Foreign investment projects in the UK energy sector more than halved last year, falling to their lowest level in more than a decade despite Britain retaining its position as Europe’s second-largest destination.
The UK attracted 27 energy-related foreign direct investment projects in 2025, according to EY’s UK Attractiveness Survey, down 51 per cent from 55 a year earlier and the lowest total since 2013.
The decline followed a 42 per cent fall between 2023 and 2024, indicating a sharp slowdown in new foreign-backed energy projects over the past two years.
Britain nevertheless remained second in Europe, behind France, which secured 50 projects. Germany attracted 16 and Spain 12.
The downturn was widespread across Europe, where energy FDI projects fell 36 per cent from 275 in 2024 to 177 last year. France recorded a 32 per cent decline, while projects in Germany and Spain fell 53 per cent and 52 per cent respectively.
Within the UK, utility supply projects, including clean technology and renewables, fell 39 per cent to 24. Oil and gas projects dropped from 16 to three.
Scotland dominated UK energy investment, securing 15 projects, or 55 per cent of the national total. The West Midlands attracted five and London two.
EY’s separate survey of 360 international investment decision-makers suggested the UK retains advantages in the energy transition. Some 60 per cent rated Britain positively for renewable electricity provision and 53 per cent for green innovation.
But energy costs emerged as a significant barrier to investment. Almost three in 10 respondents identified the cost of doing business, including energy, as a leading risk over the next three years, while 22 per cent said reducing energy prices should be a priority for improving UK competitiveness.
Annie Graham, EY UK industrials and energy leader, said energy was both an important investment sector and an enabler for industries ranging from steel to AI data centres.
“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,” she said.
Graham added that faster grid connections, planning reform and investment in domestic energy infrastructure would be crucial to attracting capital into energy-intensive industries.
