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Third, beyond ESG mandates, institutional investors have to worry about their “right to operate” with a long view.
![institutional investor ad wars institutional investor ad wars](https://static.bangkokpost.com/media/content/20200208/c1_1853179_200208105355.jpg)
And seeing oil price volatility more than double over the past five years isn’t going to change these perceptions. This is what’s really behind the “Great Energy Shift” among such investors. In short, over the past half-decade, perceptions of oil and gas as the “safe choice” and renewables as the “risky option” have flip-flopped for institutional investors. “Buying into operating wind and solar assets has become so low-risk in certain markets that the more conservative financial investors, such as pension funds and insurance companies, have moved in en masse.”
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Whereas renewable energy projects can often have firmer or at least more predictable costs and revenues, driving many conservative investors to shift their infrastructure allocations into these areas instead. Fossil fuel infrastructure has always been seen as near-term volatile because of the merchant nature of most offtake (ie: they sell into commodity priced markets), and now are increasingly seen as risky in the long term as well, thanks to the climate change megatrend. To overgeneralize, infrastructure investors are less prone to embrace volatility than other asset categories will.