Investment strategies in the UK energy transition
15 June 2021
Achieving net-zero by 2050 in the UK presents a considerable investment challenge, requiring investments of £50 billion per year by 2030 in low-carbon technologies and infrastructure. Substantial investments across sectors, such as electricity, buildings and transport, will be required to decarbonise. Different investors have different strategies when investing in low-carbon technologies, these different private strategies and motivations for investing in low-carbon assets make the energy sector transition a complex challenge.
A key challenge for policy-makers is to understand the uncertainties posed on the UK pathway to net-zero by the different investment strategies of existing and new investors in low-carbon technologies. This will help to inform policies that can create an attractive investment environment for investors.
This policy brief explores:
- who should finance the net-zero transition of the UK electricity sector
- how modelling approaches are useful to capture investors’ diversity and inform effective policies to encourage low-carbon investments
- the need for a stable and strong policy regime, coordinated with the diversity of investors’ strategies, to support low-carbon investments
- to provide opportunities to scale-up investments in renewable energy technologies, market diversification – including the growth of local investors – needs to be encouraged