Britain has lost its crown as Europe’s top destination for foreign investment in renewable energy and utility projects, as a sharp fall in new developments sees France take the lead, according to new figures from EY.
The number of green energy and utilities projects backed by overseas investors in the UK dropped by 57 per cent in 2023, falling from 93 to just 39 in a single year. That slump saw the UK overtaken by France, which grew its foreign-backed projects to 74, up from 65 in the previous year.
EY’s annual UK Attractiveness Survey found that the downturn in clean energy investment led to a 70 per cent drop in new jobs, from 4,819 in 2022 to 1,452 last year, despite a broader surge in renewables investment across Europe.
Lee Downham, EY’s UK energy and resources lead, warned that unless urgent action is taken to streamline planning and grid connection, the country’s net-zero targets and energy security goals will be at risk.
“The UK must continue to attract a strong pipeline of renewable investments if it’s to achieve its energy security ambitions,” he said. “While investors have traditionally viewed the UK as an appealing destination for clean energy, lengthy planning procedures, slow grid connectivity, and uncertainty over future pricing have been seen as drags on UK attractiveness.”
The analysis comes at a politically sensitive time, as the Labour government seeks to rebuild Britain’s green industrial base, while grappling with an energy system still heavily reliant on international gas markets.
Investment projects tracked in the report included solar farms, energy storage sites, hydrogen facilities, as well as infrastructure like R&D hubs, new HQs, manufacturing plants and maintenance centres.
The UK’s 39 new green and utilities projects in 2023 represented a collapse in inward investment in a sector central to the country’s decarbonisation and reindustrialisation plans. In contrast, France has seen a surge in support, backed by aggressive domestic incentives and streamlined permitting processes.
Germany and Spain ranked third and fourth, respectively, in EY’s European rankings. Across the continent as a whole, foreign direct investment (FDI) into the utilities and energy sector fell 21 per cent year-on-year, reflecting broader concerns about inflation, supply chain disruption and the complexity of energy regulation.
The report also highlights ongoing investor unease about the UK government’s review of the wholesale electricity market, with proposals to move to locational pricing by region. Critics argue this would create investment uncertainty and potentially penalise projects in parts of the country with weaker grid infrastructure.
While some of the UK’s high-profile clean energy projects — including large-scale offshore wind farms — are yet to progress due to planning delays and cost inflation, France has capitalised on stronger state support and faster permitting.
With global competition for clean tech investment intensifying, EY’s findings will likely fuel calls for bolder industrial policy and regulatory reform to ensure the UK can regain its leadership position in renewables — and deliver on its promise of a cleaner, more secure energy future.
