Sustainable Transition: $34 billion+ in software spend

I saw this below chart posted on a McKinsey report. The image summarizes how 5 key areas will require $2 trillion of capital to decarbonize / be more sustainable.

Totaling the 3 areas aligned with Energize’s investment thesis (electrification, power grid, agriculture) equates to around $1.7 trillion per year.

Most of the capital will go to physical infrastructure. However, at Energize we track the % of project spend going to digital solutions.

That spend number is currently ~2% of total project capital for these more antiquated & analog verticals. We believe that this digital figure will climb to around 4-5% of total budget by 2030.

In today’s numbers this means that the sustainable transition of these 3 areas equates to approximately $34 billion to $68 billion in annual software spend. This is the market opportunity for the Energize investment thesis, and the value for our portfolio to capture.