Don’t believe the hype… mostly

Inspiration for this latest Friday Editorial comes from an industry stalwart who – in response to last week's missive – reached out to say that he lives by The Berlin Rule.

So, I hear you chime: “What’s The Berlin Rule?”

This industry veteran suggests that when “the next big thing” is touted at major infrastructure conferences: “Say nothing. Listen. And whatever phrase you hear spoken the most – don’t do it.”

That sounds like a sound strategy as a lot of false scents have been chased in recent times and a lot more are being vigorously snuffled as you read this.

The Berlin Rule and over-hyped “opportunities” were brought to mind the other day over a quiet snifter with an old chum of many years, when he mentioned Spain’s Castor UGS Gas Storage project that reached financial close in the summer of 2010 with a sponsor team of ACS Group, Enagas and Dundee Energy.

Back in the day, this deal turned heads… probably even won a couple of IJ awards!

Everyone was toasting a genius storage solution for 1.3 billion cubic metres of gas in a depleted oil reservoir off Barcelona’s sunny shores… but it turned out to be not such a welcoming host.

Gas injections caused hundreds of small earthquakes – up to magnitude 4.2 – and the government wisely called a to halt the project permanently for fear of earth shattering escalation.

In Spain again (purely coincidental, but it came to mind while writing) delegates at the 2005 IJ conference in Turnberry were charmed to hear about a tunnel linking the nation to Morocco… right up to the first mention of a fault line. Fortunately, this one was strangled at birth, but there was a bizarre attempt to revive it in 2007.

OK – so that’s a couple of extreme cases of folly that fell flat on their faces in spectacular style… both of which should have been shot in the head after consulting specialists who could have anticipated cramming a different molecule into rock formations or would have questioned the wisdom of drilling a tunnel under very deep water on a bloody fault line. I mean, really?

As a general observation, it feels these days like The Berlin Rule should be applied a little more keenly than it recently has.

Ich bin ein Berlin Rule

Chatting to folk around the industry this week, the response to The Berlin Rule varies from hard approve to nuanced disagreement.

One friend of many years standing says: “I think that’s a bit harsh. There can be some hyped up ‘next big things’ – whatever happened to vertical farming? – but I’m long enough in the tooth to remember all the cynicism about offshore wind farms.”

That’s a fair point. Just because something walks like a duck and quacks like a duck… doesn't 100% mean that it is – indeed – a duck.

As the source continues: “I would always ask if there are any projects actually out there being financed/built.”

But that approach rules out the pioneering potential of infrastructure. A shed load of money has been spent on marine energy (wave/tide power) and there are quite a few demonstrators in the water, and nobody would suggest this should stop.

Not many people would invest in ocean energy either, of course, but it’s interesting and – you know – maybe it’s The Answer to the big question of how to power this planet cleanly… or at least one of the answers.

Just keep funding demonstrators and come back to the market once you’ve got something that doesn’t disappear off into the Atlantic like the Sea Snake en route to deployment off the coast of Portugal. (Spoiler alert – you’ll find it on the seabed)

So, while you must always be cautious – able to recognise zealots at a distance – you can’t rule out pioneers based purely on that status. But this is where The Berlin Rule comes into play.

So, let’s take a look at those Berlin moments.

Berlin or Bust

The sentiment of sources this week is that a cautious approach to risk taking is the way forward (obvs)… while also recognising (by walk and quack) the duck in the room.

The chum who coined the phrase points to 2020 when fibre-to-the-home (FTTH) was all that the fashionable infra-fluencers were bumping their gums about.

This was followed in 2021 by “pioneers” leaping aboard the hydrogen bandwagon… and, well, we all know how that’s ending up.

Then it was the electric vehicle revolution in 2022 (last week’s editorial prompted this communication) and the piecemeal roll-out of charging sites by opportunists when it would have been wiser for governments to take the lead.

Finally, he built up to last year (2025) when all the cool young things – infra-nistas – were holding forth about the merits of artificial intelligence and data centres, admiring the lovely bubble as it expands before their very eyes.

Hydrogen is the one that has most across the industry sucking their teeth; followed closely by CCS which divides most rooms; nuclear (from SMR to GW scale) always wrinkles brows; and AI training data centres that rely on a lease extensions to repay.

A banker who you all know says candidly: “I’m a lender. We gobble up the hype and repeat it liberally to feign how in-the-know we are. That being said, the rule for equity makes total sense – avoid anything in the headlines as you’ll almost certainly end up paying too much.”

Another luminary of the infra variety says of nuclear: “They might be financed under a RAB model, but expect a PFI style backlash as delays and costs escalate and the public realises the banks are doing nicely for no discernible result.”

A cautious source says: “I have similar views on anything to do with crypto. I would sooner invest your money on the third race at Wolverhampton doggies – the only thing more corrupt than crypto.”

When it comes to infrastructure, fortune favours the brave… it’s just a case of working out whether you’re actually being brave or a downright bloody fool.