A new report from international law firm Womble Bond Dickinson reveals how a turnaround in clean energy financing is set to propel the UK’s energy transition in 2025.
The Womble Bond Dickinson 2025 Energy Transition Outlook Survey gathered insights from over 1,300 global energy professionals, including over 500 UK energy suppliers, investors and major commercial energy users.
UK respondents painted a picture of a resilient and revitalised UK energy sector, standing at a pivotal point in the transition to cleaner energy. The findings reveal a sector buoyed by significant improvements in funding opportunities, a supportive political climate and the game-changing possibilities of artificial intelligence.
Financing turnaround
While financial conditions in the sector have historically been challenging, UK energy players and investors are now seeing a marked change in fortunes. The report shows that the sector is reporting a much more favourable outlook, with well-over half (59%) of respondents reporting improvements in financial conditions compared with last year and a quarter (24%) noting ‘significant’ improvements.
This energy financing turnaround has spurred investment with three-quarters (76%) of respondents increasing their UK investments this year. Easier access to finance, more attractive returns, and a focus on ESG (Environmental, Social, and Governance) were all cited as contributing to this uptick.
Richard Cockburn, Head of Womble Bond Dickinson’s UK Energy Sector, said, “Appetite for financing projects is now much more positive. Looking ahead, our report shows how UK energy producers and investors plan to broaden their energy mix with solar, green hydrogen and heat networks topping the list for the coming years.”
Market consolidation
According to the report, this rising confidence is also stimulating M&A activity as well as a focus on strategic alliances and joint ventures, all of which are set to reshape the UK energy sector in the coming 12 months.
While M&A activity in the sector has been subdued in recent years, the majority of respondents (47%) are expecting to see substantial increases in deals with only 7% anticipating any kind of decrease.
Richard Cockburn explained, “There are various drivers behind this, from businesses starting to crystallise their strategies to more government support, all creating an improving environment which is encouraging businesses to press on with their growth plans. The trend may also be an indicator of smaller players combining forces to achieve the scale necessary to deliver on bigger projects. This is a particular issue for green hydrogen, where – up until now – smaller operators and start-ups have struggled to meet the demands of getting the technology off the ground.”
Political support
The report suggests that the recent change in UK government has further enhanced optimism around the energy transition, although robust legislative and financial support remains critical.
The findings reveal that three-in-five (57%) respondents are confident in the new UK government’s commitment to energy transition. Yet a similar proportion (56%) stressed the importance of policy interventions, such as stricter carbon regulations, increased funding for clean energy R&D and new subsidies for renewable projects to truly drive progress.
Big energy users renew efficiency focus
To provide a holistic view of the state of energy transition in the UK, the report also examined views of major energy users – including intensive industrial and technology users as well as retailers, transport businesses and the property sector.
Notably, these businesses are reporting a focus on energy efficiency initiatives in their decarbonisation strategies. The high costs associated with such measures have previously led to a lack of enthusiasm. However, over half (54%) are now prioritising energy-saving strategies.
Richard added, “Three-in-five (58%) of the businesses we surveyed put this change in emphasis down to a strong focus on environmental protection. In addition, over a third (36%) highlighted the moral imperative of ‘doing the right thing’, while a similar proportion (36%) pointed to the operational efficiencies decarbonisation bring. All-in-all, this is an approach which allows firms to tick both ethical and financial boxes.”
The findings also showed that most commercial energy users (68%) are currently relying on operating income to fund their decarbonisation efforts, with just under half (45%) planning to tap into government subsidies.
AI adoption slow but gaining ground
One area which has the potential to significantly accelerate energy efficiency, and decarbonisation more broadly, is the use of technology and artificial intelligence (AI).
However, the Womble Bond Dickinson report indicates that the UK energy sector has been slow to adopt AI and is lagging behind other markets, with current use mostly limited to basic functions like data mining and operational controls.
The findings show that over half (54%) of UK energy producers and investors are not currently using AI, a significantly higher proportion than in regions such as the Middle East and the US. However, this trend is expected to shift, as 46% are planning to increase their AI investment in the coming years.
However, respondents pointed to concerns around cyber threats, data management challenges and a shortage of skilled workers as barriers to unlocking the full potential of AI in areas such as smart buildings, resource discovery and digital twins.
Richard added: “No one is arguing with the potential for AI to transform energy transition, but significant uptake requires planning and governance, particularly when it comes to training AI and compliance with regulations. Many are taking a wait-and-see approach, which is understandable given the need to avoid reputational damage and other serious consequences.”
The findings are taken from the Womble Bond Dickinson 2025 Energy Transition Outlook Survey. This annual survey reports the views of boardroom executives from energy and utilities firms as well as leading investors in the sector and commercial consumers of energy from the UK and the EU, North America, Asia Pacific, the Middle East and Latin America.
