Investment firms anticipate surge in renewable energy spending
UK investment firms are expecting a sharp surge in financing for renewable energy projects once an end to the conflict in the Middle East is reached, after it triggered one of the worst rises in oil and gas prices in years.
Over 85 per cent of firms, accounting for roughly £5.5 trillion in assets under management, expect an uptick in financing for renewable projects, according to the latest findings from the UK Sustainable Investment and Finance Association (UKSIF).
The findings come as the Labour government pushes ahead with its ambition to end the country’s reliance on fossil fuels, with the government still aiming to decarbonise the electricity grid by 2030.
The King’s Speech last week also set out legislation which will make it illegal to grant new oil and gas licences in the North Sea, with the government refusing to buckle under criticism from oil giants and the opposition benches.
Nearly 80 per cent of firms now see renewable energy investments as “less risky” than oil and gas following the outbreak of the war, with 74 per cent seeing just UK-based renewable energy investments as a safer option.
Meanwhile, 87 per cent of respondents confirmed that their confidence in the long-term outlook for global renewable energy investments has increased since the start of the conflict, with 78 per cent also expressing confidence solely in the UK.
UK transition
Several UK energy and utility companies have backed projects to assist in the transition, cemented by energy secretary Ed Miliband doubling down on the government’s ambition to end reliance on fossil fuels.
National Grid has shifted focus towards primarily electricity assets and has most recently completed the sale of its liquefied natural gas facility, Grain LNG to a consortium which included Centrica Energy.
But in 2025, Centrica confirmed its subsidiary Spirit Energy would sell its 46.2 per cent stake in the Cygnus gas field, one of the largest in the North Sea, to Ithaca Energy for £116m.
Later that year, it sold the remainder of its stake to Serica Energy, moving it away from high-emission fossil fuel extraction.
Since the outbreak of the conflict, 65 per cent of respondents said the economic benefits of the UK rapidly transitioning away from fossil fuels seems “greater”.
International Energy Agency executive director, Fatih Birol, shared the sentiment, arguing that renewable energy would also receive a “significant boost” from the conflict off the back of fears around the oil and gas supply and prices.
UKSIF chief executive, James Alexander, said: “Oil and gas companies may be reaping windfall profits from the global supply shock. But the new risks exposed by this crisis will likely push governments to fast-track their shift away from dependence on fossil fuels.
“Investors believe this renewed focus on energy security will drive increased capital flows into renewable infrastructure assets.
“But policymakers must continue to strengthen domestic financing conditions so that global investors recognise the UK as a leading destination to deploy capital.”
Utility stock performance
This optimism is also reflected in the performance of UK utility stocks, as investors were attracted by new projects and possibility of steady growth and stable dividends.
National Grid shares are up 8.2 per cent this year to date, trading at 1,253p, while United Utilities shares have jumped 11.9 per cent to 1,350p.
But, oil giants have also received a significant share bump, with Shell up 19.3 per cent since January, and BP rocketing 30.7 per cent.