Almost half (49%) of institutional investors expect to increase their exposure to assets supporting and participating in energy transition by 2021, a new study has revealed.

The research from Aquila Capital found that the fast-growing popularity of energy transition as an asset amongst institutional investors, with two-thirds of them citing energy storage, such as batteries, as offering the greatest investment potential. Following behind energy storage was electricity transmission, with 45% of investors citing it as a further strong investment.

According to Aquila Capital, energy storage is becoming particularly appealing due to the growing role it was play in maintaining the supply of renewable electricity into Europe’s energy mix.

The firm stated that cost reductions, technological development and improving regulations will continue to strengthen the investment case for storage moving forward.

The study identified several factors that make participating in the energy transition more financially appealing for investors. The most important of these, cited by 68% of investors, is the increasing share of renewable sources in the energy market, followed by the restructuring and decentralisation of energy grids (62%).

Commenting, Aquila Capital head of investment management energy & infrastructure EMEA said: “These findings underline the growing appeal of the energy transition among institutional investors and the opportunities that they find most appealing. Indeed, 82% of investors said they would be attracted by a multi-asset class fund mandated to invest in renewable energy generation, storage and transportation.

“To meet growing investor demand, we launched the Energy Transition Infrastructure Strategy (ETIF) in April last year. The ETIF aims to invest in these three key subsectors. Europe is making progress on its energy transition journey and investors have an unprecedented opportunity to benefit from this.”

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