AI is driving the first real growth in Australian energy demand in 20 years

Please note this interview was filmed on 21 October 2026.

Some people might look at infrastructure and throw it into the boring investment basket. It’s hard to blame them, right? Historically, it’s been the sleepy portfolio: toll roads, airports and ports quietly collecting single-digit yield year after year.

But it’s also not really the case anymore. Yes, those traditional assets are still an important part of the infrastructure space but the aperture has widened to encompass things like data centers and digital networks through to renewable energy solutions and environmental assets.

According to Sam Franklin, Managing Director of EQT’s Infrastructure business, at a very high level, the world of infrastructure hasn’t changed at all.

“The purpose of infrastructure investing is identifying assets that at the highest level provide an essential service to society. I think the change in what infrastructure investing is reflects changes in society.”

He points to EQT's first digital infrastructure deal, a Nordic fibre business struck when digitalisation was beginning to transform how people and enterprises consume data.

"There was a debate at the time about ‘is high-capacity internet really an essential service to society or is it just a nice consumer good?’" he says.

It wouldn’t even be a question today. For investors, that means data centres, subsea cables and distributed power belong in the same conversation as airports and toll roads, and increasingly they are where the growth is.

“What is an essential service to society has changed, but I don't think the definition of infrastructure or the way we look at infrastructure has.”

As part of Livewire's Infrastructure Series, I spoke with Franklin about the asset class’ evolution, how AI is reshaping Australia’s energy grid, and why a contract isn't the inflation shield many investors assume.

Private infrastructure fills a capital gap

Companies are staying private for longer. It’s been repeated so often that it's practically a cliché but, as is often the case with clichés, it’s also true. Some listed infrastructure businesses are even going the other direction and coming off the ASX. Franklin argues this reflects a genuine gap in what public markets are built to do.

Many infrastructure businesses now need large amounts of ongoing capital to keep up with a growing population and changing demand. Public markets, by contrast, tend to favour low leverage and steady dividends.

"In an ideal world, the role that private infrastructure is playing is taking those businesses where you need to reinvest those cash flows, where you might need to redeploy more equity into those businesses to fund that growth," Franklin says.

“I think you've got the rise of passive investing in the public markets, whether true or not, you have perceptions that there is more of a short term focus.”

Sometimes this dynamic is framed as the private and public markets being in opposition to each other, but Franklin sees it as being much more symbiotic than that.

“Once that transformation or that journey's been complete, the public markets are obviously a very natural place for these kind of assets,” he says.

“A country can’t thrive without both thriving public markets and also private markets. I think the evolution of private infrastructure is plugging a gap that is actually going to be long-term net beneficial for these companies and hopefully for society as a whole.”

Importantly, when EQT eventually exits, the aim is to hand back a business that is demonstrably better.

“The public markets have long memories, and I think rightfully, so they're going to expect to see a reason why the business is different to what was taken off the public market.”

The intertwining of AI and energy

Digital and energy infrastructure are increasingly the same story. As Franklin puts it, you need power for digital assets, and digital assets are now driving energy growth.

The specialisation of AI data centres is also creating new opportunities as large training facilities don't need to sit near population centres, which means they can tap stranded or underused power. At the same time, AI demand is reversing a long period of stagnation on the Australian grid.

"That trend is driving, for the first time in 20 years, actual growth in underlying energy demand on the Australian grid," Franklin says.

Previously, he adds, rooftop solar had absorbed what little growth there had been in energy demand, which “constrained” investment in the grid itself.

“I think it's actually triggering some quite positive investment in terms of the needed investment in just increasing the stability of the Australian grid. But it goes beyond that on the energy side, you always have electrification and sustainability still remains a really important part of the overall energy story," Franklin says.

“On the digital side, AI’s rapid advance is driving a growing need for sovereign security over data generation, over telecommunications, and the implications for the infrastructure that's required there as well.”

EQT's US portfolio offers a sense of the scale. One business it owns originally supplied off-grid power to large manufacturers. After partnering with data centre operators, it has grown from around 30 megawatts of generation capacity to more than 900 megawatts in about three years, largely from renewables, with gas providing baseload support.

Energy security is Australia’s standout opportunity

Franklin sees Australia's domestic market as a unique energy infrastructure opportunity. The grid still leans heavily on ageing coal-fired power stations for baseload power, and whether those plants close sooner or later, he expects the system to face more volatility.

"Either we are going to wind these assets down, which is going to result in a larger portion of Australia’s generation being delivered by what are necessarily intermittent power generation systems, solar and wind, or they're going to stay online for longer, but these assets are becoming less reliable every year they're online," he says.

That creates demand for batteries, for gas as a cleaner interim baseload source, and potentially for Australia to become a larger part of Asia's AI build-out, using abundant land and solar to host training workloads in remote locations.

Geopolitics is also sharpening the focus. Fuel security concerns tied to the Middle East echo Europe's experience during the Russia-Ukraine crisis, while on the digital side, long-neglected assets such as subsea cables and the ground infrastructure behind low-Earth orbit satellites are drawing fresh investment.

He expects the need for energy generation, and the growing role of sustainable generation backed by batteries, to persist over the longer term.

"I think over time you will see that investment trend continue."

Inflation protection comes from active ownership, not just the contract

Inflation protection is one of infrastructure's biggest selling points, and Franklin says most businesses ultimately passed through the recent inflation surge. But the experience exposed a weakness in relying on contracts alone.

Inflation moved so quickly, reaching 7% in a single quarter in parts of Europe, that backward-looking contractual mechanisms couldn't keep up.

“Often when you’ve got these contractual inflation mechanisms, they are backward looking six months to a year,” he says.

Businesses were caught with sharply higher costs and little ability to respond before their contracts reset. The assets that coped best were actively managed businesses that could work with customers as costs rose. Franklin argues these were, in some ways, better protected than "the nice toll road where you get a 2% tick every year".

"That was, I think, a learning lesson for us that the contract maybe is not the be-all and end-all, and actually active ownership is much more important."

Building the Infrastructure of tomorrow

EQT Infrastructure identifies high-quality infrastructure companies along a thematic investment approach grounded in the evolving needs of society. Find out more. 

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Ironbark EQT Nexus Infrastructure Fund (AUD)

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