The Capital Misalignment Hurting Long-Term Infrastructure, According to Nick Curum

In a recent LinkedIn post, Nick Curum highlights a critical disconnect between our stated need for resilient infrastructure and the capital models used to fund it. Curum argues that conventional financial frameworks are ill-equipped to handle century-scale assets like hydropower, leading to a systemic failure in building the long-term infrastructure society requires.

Curum points out the paradoxical situation where resilience is emphasized, yet investment continues to be directed towards assets with significantly shorter lifespans. This is particularly evident in the energy sector, where the long-term benefits of infrastructure are often overshadowed by short-term financial metrics.

Our capital models are not built for century-scale infrastructure. It is capital intensive in decade one. Cash generative for decades after.

The Institutional Failure of Short-Term Horizons

According to Nick Curum, the problem is not technical but institutional. The mismatch arises from the clash between the multi-decade, even century-long, operational life of infrastructure projects and the much shorter investment horizons prevalent in finance and politics.

Curum elaborates on this structural tension:

The Clash of Timeframes

He identifies a direct conflict between:

• 4-year political cycles
• 10-year fund horizons
• 100-year civil assets

This fundamental misalignment, Curum suggests, forces difficult choices where the long-term value of an asset is undervalued.

Rethinking Infrastructure Investment Metrics

The author uses hydropower as a prime example to illustrate his point. He details the typical profile of a reservoir hydro project, emphasizing its long build time, substantial upfront capital, and then decades of low operating costs and predictable revenue.

A typical reservoir hydro project: 5–10 years to build, high upfront capital; 50–100+ years of predictable low operating cost; Mid-life refurbishment that extends value beyond a century; No fuel price exposure; Inflation-resistant cost base once commissioned.

Despite these inherent strengths, Curum notes that the dominant question in investment circles remains focused on short-term returns.

Beyond Generation Capacity

Nick Curum argues that viewing assets like hydropower solely through the lens of immediate generation capacity misses their broader strategic importance. He lists several crucial, yet often overlooked, contributions:

• Duration
• System stability
• Multi-purpose infrastructure
• Intergenerational capital allocation

As Curum states:

If we consistently underweight 100-year assets, the issue is not technology. It is how we price time. It is how we discount the future. It is how we define acceptable returns.

He challenges investment committees and stakeholders to examine their decision-making processes. Curum poses critical questions about whether duration and system value are truly prioritized over short-term Internal Rate of Return (IRR) optics.

The Consequence of Mispriced Time

The core of Curum’s argument is that our current financial paradigms are failing to adequately price time and the future. This leads to a situation where essential, long-lived infrastructure is deprioritized, potentially jeopardizing the development of the resilient systems we claim to desire.

And if the latter dominates, are we building the system we claim to want?

Curum’s analysis suggests that a fundamental shift in how we value long-term assets and discount the future is necessary to align capital allocation with the goal of building sustainable, resilient infrastructure for generations to come.