Accelerating the UK’s transition to a low-carbon energy system will require substantial investment—much of which must come from private capital.
Energy providers, investors, policymakers, and consumers each have a critical role to play in ensuring that investment in low-carbon infrastructure and technology scales up rapidly enough to meet the UK’s net zero targets. Achieving these targets will demand significant expenditure from both the public and private sectors. Crucially, the pace and direction of progress hinge on the establishment of a stable, long-term policy framework—one that instils confidence among private investors and enables capital to flow effectively into the energy transition.
In this context, Deloitte conducted a study surveying major private investors—including infrastructure funds, corporate investors, private equity firms, multi-asset managers, banks, pension funds, and sovereign wealth funds—to understand the key considerations driving investment decisions in the UK energy sector.
The findings reveal that the foremost priority for investors is a predictable and stable long-term energy policy. Additionally, respondents emphasized the need for a more efficient planning, consent, and grid-access regime to support the development of a larger and more resilient energy grid. Enhanced carbon pricing mechanisms were also identified as critical—improving market signals and enabling investors to factor carbon costs into their decision-making more effectively.
Commenting on the role of investors, Netti Farkas-Mills, Senior Insight Manager for Energy, Resources, and Industrials at Deloitte, noted:
“Investors are eager to support the energy transition, but they need the assurance that comes from a clear and consistent long-term policy framework. Furthermore, the availability of investible projects is essential. These projects must offer desirable returns, be of a suitable size, have clear risk profiles, and generate predictable cash flows.”
Dr. Jamie Speirs, Deputy Director at the Centre for Energy Policy, added:
“Infrastructure investment is absolutely essential. Much of the renewable energy supply is located in the North, while demand is concentrated in the South. Bridging this geographical divide requires strategic infrastructure development.”
This paper forms part of Driving Growth: Innovation and Sustainability in Scotland—a year-long collaboration between the Fraser of Allander Institute and Deloitte. The series explores sustainable economic growth in Scotland, with particular focus on the twin themes of energy transition and digital innovation, including artificial intelligence.
Guest experts will contribute throughout the series, which will feature further research and podcast discussions.
Professor Mairi Spowage, Director of the Fraser of Allander Institute, remarked:
“The energy transition is an intricate economic challenge, involving a diverse range of stakeholders—from investors and energy companies to consumers and policymakers. This survey report does an excellent job highlighting the major issues at play, and our joint series aims to explore both the opportunities and challenges presented by these profound structural changes.”
Financing the UK Energy Transition
Authors
Sanjam Suri is a Knowledge Exchange Fellow at the Fraser of Allander Institute. Sanjam works closely with internal and external partners specializing in business and economic analysis. Sanjam also lead's the Scottish Business Monitor publication. Prior to this, Sanjam was the Lead Country Risk Analyst at Export Development Canada in Ottawa. Sanjam has also worked as an Economist and Senior Economist at the Bank of Canada in Ottawa. Sanjam has an undergraduate degree in Mathematical Economics from Trent University (Canada), and a Masters degree in Financial Economics from Western University (Canada).
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.