The climate crisis is taking up more of the centre stage as policymakers, politicians, investors, and business leaders race to provide solutions to accelerate the global transition away from oil and gas and develop less climate impacting alternatives.
It is estimated that the global economy requires a staggering $9.2 trillion in annual average investment to achieve net-zero emissions by 2050¹.
As ‘energy transition’ begins to establish itself as the dominant theme in private equity, it is worth taking a deeper look at the latest mega trend and what effect this has on the hiring market.
What is Energy Transition?
In its simplest terms, energy transition is the shift in the technologies and behaviours of the global energy sector to move away from fossil-based systems of energy production and consumption (such as oil, natural gas, and coal) to renewable energy sources like solar, wind, and hydroelectric.
But it’s not all renewables. Energy transition is a broad, and expanding, landscape that also incorporates areas such as electrification, decarbonisation and digitalisation which covers everything from green technologies, large scale green energy operators and green services creating new efficiencies in global supply chains.
The role of private equity
With all of this innovation comes a huge opportunity for the private equity sector to contribute to bridging the gap in annual investment to aid growth and development. At every level, private equity is primed to do what it does best: provide their resources and expertise to support energy transition businesses scale, whilst generating significant returns for investors.
According to Pitchbook, from 2017 to the first half of 2022, buyout and growth equity funds invested around $160 billion in energy transition-related deals, with most of the investment concentrated in the renewables and clean industries segments².
Both traditional private equity firms and new private capital platforms at firms such as Brookfield Asset Management or Apollo Global Management are committing tens of billions of dollars to energy transition funds.
We are also seeing the large-scale emergence of early-stage climate investors such as Energy Impact Partners and Climate Investment, both of whom are targeting opportunities in nascent energy technology like Carbon Capture and AI Energy Analytics.
Why now?
2022 proved to be a turning point in private equity as pressure mounted on fund managers to contribute to taking action. It would be easy to think of energy transition as merely a ‘moral crusade’, but it is not often we see the unification of private capital, politics and moral sentiment into a powerful investment trifecta.
Historically, detractors of the energy transition (in the political sphere at least), have claimed that the path to NetZero comes with a huge financial burden for the consumer. But the narrative is changing as we reach the point of critical mass; in the last decade alone the costs of renewable technologies have fallen by 80% in the case of solar photovoltaic and 60% for onshore wind power³. In every sector we are seeing the impact of energy transition efficiencies, whether it be battery storage technology, electric vehicles, or large-scale renewable generation.
Recruitment in energy transition
The Energy Transition sector has become central to Dartmouth’s Real Assets strategy as a wealth of new funds have emerged. We are working with some exciting clients who are true innovators in this area and have placed industry experts such as an Energy Transition Director and Investment Associates who are contributing towards making a real difference. As a result, we have unsurprisingly seen a surge in interest from candidates, sparking intense competition over the limited investment positions in the market.
We have noticed the younger generation are particularly motivated by roles in this sector, supported by data from our 2023 Gen Z Hiring Report which highlights the “clear generational interest in making a positive impact on the world through their work”. Nearly three out of ten respondents (29.1%) due to graduate in 2024 rated the importance of ESG related strategy/values as key factor in their decision making when choosing a new role, compared to 20.6% of 2020 graduates.
As new funds are set up, and others become more established, we will continue to see more opportunities for a range of specialisms and seniority. Candidates who succeed in securing investment roles often have a combination of deep-rooted passion for the sector, a strong awareness and interest in global ecosystems, and the prerequisite transaction experience.
If you are interested in working in the Energy Transition sector, or your team is at the point of expansion and requires hiring support, reach out to me directly at thomas.amos@dartmouthpartners.com and we can help make a positive impact on our climate together.