The UK is the second most attractive market for energy-related investment in Europe, according to new findings.
A report from “Big Four” consultancy EY shows that the UK was the second-hottest market for energy-related foreign direct investment (FDI) in 2025, behind only France. The country attracted 27 energy FDI projects last year, ahead of Germany (16) and Spain (12), but significantly behind France’s 50 FDI energy projects.
55% of the UK’s FDI projects were in Scotland, including all of the oil and gas investments.
Despite a strong relative performance, the UK’s total of FDI energy projects was down 51% from 2024, when foreign investors backed 51 projects. Investors surveyed by EY said that the UK’s high energy costs were the main barrier to investment, as they increase the overall cost of doing business in the country. Political instability and geopolitical issues were also cited as major concerns.
However, the UK’s decline reflects a broader dip across Europe, with a 36% year-on-year decrease across the continent. France, Spain and Germany all saw double-digit declines from 2024, including a 52% dip in FDI projects in Spain.
UK strong on renewable energy
EY’s report included surveys of international investors, which showed high levels of confidence in the UK’s renewables and clean energy potential.
60% of investors rate the UK positively for renewable energy provision in electricity supply, 53% rate it highly for green innovation and 19% – nearly a fifth – said climate and sustainability policies are the “most important” factor when choosing to invest.
Renewables and clean technology were also identified as one of the UK’s major growth areas, alongside IT services, financial services and business services.
Earlier this year, Solar Power Portal heard that the UK’s Contracts for Difference (CfD) scheme for renewables was the “gold standard” for renewable energy investment incentives. Experts said it gives renewable energy investors the ideal balance of merchant opportunities and guaranteed revenues.
However, EY’s data paints a more complex picture when it comes to broader energy investment in the UK, where it says a “wait and see” attitude has arisen in response 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.”
