The infrastructure sector sits at a collision point of global disruptions, including shifts in capital availability, evolving social and environmental priorities, and rapid urbanisation. However, the emergence of COVID-19 introduces an altogether new set of challenges. The full impact of the pandemic will take years to play out. Yet in the near term, we believe it will reshape the industry in four ways, intensifying its focus on operational resilience, the affordability of infrastructure, the deployment of new technologies and the need for sustainability. Successful infrastructure delivery demands close alignment and collaboration between a wide range of participants, each with its own agenda and interest. The result? No single player acting alone can effect real change in the sector.
In the rest of this series, we look at the overarching forces that will influence the future of the infrastructure industry, including
In October 2019, we asked infrastructure CEOs across the world to look ahead to 2020. Though most said they were expecting the pace of economic growth to slow during the year and were planning their growth strategies accordingly, nobody could have anticipated the COVID-19 pandemic. Given the crisis sudden sharp impacts and a long potential duration of intensity, the economic fallout of the crisis will test the resilience of the infrastructure sector.
The forced cessation of travel, disruptions to supply chains and changes in consumer behaviour are among the COVID-19 impacts that are affecting every sector of infrastructure. Lockdown measures have resulted in a sudden decline in public transport and road infrastructure usage, causing formerly stable demand and revenues to diminish overnight. Against this background, transport asset owners are wondering whether the sudden move to remote working will lead to a permanent shift in working patterns, with consequent impacts on other industries, such as real estate. The shutdown could also lead to a shift from mass transit to micro-mobility options, which would affect future infrastructure planning.
Questions are also being raised about the air travel and freight industries. If usage of air transport declines significantly, will the aviation sector need to consider fundamental changes in how airports are designed and built? And what would a switch to more localised supply chains do to volumes and demand for port owners and operators?
The power sector is not immune either. In the UK, for example, overall demand for electricity has declined due to the lockdown. As a recent PwC study has highlighted, the coincidence of COVID-19 with an oil price crash in March 2020 is likely to affect the transition to renewable energy in the short term, with cheap oil lessening the attractiveness of investment in renewables, because oil-run generators will be more cost-effective.
It’s impossible to map out how the crisis will ultimately affect the infrastructure sector as a whole. But we believe the most immediate effects will be felt in four areas: operational resilience, technology adoption, affordability and sustainability.
Global Leader, Capital Projects & Infrastructure, Partner, PwC United Kingdom
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Capital Projects & Infrastructure, Senior Manager, PwC United Kingdom