 million people, a population that has grown about 3 percent annually since 2010.⁹Lagos diagnostic study and pathway for transformation: A rapid multi-sector analytical review of the mega-city, World Bank Group, June 2023. To keep pace, the city has been rolling out major infrastructure projects. These include ongoing efforts to increase the water supply—which began in the late 1990s and have more than doubled treated water output and added at least 640 kilometers of new mains—as well as the Blue Line light rail, a 13-kilometer corridor already carrying an estimated 250,000 daily riders (phase one opened in 2023).¹⁰Implementation completion report: Federal Republic of Nigeria Lagos State water supply project (Loan 2985-UNI), report no. 17980, World Bank, May 21, 1998; Kunle Adeshina, “We will generate a combined 100M gallons per day water capacity soon—LASG,” Lagos State Government, Ministry of the Environment and Water Resources, January 21, 2025; “CPCS sets Lagos Blue Line Rail up for success,” CPCS, n.d.

Europe and the United States are facing a different challenge. Rather than expanding infrastructure for new urban centers, these regions must adjust their infrastructure to adapt to shifting demographic patterns, including an aging population and postpandemic relocations to rural and suburban areas.¹¹Mark Mather and Paola Scommegna, “Fact sheet: Aging in the United States,” Population Reference Bureau, January 9, 2024; “U.S. Census Bureau releases 2018–2022 ACS 5-year estimates,” US Census Bureau, December 7, 2023; Hamilton Lombard, “Since the pandemic, young adults have fueled the revival of small towns and rural areas,” StatChat (University of Virgina Weldon Cooper Center for Public Service), September 17, 2024. Meanwhile, the slowing of China’s economic boom is altering global infrastructure dynamics, affecting everything from commodity prices to the long-term viability of large-scale development projects dependent on China’s growth.

Digital technology and AI are driving advances in infrastructure

Technology has always shaped supply and demand of infrastructure. Today, digital technology, particularly AI, is the major driver of technological advancement in the industry. AI is spurring massive demand for data centers and supporting infrastructure, for example. In 2025, Amazon, Google, Meta, and Microsoft will invest more than $400 billion in capital spending, much of it in data center capacity to support AI.¹²Rolfe Winkler, Nate Rattner, and Sebastian Herrera, “Big Tech’s $400 billion AI spending spree just got Wall Street’s blessing,” The Wall Street Journal, July 31, 2025. Global AI workloads are expected to increase data center demand by more than 50 percent by 2030, forcing substantial upgrades to power, cooling, and network infrastructure.¹³“AI power: Expanding data center capacity to meet growing demand,” McKinsey, October 29, 2024.

Consider the impact of AI and digital automation on just one infrastructure vertical—the transportation sector. In rail, early adopters in Europe and North America are using a mix of high-capacity fiber backhaul, edge data centers, and 5G to optimize crew planning, trimming labor costs by 10 to 15 percent. Proofs of concept in rail predictive maintenance have boosted fleet reliability by about 15 percent and lowered maintenance costs by roughly 20 percent.¹⁴Raphaëlle Chapuis, Leo Melnikov, and Nicola San, “The journey toward AI-enabled railway companies,” McKinsey, March 7, 2024. AI is also poised to facilitate the next wave of railroad evolution, including autonomous trains and AI-powered digital twins. Autonomous trains promise more efficient and continuous freight and passenger movement, while digital twins allow for real-time network optimization. Both of these developments have the potential to redefine how goods and people move in the coming decade.

The trucking industry could also see rapid change, as low-latency digital infrastructure could unlock autonomy in the coming years. The value chain for fully driverless heavy-duty fleets could generate about $600 billion in revenue by 2035 across China, Europe, and the United States. In the United States, these vehicles could reduce shipping costs and shrink the projected shortfall of about 160,000 drivers by 2030. As 5G, edge data centers, and remote-operations control rooms mature, autonomous truck pilots can scale from short highway runs to full end-to-end distribution center runs.¹⁵“Will autonomy usher in the future of truck freight transportation?” McKinsey, September 25, 2024.

These examples illustrate a broader trend: across sectors of the economy, intelligent networks promise lower operating costs, higher asset utilization, and new revenue streams. But they also require significant capital, clean-energy sourcing, and public–private coordination. Any coordination between the public sector and investors will want to consider balancing the speed of rollout with security, sustainability, and long-term system resilience as the digital build-out accelerates.

The global transition to cleaner energy is progressing

The clean-energy transition is among the most substantial forces shaping infrastructure investment, with various cleantech deployments increasing notably from 2010 to 2023. Global installed terawatt capacity of wind and solar rose about 20 percent a year during that period, while the electric-vehicle fleet grew roughly 79 percent annually and the installed stock of heat pumps increased by about 6 percent a year.¹⁶“The energy transition: Where are we, really?” McKinsey, August 27, 2024.

Net-zero pledges have also become more prevalent. Some 10,000 companies are members of the “Race to Zero” campaign to halve emissions by 2030, while two-thirds of Fortune 500 companies have made climate-related commitments.¹⁷“The energy transition: Where are we, really?” McKinsey, August 27, 2024. To meet global decarbonization targets, annual energy infrastructure investment will need to more than double by 2030, requiring large-scale funding for renewable energy generation, grid modernization, and energy storage.¹⁸Cristen Hemingway, Jaynes, “IEA: Clean energy investment must reach $4.5 trillion per year by 2030 to limit warming to 1.5°C,” World Economic Forum, September 28, 2023. Innovation is advancing rapidly in key areas, including grid-scale battery storage, green steel production, next-generation nuclear power, and modular renewable energy systems such as distributed solar and hydrogen electrolyzers.

At the same time, varying regional policies are adding complexity. In the United States, for example, there is uncertainty around the longevity of both investment and production tax credits, along with unfolding tariff regimes on vital inputs such as solar modules and steel. These open questions may have played a role in the declines seen in first quarter 2025 renewable‑finance volumes of about 40 percent for solar and 80 percent for energy storage compared with the prior year. Furthermore, some jurisdictions—most notably parts of Asia and Africa—continue to add gas- or coal-fired capacity or extend the life of existing plants to address immediate energy security concerns.¹⁹“China’s construction of coal-fired power plants reaches highest in a decade,” Financial Times, February 12, 2025; Malcolm Moore and Rob Rose, “A cautionary tale from south Africa’s ‘just energy transition,’” Financial Times, July 23, 2024.

Nevertheless, navigating the energy transition represents an economic opportunity, as countries and companies that invest early in next-generation energy systems could gain long-term competitive advantages.

Private capital has emerged as a key force in infrastructure financing but faces challenges

Over the past decade, private investors have played a pivotal role in infrastructure financing. Assets under management in dedicated infrastructure funds have tripled from roughly $500 billion in 2016 to more than $1.5 trillion today.²⁰“Global Private Markets Report 2024: Private markets in a slower era,” McKinsey, March 28, 2024. Although fundraising fell by 15 percent in 2024 compared with 2023, deal value rose 18 percent, making 2024 the second-highest year on record behind only 2022.²¹“Global Private Markets Report 2025: Braced for shifting weather,” McKinsey, May 20, 2025 (n = 333). Furthermore, nearly half (46 percent) of limited partners in a McKinsey survey expressed an intention to increase infrastructure allocations in the next year, attracted by infrastructure’s predictable cash flows, inflation protection, and strategic alignment with digitalization and energy transition trends.²²“Global Private Markets Report 2025: Braced for shifting weather,” McKinsey, May 20, 2025 (n = 333). Meanwhile, investors are committing large amounts of capital to single flagship funds, further evidence that limited partners are willing to back managers that can deploy capital at scale. That said, private capital still accounts for a minority share of total infrastructure investment, with the bulk of funding still derived from governments and public sources.

The mix of verticals seeing investments is changing, too, to reflect the new definition of infrastructure. The fastest-growing category is digital infrastructure, which has jumped to about 16 percent of global deal value as hyperscalers scramble for towers, fiber, and edge data center capacity. Renewables now account for roughly one-quarter of all transactions, cementing their place as a mainstream infrastructure allocation rather than a niche climate play. Traditional transport has shrunk from roughly 45 percent of deal value a decade ago to approximately 22 percent in 2024, while power and core energy hover in the low teens.²³“Global Private Markets Report 2025: Braced for shifting weather,” McKinsey, May 20, 2025 (n = 333). Investment across verticals—for example, at the nexus of energy and digital in the construction of data center campuses—has risen as well, due to increasing interdependencies.

However, private investors face challenges. Higher interest rates (which increase discount rates and compress returns), crowded auction processes, longer exit timelines, and evolving geopolitical dynamics are reshaping infrastructure valuations, fundraising momentum, and portfolio-level return expectations. At the same time, cross-border deals have been affected by evolving geopolitical relations and tightening investment controls in critical infrastructure verticals.

To ensure they capture the required returns for their limited partners, investors are experimenting with fresh ways to unlock value, particularly through value creation levers such as commercial excellence, platform roll-ups, and operational improvements. (Chapter 4 of this report will explore these levers in depth.)

The geopolitical landscape is upending investment decisions and trade

Infrastructure investment has become a strategic tool in global politics, with countries using large-scale projects to extend influence, secure resources, or reshape trade networks. One emerging example is the race to build national AI infrastructure—particularly sovereign data centers designed to keep sensitive data within borders, control access to compute resources, and assert digital autonomy.

In addition, resource security is playing a growing role as wealthier nations and corporations engage in land acquisitions in resource-rich regions, securing access to critical materials needed for energy, technology, and industrial production. Meanwhile, shifting global supply chains are driving investments in new trade corridors and transport infrastructure, particularly in Association of Southeast Asian Nations (ASEAN) manufacturing hubs and in industries linked to hydrogen-based energy and green ammonia production. As companies and nations seek to derisk supply chains, trends like nearshoring and friendshoring are reshaping global trade infrastructure, influencing where new investments are directed.

Meanwhile, global trade policy uncertainty has risen, due to increased tariffs. The World Trade Organization (WTO) estimated that higher tariffs could reduce global merchandise trade by roughly 1 percent next year.²⁴“WTO says tariffs could bring contraction of 1% in global merchandise trade volumes,” Reuters, April 3, 2025. At the same time, physical disruptions—including more than 100 shipping attacks near the Red Sea and drought-related restrictions in key waterways—have complicated trade logistics, extending supply routes and increasing transportation costs.²⁵Paulo Aguiar, “Houthis emerge from Red Sea crisis unscathed,” Geopolitical Monitor, February 19, 2025; “Panama Canal traffic cut by more than a third because of drought,” Associated Press, January 19, 2024.

Ongoing labor shortages are affecting infrastructure projects

Labor shortages are causing major delays in infrastructure projects. More than half of construction firms in the United States report project delays due to worker shortages.²⁶“2024 workforce survey analysis,” Associated General Contractors, August 2024. For example, high-profile investments such as Intel and TSMC’s Arizona semiconductor fabrication facilities have cited skilled-labor gaps and cost overruns.²⁷Wen-Yee Lee, “TSMC’s US plant unlikely to get latest chip tech before Taiwan, CEO says,” Reuters, January 16, 2025; “Intel editorial: Intel addresses semiconductor workforce shortage,” Intel press release, September 24, 2023. Projections for the United Kingdom indicate the need for more than 250,000 additional construction workers in the next five years.²⁸Mark Hillsdon, “Long on ambition, short on people: How the skills gap could scupper UK’s bid to decarbonise buildings,” Reuters, November 28, 2024. A survey of construction companies in France found that labor shortages have been a leading factor limiting construction activities in recent years.²⁹“Factors limiting building activity in France from 2005 to 2024, by type of constraint,” Statista, January 29, 2025.

The gap is projected to grow in the coming years. Labor demand in the United States is forecast to peak in 2027–28, when infrastructure work could require about 350,000 additional workers in engineering, materials, and contracting.³⁰“Will a labor crunch derail plans to upgrade US infrastructure?” Recruiting News Network, October 20, 2022. Globally, the renewables sector alone must add about 2.8 million jobs by 2030 (1.1 million for construction and 1.7 million for operations and maintenance).³¹“Renewable-energy development in a net-zero world: Overcoming talent gaps,” McKinsey, November 4, 2022.

Churn compounds the problem. Annual hiring for many craft roles far exceeds net job growth, inflating recruitment and training costs. Even with construction wages up more than 25 percent since early 2020 in the United States, employers struggle to attract talent because of lengthy training pipelines, waning interest among younger workers, and sharp regional imbalances.³²“Average hourly earnings of production and nonsupervisory employees, construction,” Federal Reserve Bank of St. Louis, updated August 1, 2025; Ezraq Greenberg, Erik Schaefer, and Brooke Weddle, “Tradespeople wanted: The need for critical trade skills in the US,” McKinsey, April 9, 2024.

Addressing these shortages will require several approaches, including achieving higher productivity through automation and modular methods, aggressive upskilling and retention programs, and expanded use of remote-operations technologies, such as tele-operated heavy machinery that allows skilled workers to manage equipment from centralized control centers. Investors and operators that tackle the talent gap early stand to gain cost, schedule, and reliability advantages.

This chapter has examined factors that have played a role in the fundamental redefinition of infrastructure—including some of the forces that introduce new challenges. With this context in place, we will next explore each of the seven infrastructure verticals in depth, both individually and at their intersections.

While the trends reshaping infrastructure are apparent across verticals, they manifest differently depending on the context. When it comes to energy, for example, grid modernization and renewable integration are formative forces. Agriculture is affected by evolving global trade flows, technological innovation, and growing use of sustainable inputs and farming practices.

This chapter examines how major trends and sector-specific developments are unfolding and where investment is flowing around seven foundational verticals: transportation and logistics; energy, power and resources; social infrastructure; digital infrastructure; agriculture; waste and water; and defense.

It also offers insights about the opportunities that exist where these verticals intersect. After all, with the evolving redefinition of infrastructure, these new intersections are where some of the most exciting innovations—and corresponding investment opportunities—are emerging.

Opportunities where infrastructure verticals intersect

Infrastructure of the future is being shaped by two forces: the expanding definition of the class and the increasing technical, operational, and financial interdependence of infrastructure systems. As a result, new opportunities are emerging at various intersections of the verticals, primarily enabled by digitalization and other technological advances. This section explores three examples of such cross-vertical opportunities (Exhibit 5).

Energy and digital: Power infrastructure for data center expansion

The rise of AI and cloud computing has made data centers among the world’s most power-intensive infrastructure. AI, particularly gen AI, requires enormous computing muscle from data centers and, thus, energy. Training gen AI models and inference (a gen AI system’s response to a user prompt) each require more energy than traditional computing. For instance, generating a single image using a gen AI model requires about as much energy as charging a smartphone.³³Melissa Heikkilä, “Making an image with generative AI uses as much energy as charging your phone,” MIT Technology Review, December 1, 2023.

Consumer and corporate demand for AI is already strong and driving up energy needs. ChatGPT alone is reported to have as many as one billion users.³⁴Martine Paris, “ChatGPT hits 1 billion users? ‘Doubled in just weeks’ says OpenAI CEO,” Forbes, April 12, 2025. More than three-quarters of organizations across industries report adopting gen AI in at least one function.³⁵“The state of AI: How organizations are rewiring to capture value,” McKinsey, March 12, 2025. Corporate demand is expected to rise considerably. Gen AI is already demonstrating productivity increases in areas like software coding and marketing, with agents capable of completing even more tasks on the horizon.

As a result, data centers are getting bigger and requiring more power. A decade ago, 30-megawatt facilities were considered large; today, 200-megawatt facilities are increasingly common.³⁶“AI power: Expanding data center capacity to meet growing demand,” McKinsey, October 29, 2024. In just the next two years, data center power demand globally is expected to increase by 50 percent.³⁷“AI to drive 165% increase in data center power demand by 2030,” Goldman Sachs, February 4, 2025.

Larger and more power-hungry data centers are straining power grids. Data center electricity use in Ireland, for example, rose to 21 percent of total national consumption, prompting a moratorium on new connections of data centers to power until 2028 to mitigate blackout risks.³⁸Matt O’Brian, “Ireland wrestles with AI data center growth and power use,” Associated Press, December 19, 2024.

With the relationship between computing centers and energy tightening, investments increasingly target both. BlackRock, Global Infrastructure Partners, MGX, and Microsoft launched the Global AI Infrastructure Investment Partnership to raise up to $100 billion—starting with $30 billion in private equity—to build AI data centers alongside renewable energy and storage infrastructure.³⁹“BlackRock, Global Infrastructure Partners, Microsoft, and MGX launch new AI partnership to invest in data centers and supporting power infrastructure,” Microsoft, September 17, 2024. Abu Dhabi’s sovereign wealth fund ADQ partnered with Energy Capital Partners to invest more than $25 billion in US energy projects that will power data centers. The deal involves developing 25 gigawatts of power generation and infrastructure, with an initial $5 billion capital infusion.⁴⁰Anthony Di Paola, “Abu Dhabi forms $25 billion US energy venture to power AI,” Bloomberg, March 19, 2025. These investments reflect an integrated approach in which digital growth is planned hand in hand with energy system expansion and, often, decarbonization.

Investments are targeting new builds based on existing energy sources (natural gas and renewables) and new ones (nuclear and geothermal), augmenting and optimizing existing energy infrastructure, and converting existing assets into those capable of powering data centers (such as converting a coal plant to a gas plant).

Agriculture, energy, waste, and transportation: Sustainable fuel

The drive to decarbonize freight and aviation transport is creating new cross-vertical infrastructure opportunities. McKinsey estimates that sustainable fuels represent one of 12 technologies that, if deployed together at scale, could reduce total human-made greenhouse gas emissions by as much as 90 percent.⁴¹What would it take to scale critical climate technologies?, McKinsey, December 1, 2023.

A wide range of sustainable fuel technologies developed at the intersection of multiple infrastructure verticals is rapidly emerging and scaling. One example is the use of renewable natural gas (RNG), which is generated through anaerobic digestion of agricultural residues and food waste, for both transportation and power generation.⁴²“Renewable natural gas: A Swiss Army knife for US decarbonization,” McKinsey, November 21, 2023. It marks the intersection of four infrastructure verticals, where agriculture and waste (energy producers) meet transport and energy (end users).

Sustainable aviation fuel is another example. Its development brings together similar industries: SAF production links farm and food waste processing with energy conversion and transport logistics. The SAFs already certified for use in today’s jet engines produce about 80 percent less greenhouse gas emissions than traditional jet fuel.⁴³“What are sustainable fuels?,” McKinsey, October 8, 2024; IATA July 2024. By 2030, global demand for global SAF is projected to reach 17 million metric tons per year, accounting for approximately 4 to 5 percent of total jet fuel consumption.⁴⁴Financing sustainable aviation fuels: Case studies and implications for investment, World Economic Forum, February 26, 2025.

Organizations in each participating industry are acting on the SAF opportunity. Pittsburgh International Airport is constructing an on-site SAF plant to produce more than 100 million gallons annually using regional feedstocks, integrating biofuel production directly into airport operations.⁴⁵Aaron Karp, “Pittsburgh airport to build on-site SAF facility,” Aviation Week, June 18, 2025. In 2023, the Summit Agricultural Group created Summit Next Gen, an SAF platform that uses Honeywell’s ethanol-to-jet processing technology to turn ethanol from corn-producing farms into jet fuel.⁴⁶Nicole Frett, “Summit Next Gen to use Honeywell ethanol-to-jet fuel technology for production of sustainable aviation fuel,” Honeywell press release, May 15, 2023. A partnership between Australia’s Ampol (energy), GrainCorp (agriculture), and IFM Investors is exploring SAF production from locally grown canola.⁴⁷Randhir Patil, “Australian Canola may soon power jets with low-carbon fuel,” Bioenergy Times, June 16, 2025.

Transportation, energy, and digital: Connected and electrified transport

Decarbonizing transport through electrification requires transportation, energy, and digital infrastructure to work in harmony. Electric-vehicle (EV) adoption, for example, often hinges on reliable charging infrastructure. About 40 percent of EV consumers cite charging speed as their most critical consideration for buying an EV, and 35 percent cite charging costs.⁴⁸Lauritz Fischer, Felix Rupalla, Shivika Sahdev, and Ali Tanweer, “Exploring consumer sentiment on electric-vehicle charging,” McKinsey, January 9, 2024.

The transport vertical can also aid in decarbonization by adding energy back to the grid. National efforts in China are advancing vehicle-to-grid (V2G) integration, embedding EVs as energy assets. With more than 760,000 fast-charging stations already deployed nationwide, accounting for roughly 90 percent of global charging growth in 2022, China is piloting V2G systems across nine major cities. These programs allow EVs to draw power when needed and return electricity to the grid during peak demand hours.⁴⁹Colleen Howe, “China to launch grid-connected car projects to balance power supply,” Reuters, April 2, 2025; “Global EV Outlook 2023,” International Energy Agency (IEA), April 2023.

The convergence of transport, energy, and digital also supports connected vehicle technologies and autonomous driving. A 2022 McKinsey Mobility Consumer Pulse Survey found that 34 percent of respondents are interested in Level 4 (highly autonomous) automation in their next vehicle. This level requires reliable, high-speed digital infrastructure.⁵⁰Kersten Heineke, Philipp Kampshoff, and Timo Möller, “Spotlight on mobility trends,” McKinsey, March 12, 2024.

The 5G Autobahn to Autoroute project in Europe illustrates an integrated sector approach to achieving connected mobility. The project—led by Orange, O₂, Saarland University, Telefónica, TOTEM, and Vantage Towers and supported by the Région Grand Est in France and Saarland Ministry of Economic Affairs, Innovation, Digital and Energy in Germany—is deploying continuous 5G connectivity along a 60-kilometer highway corridor between France and Germany. Designed to enable features like cooperative lane changes and real-time collision avoidance, the initiative demonstrates how next-generation roadways depend as much on data infrastructure as on design and construction. The project is scheduled for completion in 2027 and could serve as a model for cross-border connected mobility.⁵¹“First cross-border 5G highway corridor between France and Germany to enable innovative driving functions,” Telefónica press release, January 15, 2025.

This chapter has explored each of the seven infrastructure verticals in depth, with an eye to the compelling opportunities of each, as well as at their various intersections. Next, we turn to a detailed look at the implications for three core stakeholder groups: governments, investors, and operators/developers.

A major theme of this report has been how the definition of infrastructure has undergone a fundamental redefinition, broadened to encompass everything from AI-ready power grids to digitally enabled logistics networks. Now the challenge is how to deliver results. As investment ramps up globally, success increasingly hinges on more than how much capital is deployed; it also depends on how effectively governments, investors, and operators coordinate, adapt, and execute. This chapter outlines what infrastructure stakeholders could do to thrive in this evolving environment.

Governments

Despite record-breaking infrastructure budgets, governments face increasingly difficult tradeoffs. To balance fiscal constraints with rising pressure to deliver the infrastructure their populations demand and require, governments should consider strategies such as repurposing assets, streamlining regulatory requirements, and attracting private funding.

Repurpose assets

At times, underused assets offer a starting point for governments to invest in new areas. For example, at Fort Belvoir in the US state of Virginia, the Army’s Enhanced Use Lease is transforming surplus land into a renewables-powered data center while redirecting lease payments to base operations.⁵²Data storage center phase 3—Sail Fish, National Capital Planning Commission, December 3, 2020. The Department of Energy is piloting similar land-for-power models for grid-scale storage, as well as repurposing former nuclear sites for solar power.⁵³Paul Ciampoli, “DOE offers funding to support pilot-scale energy storage demonstration projects,” American Public Power Association, September 5, 2024; Neil Ford, “US starts to build solar on ex-nuclear sites across country,” Reuters, July 4, 2024. Repurposing can accelerate project completion by avoiding lengthy greenfield permitting processes and attract private capital seeking faster time to revenue generation.

Streamline regulatory processes

One potential blocker to such efforts is permitting processes. Some ways governments can simplify these processes include setting statutory approval deadlines to ensure timely decisions, launching one-stop digital portals to centralize applications and streamline interactions across departments, and adopting risk-based reviews to expedite routine projects. In New South Wales, Australia, a newly established Investment Delivery Authority—backed by an AU $80 million innovation fund—is set to fast-track major infrastructure projects (including data centers, renewables, and commercial builds), streamline development approvals, and cut red tape across government departments.⁵⁴Sean Mitchell, “NSW sets up authority and funds $80m innovation drive,” IT Brief Australia, June 23, 2025.

Create frameworks for attracting private capital

Governments can attract private investors by developing tailored frameworks aligned with their distinct risk/return mandates. These frameworks include clearly structured construction or operational concessions within PPPs. Hong Kong’s Mass Transit Railway system used land value appreciation to fund metro expansions.⁵⁵Lincoln Leong, “The ‘rail plus property’ model: Hong Kong’s successful self-financing formula,” McKinsey, June 2, 2016. And in 2020, Brazil introduced the New Sanitation Legal Framework to attract $128 billion in private investments for sanitation and water supply by mandating competitive bidding for service contracts. Previously, contracts were awarded directly to public or semipublic entities without competition, limiting private-sector involvement. The new requirement for open bidding creates transparency, reduces investor uncertainty, and promotes greater private-sector participation.⁵⁶Roberto Vianna do Rego Barros and Jorge Luiz Barbieri Gallo, “Brazil’s new basic sanitation legal framework,” DLA Piper, November 30, 2020; Cíntia Leal Marinho de Araujo, “The new legal framework for water and sanitation services in Brazil and the standardized guidelines,” International Water Association, May 3, 2024. Such approaches help reduce perceived investment risk, making infrastructure projects more attractive, especially in non-OECD countries, where uncertainty can deter investors.

Do more with less

Tight fiscal circumstances mean governments must stretch every infrastructure dollar. One of the most powerful ways to reduce the overall cost of infrastructure is to avoid investing in projects that neither address clearly defined needs nor deliver sufficient benefits. Choosing the right combination of projects and eliminating wasteful ones could save (or redeploy) $200 billion a year in unnecessary spending globally.⁵⁷“Infrastructure productivity: How to save $1 trillion a year,” McKinsey Global Institute, January 1, 2013. For example, the UK’s 2017 Transforming Infrastructure Performance program set out to save roughly £15 billion annually through smarter procurement, off-site construction, digital methods, and systemwide coordination.⁵⁸Transforming infrastructure performance, Infrastructure and Projects Authority, December 2017. Project owners should use precise selection criteria to ensure that proposed projects meet specific goals, develop sophisticated methods for determining costs and benefits, and evaluate and prioritize projects by their potential effects on the entire network, instead of looking at individual projects in isolation.

Investors

With yields under pressure from rising interest rates and increasing competition, infrastructure investors should consider diversifying into new sectors even as they find synergies across verticals and double down on value creation.

Diversify vertical investments

Limited partners are increasingly interested in infrastructure, given its lower risk profile, stable returns, delivery of essential services, and long-lasting physical assets. But as more money has flowed into traditional infrastructure, competition has driven down profits. For general partners, this means reflecting on infrastructure trends, widening their fund’s mandate, and considering traditional infrastructure verticals they may not have typically invested in. One such example is KKR’s acquisition of ProTen, an Australian poultry infrastructure operator with contract-backed cash flows. The acquisition reflects the growing push by investors to consider essential service businesses within infrastructure verticals other than the ones they have typically pursued.⁵⁹“KKR acquires ProTen from Aware Super,” KKR press release, July 1, 2024. Similarly, the acquisition of Triton by the Howden Hellas Group underscores growing interest in adjacent segments like marine logistics—assets that fall outside core infrastructure but are becoming more relevant as offshore wind expands.⁶⁰“WFW advises Triton Marine’s shareholder on its acquisition by Howden,” Watson Farley & Williams, November 6, 2023.

Look for cross-vertical opportunities

Investors with a strategy of exploring cross-vertical opportunities aim for first-mover advantage by identifying such investment opportunities ahead of competitors. Data centers integrate digital connectivity and energy infrastructure through co-located renewable generation, while e-mobility hubs merge transportation networks and grid infrastructure. Shifting from criteria-based models (for example, focusing on a certain asset size or return profile) to a thematic model can help surface these opportunities. Reflecting on the broader themes prevalent today—including climate change, shifting trade flows, and the rise of artificial intelligence—can help investors capitalize directly on the growth driven by overarching macro trends, rather than relying solely on traditional sector-specific performance.

Generate alpha through value creation

Operational improvements have become a primary driver of value creation, rivaling traditional financial engineering approaches. This shift has emerged from higher borrowing costs, less debt available to enhance returns, and diminishing multiples arbitrage. In light of this, investors will increasingly depend on margin cost optimization (strategic sourcing and procurement; rationalization of selling, general, and administrative expenses; and lean operations), revenue acceleration (dynamic pricing, product innovation, and optimized go-to-market strategies), and disciplined capital allocation (portfolio shifts to higher-return opportunities and stringent capital spending management).⁶¹Alexander Edlich, Christopher Croke, Fredrik Dahlqvist, and Warren Teichner, Global Private Markets Report 2025: Braced for shifting weather, McKinsey, May 20, 2025.

Advanced technologies such as AI and gen AI offer investors powerful new tools to improve margins, accelerate revenue growth, and enhance capital productivity. For instance, Brookfield established an AI Value Creation Office to scale AI insights across its portfolio. It installed IoT sensors coupled with AI analytics at the automotive battery manufacturer Clarios to optimize maintenance schedules, prolong machine life, reduce waste, and cut energy consumption.⁶²“Game On: Why industrials are in play,” Brookfield, 2024.

Operators and developers

At operators and developers, margins are being squeezed by rising costs, labor shortages, aging infrastructure, supply constraints, and performance-based contracts. To stay ahead, firms can pursue strategies that employ technology to gain scale and look for revenue opportunities from areas beyond primary assets, such as services.

Tap new technologies to create value

Technology adoption is accelerating across asset classes to spur efficiency and increase revenue. Infrastructure assets are well positioned to take advantage of AI with applications in pricing, predictive maintenance, real-time scheduling, and project execution.

For example, in transport, a leading global airport deployed a suite of AI-driven tools to optimize performance of its baggage-handling system rather than invest in a costly physical expansion. The airport reduced carousel downtime, which improved passenger experience and system reliability, and reduced peak-period staffing costs through more efficient deployment.

Predictive maintenance has reduced downtime in utilities by up to 75 percent and cut maintenance costs by up to 30 percent.⁶³Nicholas Nhede and Colin Beaney, “Predictive maintenance can unlock lower costs and better performance for African utilities,” Smart Energy International, May 15, 2018. In rail, Siemens’ Railigent platform is set to help the Sydney Metro monitor infrastructure health in real time. The platform uses AI to flag anomalies and optimize predictive maintenance, reducing downtime and potentially extending asset life.⁶⁴“Siemens deploys MaaS in major Sydney contract,” CDOTrends, January 17, 2023.

When it comes to energy, several companies are piloting gen AI tools to improve project execution, including applying dynamic, real-time scheduling. AI algorithms continuously reallocate tasks and adjust project timelines based on real-time inputs such as weather changes, workforce availability, equipment status, and supply chain delays.

Expand service offerings across the value chain

Developers are also bundling services to capture more margin. DP World’s acquisition of Syncreon shifted it from a port-focused operator to an integrated logistics provider, with warehousing, fulfillment, and transportation under one roof.⁶⁵“DP World acquires leading US-based supply chain solutions provider,” DP World, press release, July 1, 2021. Similarly, concessionaires like Ferrovial now use their transport assets to offer EV charging and broader energy-as-a-service solutions like second-life batteries, thereby monetizing existing infrastructure in multiple ways beyond traditional fees.⁶⁶“Ferrovial installs electric car charging points in Torrejón de Ardoz and advances with its energy solutions,” Ferrovial press release, July 25, 2023. Other areas that operators and developers can explore are maintenance, waste recovery, energy optimization, and customer engagement platforms.

Extend asset lifespans

Operators facing aging infrastructure, supply constraints, and tight labor markets are increasingly focused on extracting more value from existing assets to improve performance and delay costly replacements. Instead of investing heavily in new infrastructure, firms are deploying maintenance and predictive optimization approaches to raise asset utilization and profitability. Heathrow Airport partnered with Vanderlande to install sensors enabling predictive maintenance, which is reducing baggage-system downtime by about 25 percent and potentially extending equipment lifespans.⁶⁷“Introducing predictive maintenance at Heathrow Airport,” EXPO21XX News, 2023. Investors are capitalizing on this trend: Macquarie’s recent acquisition of the operations and maintenance specialist ZITON underscores a strategic push to extend the service life of offshore wind farms, converting asset life extension into a profitable, recurring revenue stream.⁶⁸“Macquarie Asset Management agrees to acquire ZITON, a specialist in offshore wind O&M services from Permira Credit,” Macquarie Group press release, October 1, 2024.

An ever more interconnected world demands a shift in mindsets about the infrastructure that enables society to function. With an expanded understanding of what infrastructure comprises, stakeholders including government, investors, and operators can take decisive action to meet the challenges and opportunities emerging from this complex, competitive infrastructure moment.

Governments should reflect on what resources to target and how to remove bottlenecks, then act accordingly. Investors have an opportunity to move beyond buy-and-hold strategies, instead managing assets more actively to unlock new possibilities. Operators and developers can embrace groundbreaking technologies and new areas of service to unlock new sources of value. Those that adapt will shape the next generation of infrastructure—and the economies that depend on it.