Research
Research
Reports and analyses on the risks behind infrastructure value.
Articles
23 articles
Thematic Report: VAPRI: Vallorii's Price of Risk model for infrastructure cost of equity
CAPM has been the workhorse model for cost of equity across regulated utilities but is reaching its limits.
Vallorii
2 min read
When accounting shapes behavior: the hidden incentives in infrastructure valuation
In regulated infrastructure, value is not a fixed concept. The value of an infrastructure asset depends on how it is measured and which accounting basis drives returns. Different accounting frameworks produce markedly different views of the same asset base. Regulatory asset values (RAV), historical cost accounts, and current cost accounts (modern equivalent asset value, MEAV, or replacement cost), each serve distinct purposes. But when the differences between these measures changes,...
Kirsten Dupuy
4 min read
Depreciation, Affordability, and the Hidden Trade-offs in Infrastructure Investment
Infrastructure debates tend to focus on what should be built next. Yet a more fundamental question sits beneath them: how quickly should we pay for what has already been built? That question goes to the heart of depreciation. As discussions at the March roundtable underscored, it is emerging as a central lever in infrastructure economics and regulation. How does intergenerational fairness impact affordability? Depreciation directly shapes returns, bill trajectories, and risk allocation over...
Kirsten Dupuy
4 min read
Rising Affordability Pressure Adds 30-130bps to Electricity Network Cost of Equity
Affordability does not constrain infrastructure investment directly. It acts through politics and regulation. As utility bills rise faster than incomes, tolerance for further increases falls, raising the risk of political intervention in allowed returns and cost recovery. For long-lived, capital-intensive assets, this uncertainty lifts required returns, turning affordability into a material cost of equity risk.
Kirsten Dupuy
3 min read
Affordability is becoming a binding constraint on UK infrastructure investment
Infrastructure investment is increasingly shaped by affordability pressures rather than engineering or regulation alone. UK households already spend a high share of income on utilities, and bills are set to rise faster than incomes through the 2030s. This analysis examines whether future consumers will be willing and able to fund the scale of capital programmes now being proposed—and why affordability is becoming a binding constraint on infrastructure delivery.
Kirsten Dupuy
3 min read
Red tape: Does economic regulation have an overfitting issue?
“Overfitting” is a phenomenon in statistics where models are needlessly complex. Overfit models are very elaborate yet inaccurate . Such models look precise and sophisticated, but the precision is illusory: they reproduce the past while obscuring the future. The same dynamics can emerge in regulatory frameworks and models when detail accumulates faster than insight. Economic regulation in the UK has increased in complexity over recent decades with the introduction of cost-based regulation,...
Lennart Baumgärtner
1 min read
When asset resilience becomes a valuation input
As environmental stress rises, infrastructure resilience is becoming a valuation input. Vallorii’s VARI (Vallorii Asset Resilience Index) estimates hidden asset health by linking external factors like rainfall and groundwater to failure signals such as storm overflows. The result is a clear resilience score that highlights meaningful differences between operators and supports smarter pricing, capital allocation, and risk decisions.
Jorge Cárdenas
5 min read
UK regulation in motion: December-January updates reshaping utility finance, and what to price next
UK utility regulation has shifted sharply from policy headlines to a governance-and-finance reset. Across water, energy, telecoms and transport, regulators are tightening incentives, hardening enforcement, and demanding credible delivery as a condition of “financeability.” Ofwat’s blind-year reconciliation makes performance real cash, while RIIO3 pairs major investment with tougher bill politics and consumer protection. Payments and billing are emerging as the next regulatory frontier.
Cassandra Etter-Wenzel
7 min read
The Broken Link between AI Growth and Electricity Demand
The world will use far more AI. That does not mean it will use proportionally more electricity. As AI systems become more efficient, the relationship between adoption and power demand weakens. This creates a forecasting problem with real consequences for grid planning, investment timing, and policy—where flexibility matters more than precision.
Jorge Cárdenas
8 min read