The United Kingdom has solidified its position as the second most attractive market for energy-related foreign direct investment (FDI) in Europe, according to recent findings. This development highlights the country’s growing appeal to international investors, despite facing significant challenges.
In 2025, the UK attracted 27 energy FDI projects, placing it just behind France, which led with 50 projects. This performance positioned the UK ahead of other major European economies like Germany (16 projects) and Spain (12 projects). However, the total number of FDI projects in the UK decreased by 51% compared to 2024, reflecting a broader downturn across Europe.
Renewable energy drives UK’s appeal
The UK’s strong performance in renewable energy is a key factor in its attractiveness to investors. Surveys conducted by EY revealed that 60% of investors rate the UK positively for its renewable energy provision in electricity supply. Additionally, 53% of investors highly regard the UK for green innovation, and 19% consider climate and sustainability policies as the most important factor when choosing to invest.
Renewables and clean technology are identified as one of the UK’s major growth areas, alongside IT services, financial services, and business services. The UK’s Contracts for Difference (CfD) scheme for renewables has been praised as the gold standard for renewable energy investment incentives, offering a balanced mix of merchant opportunities and guaranteed revenues.
Challenges and opportunities
Despite its strong relative performance, the UK faces several challenges that could hinder future investment. High energy costs, political instability, and geopolitical issues are major concerns for investors. These factors contribute to a wait and see attitude among potential investors, who are cautious about the macroeconomic uncertainty and geopolitical shifts.
Annie Graham, EY UK industrials and energy leader, emphasized the need for the UK to accelerate grid connection times and implement wider planning reforms. These measures could encourage developers to contribute capital to energy infrastructure, thereby supporting future investment in the sector.
Initiatives to encourage greater domestic energy production are also welcomed and could help improve price competitiveness in the UK energy market. The Government’s recent commitments to delinking electricity and gas prices are a step in the right direction. However, tackling structural energy challenges will take time and is crucial for the UK’s global competitiveness, especially across energy-intensive industries.
Energy resilience and smart technologies
As the demand for energy from AI data centers and electric vehicles continues to rise, energy resilience has become a board-level imperative across Europe. The Economist Panel ‘Flexible by Design: Energy Resilience for Business’ brought together key leaders from energy regulation, grid operations, digital infrastructure, and manufacturing to address Europe’s most pressing commercial challenges.
EcoFlow, a leader in smart home energy storage solutions, is leveraging its extensive experience to provide commercial operators with immediate, cost-effective energy independence. By transferring its proven consumer technology foundation and software intelligence into the commercial market, EcoFlow is helping businesses manage complex energy needs, lower operational expenses, and ensure power resilience.
The panel discussed various strategies for overcoming grid bottlenecks and unpredictable power costs. Practical approaches for enterprises to safeguard operations against power disruptions and price spikes without incurring excessive capital expenditure were highlighted. The role of small-scale distributed storage, solar, and energy-management software in balancing supply and demand was also explored.
The insights from the panel underscore the importance of energy flexibility and smart technologies in driving European industrial competitiveness. As the continent navigates historic price volatility and years-long grid connection queues, these innovations offer immediate relief and long-term solutions.
