UK remains second in Europe for energy investment projects, despite FDI decline

• The UK retained its position as the second most attractive location in Europe for energy-related Foreign Direct Investment (FDI) projects in 2025, behind France in first place and ahead of Germany and Spain.
• This is despite a 51% year-on-year decline in UK energy FDI projects and the UK’s lowest annual total since 2013.
• International investors rank the UK positively for renewable electricity generation, green innovation and clean technology opportunities, whilst the high cost of energy remains a consistent theme.
• Scotland secured more than half (55%) of all UK energy FDI projects in 2025.
• EY highlights the importance of delivering a “diverse, resilient and domestic energy mix” to help support UK attractiveness.

The UK retained its position as the second most attractive location in Europe for energy-related Foreign Direct Investment (FDI) projects in 2025, despite a year-on-year fall in projects.

According to the EY 2026 UK Attractiveness Survey, the UK attracted 27 energy FDI projects in 2025, ahead of third place Germany with 16 projects and fourth place Spain with 12 projects. France remained in first place with 50 projects.

However, while the UK performed comparatively well to European peers, its energy-related FDI projects – which cover oil and gas as well as utility supply, including renewable energy, transmission and storage – were down 51% from the 55 projects secured in 2024 and were the lowest annual total since 2013 (14 projects). This also follows a 42% decrease between 2023 and 2024.

Investors value UK’s green credentials, while high energy costs remain key concern

There are nevertheless reasons for optimism, with a perception amongst investors that the UK has many of the credentials and skills needed to become a leading destination for energy transition investment.

Alongside the analysis of FDI investment numbers, EY conducted a survey comprising of interviews with a panel of 360 international investment decision-makers. Just under two-thirds (60%) of the investors surveyed rated the UK positively for renewable provision in electricity supply, while 53% rated the UK positively for green innovation.

Utility supply (including CleanTech and renewables) was also identified by investors as one of the UK’s future growth sectors. When asked to rank the top two business sectors expected to drive the UK’s growth in the coming years, utility supply was selected by 15% of respondents. This compares to 29% for Software and IT services, 22% for Financial Services, 21% for business services and professional services, and 11% for transportation and logistics.

Conversely, when asked about the UK’s barriers to investment, the high cost of energy emerged as a recurring theme. The cost of doing business, including energy costs, is among the UK’s most significant perceived disadvantages, with 29% of investors citing cost as the third-biggest risk over the next three years, after macroeconomic conditions (41%) and geopolitical tension (33%).

More than a fifth (22%) of investors said the UK should concentrate efforts on reducing energy prices to maintain competitiveness in the global economy, marginally ahead of the 20% who said reduce and simplify taxation.

Annie Graham, EY UK Industrials and Energy Leader, said: "Energy is a critical sector for capital investment in its own right, but is also a key enabler for successful investment in energy-intensive industries, such as AI data centres and steel.

“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. 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. By investing in vital infrastructure, delivering a diverse, resilient and domestic energy mix, and addressing energy costs, there is a real opportunity to boost UK attractiveness and unlock necessary capital for the long-term investments at the heart of the UK Government’s Industrial Strategy.”

Scotland is UK’s leading destination for energy investment

According to the EY analysis, UK FDI projects declined significantly in 2025 across energy subsectors. Oil and gas projects fell 81% year-on-year (from 16 in 2024 to three in 2025), while utility supply projects dropped 39% (from 39 to 24). The three oil and gas projects represent 15.8% of market share across Europe.

Scotland remained the UK’s leading destination for energy investment, securing 15 projects – more than half (55%) of the national total – and included all UK oil and gas projects in Aberdeenshire. The West Midlands secured five energy projects, while London secured two.

Europe’s other leading energy FDI hubs also see projects decline

Europe as a whole attracted 177 energy FDI projects in 2025, a 36% year-on-year decrease following the 275 projects secured in 2024. The UK received 15% of all energy projects in Europe last year, compared to 20% in 2024, while France secured 28%, compared to 27% the previous year.

France saw energy-related inward investment in 2025 fall by nearly a third (32%), from 74 projects in 2024 to 50 in 2025. Project volumes also fell in Germany, from 34 to 16 (53%), and Spain, from 25 to 12 (52%).

US and Norway the leading sources of investment in UK energy projects

The leading sources of UK energy sector projects during 2025 were the US and Norway, which contributed four projects each.

Across Europe, the US overtook Germany as the leading origin of investment in energy projects – a position Germany had previously held every year for the last decade – despite projects falling between 2024 and 2025, from 25 to 20. French-origin projects (17) ranked second, followed by German-origin projects (16) in third place.