A recent report from consultancy EY reveals that the UK was the second most attractive market for energy-related foreign direct investment (FDI) in 2025, trailing only France.
"The UK has an opportunity to support future investment in the sector and build on its perceived advantages around renewable energy," said Annie Graham.
According to EY, the UK attracted 27 energy FDI projects last year, surpassing Germany (16) and Spain (12), but falling short of France's 50 projects. Notably, 55% of the UK's FDI projects were based in Scotland, including all oil and gas investments.
Despite this strong performance, the UK's total energy FDI projects dropped 51% from 2024, when it secured 51 projects. EY's survey of investors identified high energy costs as the main barrier to investment, as they raise the overall cost of doing business. Political instability and geopolitical issues were also significant concerns.
This decline mirrors a broader trend across Europe, where energy FDI projects fell by 36% year-on-year. France, Spain, and Germany all experienced double-digit declines, with Spain seeing a 52% drop.
EY's report highlighted strong investor confidence in the UK's renewables and clean energy potential. Sixty percent of investors rated the UK positively for renewable energy provision in electricity supply, 53% praised its green innovation, and nearly a fifth said climate and sustainability policies are the most important factor when choosing to invest.
Renewables and clean technology were identified as key growth areas for the UK, alongside IT, financial, and business services. Earlier this year, Solar Power Portal reported that the UK's Contracts for Difference (CfD) scheme is considered the "gold standard" for renewable energy investment incentives, offering an ideal balance of merchant opportunities and guaranteed revenues.
However, EY's data suggests a more cautious outlook for broader energy investment in the UK, with a "wait and see" approach emerging due to macroeconomic uncertainty and geopolitical shifts.
"The UK has an opportunity to support future investment in the sector and build on its perceived advantages around renewable energy by accelerating grid connection times and wider planning reform to persuade developers to contribute capital to energy infrastructure," said Annie Graham, EY UK industrials and energy leader.
"With high energy costs for business continuing to be a key concern for international investors, initiatives to encourage greater domestic energy production are also welcome and should help to improve price competitiveness in the UK energy market, as will the Government’s recent commitments to delinking electricity and gas prices. Tackling structural energy challenges will take time but will be crucial to the UK’s global competitiveness in the years to come, especially across energy-intensive industries."
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