UK Tumbles From Top Position in Green Energy Investment as France Takes Lead

Britain has witnessed a dramatic 57 per cent decline in foreign investment for green energy and utility sector projects during the past year, surrendering its position as Europe’s premier destination for foreign direct investment in utilities and energy supply to France.

The stark figures, revealed in a comprehensive analysis by professional services firm EY, highlight a concerning shift in the investment landscape. The decline arrives at a crucial moment when the British government aims to accelerate investment to achieve its decarbonisation objectives and reduce dependence on volatile international gas markets.

Lee Downham, energy and resources lead at EY in Britain, emphasised the critical nature of maintaining investment momentum. “The UK must continue to attract a strong pipeline of renewable investments if it’s to achieve its energy security ambitions,” he stated. The analysis pointed to several key challenges, including lengthy planning procedures, slow grid connectivity, and uncertainty surrounding future pricing structures.

The numerical impact is significant, with foreign direct investment projects dropping to 39 in the last year, creating 1,452 jobs – a substantial decrease from the previous year’s 93 projects which generated 4,819 jobs. In contrast, France secured 74 projects, up from 65, while Germany and Spain secured third and fourth positions respectively.

The government faces additional pressure as it contemplates a radical overhaul of the UK’s wholesale electricity market, considering the introduction of regional zones – a move that industry critics argue could further deter investment. The broader European context shows a 21 per cent decline in foreign direct investments in the sector, emphasising the widespread nature of this challenge.

These investments encompass various projects including solar farm construction, energy storage facilities, hydrogen infrastructure, and the establishment of new headquarters, manufacturing operations, maintenance hubs and research facilities. The downturn signals a significant shift from the “surge in inward investment in renewables” observed in 2023, primarily attributed to the timing of auction rounds for renewables.