From our perspective at LEK, we do a huge amount of m and a work for, for corporate sponsors, thinking about how they want to deploy capital into their energy transition, as well as a variety of investors, whether that's PE funds, infra funds, et cetera. So we sort of see it from a few different angles. So I think the appetite to deploy capital and the energy transition is incredibly high, but there clearly are some challenges and there have been some challenges over the last couple of years. So some of that is around, you know, things that are impacting m and a, whatever sector you're in around interest rates, cost of capital, challenges in, in getting deals done.
Some of it is more specific to renewables around some of the operational challenges, getting permitting, thinking about short term regulatory dynamics, huge number of elections coming up, changes in government, et cetera, and the support that varies there for renewables and, and renewable deployment. So how do you kind of make sense of all that, that this sort of huge appetite yet some of these sort of challenges in, in the deal space? I think sort of unpacking a little bit the, the why, the where and the how. Hopefully everyone in this room is convinced of the why we need to decarbonize the energy system to help mitigate the, the impact of the climate crisis.
So that's sort of take that as a given. The where I think is quite interesting, because I know we're focused on renewables today, and I, I don't wanna sort of go too off script, but I think increasingly investors are taking a broader look at the energy transition landscape and what they consider investible opportunities for them. So as well as the supply side and the renewables and the, the full value chain around that. I think you've also then got increasing interest in the transmission, the distribution, the storage, the grid is, is getting a huge amount of interest and then thinking about further downstream and actually decarbonizing the built environment, transport industrial processes.
So people have really taken quite a, a, a broad lens of what they consider energy transition investment opportunities. I think the, the region regional dynamics matter a lot here as well. If you're thinking about particular countries where they are in that renewables capacity rollout is, is very important because you're either looking at, you know, a small installed base and it's growing hugely and, and that has a set set of dynamics or you have a more mature installed base that needs operating maintenance services and, and the whole sort of value chain that sits around around that. And then coming onto the how, and I think this is where sort of the challenges actually lie, which is around the, the business model choices. And, and I think there's work to be done thinking about the different business models in, in the renewable space, whether that's developer IPP through to some of the, the, you know, the OEMs, the distributors, the installers, et cetera, the services businesses as well. And, and sort of matching that with the different investor archetypes. And, and actually that is sort of the key and I think where some of the m and a has struggled is where perhaps the, the targets have sort of fallen through the cracks.
So they might have a lot of infrastructure like characteristics, but perhaps they've still got quite a lot of technology risk that the info funds can't really get on board with, or they might have sort of very long term fundamental growth, but it's difficult for private equity to think about how they're gonna make money in their, in their holding period of three to five years. So I think that's where we're seeing business model evolution and with some of the IPPs, there's been some de-risking of the business model to make it more attractive to, to m and a. And I think, you know, an example there might be either getting better contracted off takes or it might be de-risking the development by taking on projects at the ready to build stage, developing more strategic partnerships so that you're, you're not taking all that development risk yourself.
We've also seen with, with sort of smart meter assets for example, that was sort of a, a real struggle to invest in, but now the UK smart meter assets that are coming to market the highly contracted revenues. So when you speak to the infra funds, they're comfortable with it, they're comfortable with the core business, and they can think about doing a deal in that space. So I, I'll sort of pause there, but I I think just sort of unpacking that because I think we can all get on board with the underlying fundamentals and the long time growth outlook, but actually getting the deal the deals done comes back to some of these sort of business model choices.
Brookfield Asset Management is an asset manager, as the name says. We, we manage and invest capital on behalf of our clients. We have a hundred bill, almost a trillion of, of a UM under management. And within that strategy we invest, or one of our sub strategies is investing in renewable power and, and energy transition where we've got around a hundred billion of, of a UM today.
And, and it is through that vertical where you see us doing some of these m and a transactions that, that you're pointing to. And I think if you look back to this year for us, or you would've seen us being very active, both deploying capital into large acquisitions, but also exiting some of our large businesses. And, and we see an opportunity to do both things. If you, if you just look at, at today's market, we think on one hand it is a buyer's market for businesses that require more intense business plans where you need to deploy more of the operational expertise, you need to have access to capital.
And, and at the same time we see today's market as a seller's market for high quality assets that are operating and that are the risk - If, if we sort of wind back the cook, those of you that, well, if you were in energy you could invest in renewables and energy's energy. But I think what's clear is that the capabilities required to be successful in particularly in the the development stage, it it really is quite different. Mm. And so making sure that, you know, that is factored in and either as a, a value creation lever that you can, you know, bring to the party as, as you know, having that, that track record of operational expertise or working out if not you, then you know, where is, where is that capability coming from?
And I think what we're seeing some of the challenges has been actually that these assets are being acquired without really understanding what it's gonna take. And, and, and then you do open yourself up to, to a lot of risk on, on the development.
Our energy investments sit within our real assets portfolio, so that's alongside infrastructure and real estate and they span everything from conventional energy assets through to relatively de-risked power assets in the renewable space. Most of our investments are direct and they're direct into what we would call platforms. So these are companies largely owned and controlled by CPP that are effectively making many investments providing us economic exposure, but leaving the operating complexities in a, in a standalone entity. And a few reasons for that.
One, making these investments at our scale individually on our own balance sheet is, is not particularly efficient. But, but I'd say that the, the bo both I'd say perspectives that we've shared so far, I I think outlined that this is quite a natural signal of a maturation of an industry. It's an industry that I would say loosely for the last 15 years prices of power that you could realize for renewal developments were pretty favorable. The capital cost was pretty low.
The size of the project meant that they were not particularly complex and their number in aggregate was not really posing challenges for regulators or for grids or the supply chain. And we're now facing a reality where the scale of these projects has grown as actually an important considering for underwriting considerations. Even if there were cost overruns or delays, the technology costs were falling as the project was being built. Really your underwriting assumptions from the return compression that we saw really a couple of years ago, What I'd say now is we're, we're living in a world where the scale of investment in this arena is overwhelming some of the capacity that we have to deliver these projects.
And some of that is in permitting, some of that is in grid, some of that is in raw materials. Yeah. But that is yielding a situation where the risk of a cost over on a delay is now pretty considerable. And the scale of these projects has grown, particularly as they've gone offshore.
Yeah, I mean I'd really echo the, the perspectives here that it's around making those choices. The the risk choices, the return choices and where you want to participate in the value chain. And particularly for the integrated players, you know, actually understanding, does that diversification help de-risk some of the, the, the revenue. So, you know, there are companies that are much more integrated, have a development arm but also an operational arm, also have the, the secured PPAs and you know, so that is attractive to, to some people.
So I think it's, yeah, they're really, the appetite is there, the willingness is there, they, they want to deploy their capital, but they also, there's been a lot of lessons in history. A lot of it's very easy to lose money in renewables and so there's, there's a real keenness to make sure that you sort of get it right. And I think your, your point is, you know, thinking about what differentiated capabilities Neon had and what you were gonna bring to the table and what they were gonna bring and what those sort of growth opportunities were. A lot of that is quite company specific.
So I think it's really no one's that interested in the exact forecast of wind and solar and, you know, you can get that data really easily. Now it's more about understanding for a particular company exactly how they make money, exactly what kind of risk they've got, what track record they've got, what operational expertise they've got, and really getting under the, the surface of that. That's where all the questions are right now.
