Key takeaways
Future successful foreign investments in energy assets will be based on resilient transaction structures, adept cross-jurisdictional regulatory guidance and holistic deal strategies.
Geopolitical tensions and the global race for energy security are reshaping how governments view energy assets, from battery tech and critical minerals to grid infrastructure. These assets are seen as matters of national importance and foreign investments in them are subject to more thorough regulatory review and political scrutiny. Governments face significant surges in energy demand, driven by the AI revolution, while shifting geopolitical alliances put a premium on supply reliability. This transaction environment poses significant challenges for traditional deal structures.
What’s happening
- Escalating geopolitical tensions, including global competition for energy security
- Energy assets, including battery technology, critical minerals, fuels, and grid infrastructure, are increasingly treated as matters of national interest
- Heightened focus on foreign ownership of energy assets and energy supply security
- As governments expand the definition of “strategic sectors”, deals involving these assets are triggering foreign investment reviews and political scrutiny
Why
- Anticipated energy demand of the AI revolution and the fierce race for AI supremacy
- Geopolitical conflicts and global energy supply disruptions
- Uncertainty surrounding shifting political alliances
Why it matters
- Traditional deal tools are being stress-tested
- Foreign investment reviews are costly and time-consuming
- Delays and disruptions can erode value or derail transactions
- Deal enforcement may become a political bargaining chip
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