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Financing the UK energy transition

Energy transition investment survey

The UK has made strong progress on its energy transition journey, but emissions need to decline faster to hit legally binding decarbonisation targets. This will require significant capital investment, much of which needs to come from the private sector.

We surveyed a range of investors on how to increase their confidence to invest in low carbon energy technology and infrastructure in the UK. Explore our findings below.

Investors told us they want to invest in UK low carbon energy technology and infrastructure. But to make UK projects more attractive and improve investor confidence, they need the following energy transition enablers:

  • Stable, long-term energy policy
    Nearly all investors (97 per cent) said they need long-term, stable energy policy. Ninety-two per cent require policy certainty for at least five years, and 78 per cent said they intend to hold their investment for at least five years.
  • Quicker planning consent and grid access
    Seventy per cent of investors said that quicker permitting and consenting processes is one of their top three priorities for policy makers, and just under two-thirds (62 per cent) said a larger and more modern grid is a key energy transition enabler. 
  • More effective carbon pricing
    Nearly two-thirds (65 per cent) said improved price signals – including an effective carbon pricing system and Carbon Border Adjustment Mechanism (CBAM) – are needed. 
  • Better supply chain and skills support
    Investors need their investment targets to have access to the skills and supply chain to deliver net zero. Currently, around two-thirds of investors said their investment targets do not have access to the necessary supply chain (70 per cent) or skills (59 per cent).
  • Reduced risk for emerging energy transition technologies
    Nearly two-thirds (62 per cent) of investors have low appetite for technology risk.

How can we reduce risk for emerging energy transition technologies?

The majority (89 per cent) of investors will only invest if they make a desired return on their investment. In fact, 84 per cent will only invest if returns match or are better than opportunities elsewhere. Investors are mandated to demand risk-adjusted returns and unlikely to increase their risk appetite without the same increase in potential reward.

Corporate investors show the highest appetite for technology risk. Three quarters (75 per cent) of large business consumers want their energy providers to supply decarbonisation technology. We need to enable corporate investors to build more technology and infrastructure.

Low-carbon consumer technologies – such as energy efficient appliances, and smart grids – mostly attract interest from private equity investors, who typically require higher returns on their investment than other investor types. We need more investment in low-carbon consumer technologies to reduce their cost and make their adoption more convenient.

Our insights are based on surveys and interviews carried out with 40 investors from infrastructure funds, corporate organisations, private equity firms, multi-asset managers, banks, sovereign wealth funds and public funds. They represent approximately £4.5 trillion in assets under management, approximately 70 per cent were director or c-suite level.​ The research took place between October and December 2024.

To explore the data and insights and discuss our recommendations in more detail, contact our energy transition investment experts.

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