P3s Over the Horizon
There are new opportunities for public-private partnerships writes David Keniry.
Globally there is an alignment between the needs of governments, businesses, and investors in real assets. The key drivers of these interfacing needs are energy security, decarbonization, digitalization, housing shortages, healthcare, commodities, materials, and water management.
To meet these interfacing demands hundreds of billions of dollars, euros and everything else are being raised and pooled to be deployed.
Project delivery is not meeting the demand for the assets despite the private and public capital available and clear targets such as reduction of emissions and the provision of attainable housing and healthcare.
Examples include grids and transmission networks, energy storage, advanced manufacturing, computing, data centers, and semiconductor fabs, transportation and logistics such as ports, airports and rail.
The bottlenecks in delivery are leading to increased scrutiny of regulatory frameworks, red tape and public sector capacity to enable projects to be delivered including the availability of planning expertise.
There is increasing awareness of capacity constraints in the construction and engineering sectors and their supply chain.
To overcome challenges there is increasing discourse about the need for public and private collaboration and public-private partnerships.
While we often talk about educating the public sector, I believe one of the challenges facing infrastructure delivery is lack of understanding within private sectors including energy and technology developers of public-private partnership models and what is required to design, build, finance, and maintain large projects and assets.
I believe what we have seen in the last four years or so, is a slow realization that private companies struggle to deliver the scale of investments required in infrastructure without the financial support of the public purse, while governments struggle to deliver infrastructure investments without private sector support.
There is another discourse that governments and politics need to stand out of the way to enable private infrastructure and real asset investments. However, as these assets are increasingly region and economy-shaping investments with impacts on security, infrastructure, services, housing, and environments – politics by its nature will always be at the heart of decision-making.
I believe what needs to be communicated is that whether an infrastructure asset is public or privately owned a public-private partnership model and the companies that are experts in PPP delivery can provide the discipline and expertise required to design, build, finance, and maintain an asset to ensure it is available for owners and users when required.
A good example of this is the EU’s new industrial revolution in Northern Sweden.
John Laing has entered a corporate Private to Private Partnership (PtPP) with Stegra (formerly known as H2 Green Steel) to provide essential water treatment services to Stegra’s flagship industrial site in Boden, Sweden. This will be achieved through the design, build, financing, operations and maintenance of a new Water Treatment Plant (WTP). The Water Treatment Plant is critical ancillary infrastructure required to operate what will be the world’s first large-scale green steel plant.
The technology solution and service of the Water Treatment Plant equipment is undertaken by Aquatech, a market-leading provider of zero liquid discharge and industrial water treatment services.
This significant, long-term investment strengthens John Laing’s position in Europe as the first sole sponsor and equity investor in critical ancillary infrastructure services for a large-scale green steel plant. John Laing led the structuring of a Water Treatment Services Agreement under which the Water Treatment Plant will receive availability payments from Stegra. John Laing also secured non-recourse project finance including equity and ECA Green Domestic Guarantee supported senior debt financing. John Laing advisors included Ashurst, Vinge, Arup, EY, and Mazars.
The development of green steel in the region around Boden has resulted in public-private partnerships required for logistics including rail and ports. Boden Municipality and Stegra (H2 Green Steel( have contracted Polar Structure to construct and operate the new railway line which has received investment from Niam.
In November 2024 the Port of Luleå retendered a P3 to expand and enhance operations to handle cargoes that will facilitate the green industrial revolution. This is despite a vacuum of a favourable political environment or logical support for PPPs in Sweden.
The absence of a clear framework and political support for PPP models has created bottlenecks in infrastructure delivery and services. This was underlined by recent announcements by the UK Government on new or remodelled institutions to try pool public and private capital without providing breathing space for the PPP models that are clearly needed.
Despite this PPP-type models have survived notably to deliver offshore transmission, interconnectors and water infrastructure. Meanwhile privatised infrastructure and developments have struggled without public intervention.
Digitalization and the growing demand for computing power, digital infrastructure, as well as energy and water infrastructure are key drivers in infrastructure investments around the world but are particularly relevant in the USA as maintaining supremacy in digital and energy technologies are now viewed as fundamental to the economy and security.
While the IIJA and the IRA are key milestones during President Joe Biden’s term, I believe initiatives like the CHIPS Act and moving computing power, advanced manufacturing and digital and energy technologies into the infrastructure box will be the biggest impact on infrastructure during his term.
On P3s Over the Horizon this year we have discussed how U.S. Department of Defense initiatives to leverage public-private partnerships to ensure primacy in technologies like the proposed Defense Energy Consortium. We have also discussed recent announcements by the Federal Government to enable the development of semiconductor fabs and offset emissions in Maricopa County, Arizona.
Also on P3s Over the Horizon we recently discussed how PsiQuantum has agreed with the State of Illinois, Cook County, and the City of Chicago to a comprehensive package of incentives totaling more than $500 million to enable the company to Build the First US-Based Utility-Scale Quantum Computer to anchor Governor J.B. Pritzker’s Illinois Quantum and Microelectronics Park to be developed at the former US Steel South Works Site in the City of Chicago.
However, while much of the attention and hype is on digital and energy technologies there also more ‘traditional’ sectors and projects that are talked of as public-private partnerships that could benefit from using more formal DBFM/O models.
Entertainment, sports, convention, and cultural facilities underpinning districts and downtown regeneration was a key trend also discussed over last 12-18 months. The [Taylor] Swift Effect possibly a factor, but also the hollowing out of downtown areas, commercial real estate, and the reimagining of urban, suburban, and university communities.
Coupled with this trend is the development of healthcare, science, and education districts to underpin cities and communities with significant efforts by public authorities to enable private investments in assets.
Many of these developments are described as public-private partnerships such as medical centres and hospitals, but with emphasis on public grants and private gifts.
To conclude, I believe P3s Over the Horizon will emerge from a better understanding that the increased scale and value of capital projects require the best in infrastructure delivery and maintenance, while the level of public capital required to enable these investments require accountability. Calling them public-private partnerships will no longer suffice; formal P3 agreements and models will be required.
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